2014 (2) TMI 1264

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... computation of total income." 2. "The learned CIT(A) has further erred in overlooking the fact that the disallowance made u/s. 14A r.w.r. 8D of Rs. 2,21,83,000/- has been correctly computed by the AO relying on the guidelines issued by the Bombay High Court in the Godrej & Boyce Mfg. Co." The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal. Assessee company, engaged in the business of manufacturing and export of textile and other goods, filed its return of income on 29.09.2008, declaring total income of NIL and a book profit of Rs. 4,17,94,945/-. Subsequently, a revised return was filed on 30-09-2009.On 29.12.2010. AO finalized the assessment, u/s.143(3) of the Act, determining the income of t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....vered in assessee's own case for A.Yrs.2006-07 & 2007-08, he directed the AO to delete the addition made. 2.2. Before us, Departmental Representative(DR)supported the order of the AO. Authorized Representative(AR)submitted that expenditure was incurred by the assessee for earning tax free income, that in its computation of income, a sum of Rs. 7,89,633/- was already disallowed by the assessee-company, that the investments were made by the assessee entirely out of its own interest free funds, that no further disallowance out of the interest expenses was called for, that as per the balance sheet of the assessee as on 31.03.2008 the shareholder's fund, in the form of share capital, was Rs. 1286.11 lacs, that the Reserve and Surplus amountin....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....onsidered the rival submissions and perused the relevant material on record. As demonstrated by the learned counsel for the assessee from the balance sheet of the assessee company on 31^st, March, 2006, shareholders'fund in the form of share capital and reserve and surplus aggregating to Rs. 71.16 crores were available with the assessee company as on 31st, March, 2006. Out of the reserves and surplus, revaluation reserves was to the extent of Rs. 10.41 crores whereas remaining reserves available to the assessee to the extent of Rs. 47.89 crores were free reserves. Thus own funds to the extent of Rs. 60.75 crores were available with the assessee company at the relevant time which were more than the investment of Rs,57.64 crores made in the s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ranted. It is also observed that the AO himself did not make disallowance u/s l4A on account of interest expenditure in assessee's own case for assessment year 2005-06 in the assessment completed u/s 143(3) vide an order dated 20-12- 2007 holding that the assessee having sufficient shareholders' fund including internal accruals to make investments in shares and securities, no disallowance u/s 14A was called for. We, therefore, hold that the disallowance made by the AO and confirmed by the learned CIT(Appeals) on account of interest expenditure u/s.14A is not sustainable and delete the same. 8.As regards the disallowance of Rs. 27,93,160/- made by the AO and confirmed by the learned CIT(Appeals)on account of administrative expenses u/s.14A, ....