2011 (12) TMI 563

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....se are that the assessee derives income from Hiring of Cranes to ONGC and other oi l refineries, management services to group companies, dividends and interest from investments and income from sale of investment and Trading in shares. It filed return declaring loss of Rs. 56,78,74,068/-. However, the assessment was completed under normal provisions of the Act at loss of Rs. 31,39,57,516/- and u/s 115JB at loss of Rs. 54,13,66,418/- including the disallowance of interest related to shares Rs. 17,32,53,552/- and disallowance of interest on interest free loans Rs. 8,06,63,000/-. 3. On appeal, the Ld. CIT (A) while directing the AO to fallow the appellate order for the assessment years 1999-2000 and 2001-02, partly allowed the appeal. 4. ....

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....ed assessment order. 7. On appeal, the Ld. CIT (A) observed that the similar issue was considered by him in the appellant's own case for the assessment years 1999-2000 & 2001-2002 wherein he has calculated the disallowance to be made in the appellants case and there is no material change in the facts and hence he directed the AO to calculate the disallowance of interest on the basis adopted by him in the order dated 6.3.2003 for assessment year 1999-2000. 8. At the time of hearing, the learned counsel for the assessee while explaining the issue from the assessment order submits that this issue is covered in favour of the assessee by the order of the Tribunal in the assessee's own case in M/s. Essar Investments Limited V/s Jt.CIT (OSD)....

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....considering the decision of the Tribunal in Daga Capital Management Pvt. Ltd. (117 ITD 169) (Mum) (Special Bench) while holding that the provision of sub-section (2) & (3) of sec.14A of the Act are constitutionally valid have held vide placitum 88(vi) appearing at page 138 of the 328 ITR as under: " (vi ) Even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub sect ion (1) of sect ion 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incur red in relation to income which does not form part of the total income under the Act . The Assessing Officer must adopt a reasonable basis or method consistent with al l the r....

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....e of Godrej & Boyce Manufacturing Co.Pvt. Ltd. The Assessing Officer should consider al l the contentions of the assessee and accordingly decide the issue of disallowance u/s 14A of the Act. Needless to say that the Assessing Officer shall afford a reasonable opportunity of being heard to the assessee. Accordingly, Ground No.1 is allowed for statistical purposes." 11. In the absence of any distinguishing feature brought on record by the parties we respectful ly fol lowing the aforesaid decisions set aside the orders passed by the Revenue authorities on this account and send back the matter to the f ile of the AO to decide the same de-novo in the l ight of the directions given in the above decisions and according to law after providing re....

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....g at this conclusion, the AO listed the total assets on 31.3.2002 and 31.3.2001 and worked out the average of both. Further AO worked out head-wise % of the total assets and % relating to loans and advances accordingly, and applied the % so arrived at, to the total interest and worked out a figure of Rs. 8,06,63,000/- (after reducing the interest received therefrom) which he disallowed and added to the total income of the assessee. 14. On appeal, the Ld. CIT (A) observed that the similar issue was decided by him in the appellant's own case in AYs 1999-2000 and AY 2001-2002. In line with the same he directed the AO to disallow the interest as calculated in accordance with the calculation adopted by him in the order dated 6.3.2003 for AY 1....