TaxTMI 
TaxTMI 
2014 (9) TMI 1029
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....rried the matter before CIT(A). CIT(A) vide order dated 30.11.2010 allowed the appeal of the Assessee. Aggrieved by the order CIT(A), Revenue is now in appeal before us and has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in reducing the disallowance u/s 14A from Rs. 5,93,079/- to Rs. 1,00,576/- by stating that net expenses should be taken to compute the said disallowance as provided in rule 8D despite the fact that there is no such mention to adopt net expenditure. 2. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in allowing fresh claim of interest expenses of Rs.l1,24,065/-made by the assessee voluntary added back by the assessee in the computation of income filed despite the fact that the assessee failed to prove the said expenses with supporting evidences before the A.O. during the assessment proceedings. 3. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in allowing fresh claim of interest expenses of Rs.l1,24,065/- made by the assessee voluntary added back by the assessee in the computation of income filed afte....
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....asonably inferred that the interest received by the assessee cannot be isolated from the interest paid by him. If there is no direct nexus between these two funds, the net result of income and expenditure will have to be taken for the purpose of computing any allowable deduction/ exemption unless and until otherwise is expressly provided in the statute. In this case there is no such express provision in the Act or Rule which makes it mandatory to take gross expenditure for computation of disallowance u/s 14A in such a situation. ii. The interest received has already been offered for taxation. If the gross interest expenditure is taken, there will be a sort of double taxation to the extent of disallowance made u/s 14A as submitted by the appellant. iii. Rule 8D was notified on 24.03.2008 and is held to be applicable from A.Y 2008-09. The Rule has no applicability to earlier assessment year / years. In absence of Rule 8D, disallowance is to be made on some reasonable basis as held in the case of Godrej & Boyce by Hon'ble Bombay HC . If, therefore, having regards to facts and details including proportion of tax free investment to other assets, proportion of exempt income to ....
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.... (Ind) Securities (supra). The Hon'ble Co-ordinate Bench of Tribunal upheld the contention of the Assessee by holding that since the amount of interest debited to the Profit and Loss account was on net basis the disallowance of interest should also be made only with reference to the net interest. Before us, Revenue has not brought any contrary decision in its support for the proposition that gross interest has to be considered for the purpsoe of working out disallowance u/s 14A. Further it is a fact that for the year under consideration, the method prescribed by Rule 8D of the I.T. Rules for the working of disallowance u/s 14A is not applicable and therefore the disallowance has to be made on a reasonable basis as held by Hon'ble High Court in the case of Godrej and Boyce (supra). In such circumstances and in view of the decision in the case of Morgan Stanley (supra) and in view of the fact that CIT(A) has upheld the disallowance u/s 14A at Rs. 1,00,576/- we find no reason to interfere with the order or CIT(A) and thus this ground of Revenue is dismissed. 9. 2 & 3 ground are interconnected and therefore considered together. It is with respect to allowing of claim of interest exp....
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....A), Revenue is now in appeal before us. 12.Before us ld. D.R. supported the order of A.O and further submitted that Assessee has not proved the claim of expenses. He further submitted that in view of the decision of Hon'ble Apex Court in the case of Goetze India vs. CIT (2006) 284 ITR 323 (SC), Assessee cannot make a claim by way of application but has to file a revised return. He therefore submitted that by not filing revised return of income, the claim of the Assessee cannot be allowed and the claim was therefore rightly rejected by the A.O. He also placed reliance on the decisions in the case of Kerala State Co-op. Agricultural Rural Development Bank Ltd. vs. ACIT (2011) 10 Taxman.com. 145 (Cochin). Orissa Rural Housing Development Corporation Ltd. vs. ACIT (2012) 17 Taxman.com. (Orissa) and the decision in the case of DCIT vs. Rajasthan State Mines and Minerals Ltd. (2012) 25 Taxman.com. 11 (Jaipur). 13.The ld. A.R. on the other hand reiterated the submissions made before CIT(A) and further submitted that the decision of Hon'ble Supreme Court in the case of Goetze India relied upon by the Revenue was confined to the power of Assessing Officer and had recognized the power ....