2016 (1) TMI 602

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.... of section 263. 2. The Hon'ble CIT erred in setting aside the order with the direction to the Ld. I.T.O for reconsidering the issue relating to the disallowance u/s 14A r.w. Rule 8D in respect of the interest expenditure of Rs. 57,80,070/-. 3. The Hon'ble C.I.T. erred in holding/directing the Assessing Officer to calculate the amount of disallowance u/s 14A r.w. Rule 8D by taking the entire amount of interest paid including the interest which was having direct nexus with business income and not earning exempt income." 2. In this case, Assessing Officer completed assessment order u/s.143(3) assessing the total income at Rs. 3,48,55,447/-. While computing income, Assessing Officer worked out the disallowance u/s.14A read with Rule 8D at....

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.... stock in trade and profit there from has been duly shown in profit and loss account, the provisions contained in Section u/s 14A would not be applicable to the interest paid in respect of these shares. CIT having considered the submission on behalf of assessee observed that Assessing Officer has not applied his mind on the issue. He has not given any reason either in body of the assessment order or in assessment records as to why the above interest expenditure of Rs. 57,80,070/- was not considered for disallowance u/s.14A. CIT was of the view that Assessing Officer has made assessment without making proper inquiry, so, the order was to be held erroneous in so far as it was prejudicial to the interest of revenue. Accordingly, same was set a....

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.... per return of income and as per assessment order was due to an addition of Rs. 2,80,277/- by disallowing expenditure u/s.14 r.w. Rule 8D . The basis of calculation of disallowance u/s.14A r.w. Rule 8D was stated in the assessment order in para 8. While working out the amount of disallowance u/s.14A r.w. Rule 8D, ITO has looked into the matter thoroughly with regard to disallowance u/s.14A r.w. Rule 8D and he restricted the amount of disallowance up to 0.5% of average value of investment i.e. 0.5% of Rs. 5,60,55,329/-. It is not in dispute that assessee has placed all details with regard to interest as appearing on page 14 of the paper book and assessee has reached to the certain conclusion after appreciating the facts on record. We find th....