2016 (7) TMI 1263

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..../2014. 2. In this appeal, the Revenue has raised the following Grounds of appeal:- 1. "Whether on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in deleting the interest expenditure disallowance of Rs. 47,50,382/-, towards earning exempt income" 2. "Whether on the facts and in the circumstances of the case and in law the Ld CIT(A) is justified in holding that the disallowance u/s 14A cannot be computed by applying Rule 80 by relying on the judgment of Bombay High Court in the case of M/s Godrej & Boyce Mfg. Ltd. vs. DCIT (2010) 3281TR 81 (Bom) without appreciating the fact that the Revenue has challenged the said decision and filed SLP" 3. "Whether on the facts and in the circumst....

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....f the Tribunal in ITA No.7116/Mum/2011 dated 7/9/2012, whereby the original disallowance made by the Assessing Officer was set aside. The Assessing Officer had made the disallowance under section 14A of the Act with respect to the element of interest expenditure based on the ratio of loans to total funds. This approach was based on the formula adopted in the preceding assessment year 2006-07. In assessment year 2006-07 also the Tribunal had remanded the issue back to the file of the Assessing Officer. In this manner, the Assessing Officer in the impugned order worked out the disallowance under |section 14A of the Act at Rs. 47,50,382/-, after considering the suo-motu disallowance worked out by the assessee. The CIT(A) however, deleted the a....

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....may, the plea of the assessee is that in any case, disallowance out of interest expenditure in terms of section 14A of the Act is not merited because all the investments are made in group companies and, further that the same were made out of internal accruals and non-interest bearing funds. The Ld. Representative for the assessee pointed out that the strategic investments are liable to be excluded for the purposes of computing the disallowance under section 14A of the Act, and even on this count disallowance out of the interest expenditure was not merited. On this plea, Ld. Representative for the assessee submitted that the matter may be verified by the Assessing Officer, inasmuch as, assessee had already canvassed such a position in the co....