TaxTMI 
TaxTMI 
2016 (5) TMI 462
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....as raised the following grounds: - 2.1 For A.Y. 2008-09 "1. On the facts and in the circumstances of the case and in law, the assessment order passed u/s 143(3) r.w.s. 153A of the I.T. Act is invalid and bad in law. 2. On the facts and in the circumstances of the case and in law, the, learned CIT(A) erred in sustaining disallowance to the extent of Rs. 1,88,704/- made u/s 14A of the I.T. Act. 2.2 For A.Y. 2009-10 "1. On the facts and in the circumstances of the case and in law, the assessment order passed u/s 143(3) r.w.s. 153A of the I.T. Act is invalid and bad in law. 2. On the facts and in the circumstances of the case and in law, the, learned CIT(A) erred in sustaining disallowance to the extent....
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....o interest income and remuneration. The assessee had borrowed funds, which he has invested in the capital of firms, whereon he pays interest and also earns interest on such investment in capital of firms. The assessee submitted that the interest earned from investment in capital of firms and remuneration received were both exigible to tax as business income under section 28(v) of the Act and that interest paid on borrowed funds were allowable as deduction therefrom. The AO did not accept the assessee's claim as he was of the view that the main objective of the assessee for being a partner in the firm was to earn share of profits as partner therefrom which are exempt under section 10(2A) of the Act. The AO was also of the view that, since it....
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....that interest expenditure on borrowed funds was relatable to interest income from funds that have been invested as unsecured loans in various companies, interest earned on capital invested in the firms and remuneration received from firms, constituting business income under section 28(v) of the Act. In support of this proposition, the assessee placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Delite Enterprises (supra). In support of the proposition that interest on borrowed capital for the purpose of investment in firms is allowable against remuneration received by the partner from the firms, the assessee placed reliance on the decision of a Coordinate Bench of this Tribunal in the case of Sudhir Datta....
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....a). This is the subject matter of the appeals for all the three years involved. 4.3.1 We have heard the learned A.R. for the assessee at length in the matter of disallowance under section 14A read with Rule 8D(2)(ii) reiterating the submission put forth before the learned CIT(A) and as summarised by us at para 4.2 of this order (supra). Accordig to the learned A.R. for the assessee, the disallowance of Rs. 26,66,738/- sustained by the learned CIT(A) under section 14A read with Rule 8D(2)(ii) was not called for for A.Y. 2010- 11 as it was to be made only in respect of exempt income earned. Therefore, since apart from interest income from investments in loans and capital accounts of firms, the assessee has also received remuneration from f....
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....alance interest of Rs. 26,66,738/- had been set off against the remuneration of Rs. 80,00,000/- no disallowance under section 14A read with Rule 8D(2)(ii) would have been called for. Following the decision of the Coordinate Bench of this Tribunal in the case of Sudhir Dattaram Patil (supra), we delete the disallowance of Rs. 26,66,738/- made/confirmed under section 14A read with Rule 8D(2)(ii) in the impugned order. Accordingly, the assessee's appeal for A.Y. 2010-11 is allowed on this issue of disallowance under section 14A read with Rule 8D(2)(ii). 4.4.1 In respect of the disallowance under section 14A read with Rule 8D(2)(iii) made by the AO and sustained by the learned CIT(A) for A.Y. 2008- 09 (viz. Rs. 1,88,704/-), for A.Y. 2009-10 ....