2017 (8) TMI 660

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....tion made on account of disallowance of Rs. 12,00,781/- u/s 14A r.w Rule 8D. 2. On the facts and in the circumstances of the case, and in law, whether the ld. CIT(A)-I, Thane was correct in deleting addition made on account of disallowance of Rs. 26,54,640/-" 3. The brief facts relating to ground no.1 is that during the course of assessment proceedings, the Assessing Officer noted that the assessee has earned dividend income amounting to Rs. 15,49,833/- during the impugned assessment year, which was claimed by the assessee to be exempt. However, the Assessing Officer disallowed proportionate expenditure of Rs. 17,98,642/- u/s 14A read with Rule 8D. Aggrieved the assessee preferred appeal before the CIT(A). The CIT(A) made no dis....

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....learly indicates that the investments in the shares and mutual funds have been made, not from the borrowed funds but from its own sources by the company. The appellant company has substantial surplus funds and it is proved by the bank fixed deposits of the company, which are at Rs. 2865.29 lakhs and the accumulated profits at Rs. 2447.49 lakhs as on 31.03.2009. All these facts mentioned above prove that the company has enough surplus funds for investment in the shares and mutual funds and has not borrowed any funds for these investments. Therefore, there is no question of paying any interest on borrowed funds for investments in these stocks. As a consequence, the application of the provisions of Rule 8D(ii) in this case is misplaced. ....

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....ed decision of my predecessor is equally applicable to the appellant's case for the year under consideration. Therefore, relying on the order of my predecessor and considering the facts of the case, it is held that no disallowance was called for in terms of Rule 8D(2)(ii) and disallowance is restricted to Rs. 5,97,8617- being 0.5% of the total investments in terms of the provisions of Rule 8D(2)(iii) of the I.T. Act. The AO is directed accordingly." 3. We have heard the rival submissions and have carefully considered the same. The learned DR even though vehemently relied on the order of the Assessing Officer could not produce before us any material or evidence, which may compel us to reverse the findings of the CIT(A). The CIT(A) has....