TaxTMI 
TaxTMI 
2017 (9) TMI 243
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....nds inter alia that :- "ASSESSMENT YEAR 2001-02 1. Whether on the facts and circumstances of the case & in law, the Ld. CIT (A) erred in deleting the disallowance to Rs. 90,32,506/- made by the AO in the denovo assessment as per directions of Hon'ble IT AT in its order dated 16.02.2012? 2. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in travelling beyond the specific direction given by the Hon'ble ITAT in its order dated 16.02.2012? 3. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the disallowance amounting to Rs. 90,32,506/- made by the AO by adjudicating upon an all together new ground of appeal which was never raised by the assessee in earlier two assessment proceedings, earlier two appellate proceedings before the CIT(A) and earlier two appellate proceedings before the Hon'ble IT AT in respect of assessments and reassessments framed earlier for the A.Y. 2001-02? 4. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the disallowance amounting to Rs. 90,32,506/- made by the AO disregard....
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....rlier original assessment proceedings and earlier appellate proceedings before the CIT (A) and earlier appellate proceedings before the Hon'ble ITAT in respect of assessment framed earlier for the A.Y. 2006-07? 4. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in ignoring the fact that the source of investment is not a relevant factor even in the method of determining disallowance under rule 8D after its insertion subsequently. Therefore, the same cannot be taken into account for calculating disallowance u/s 14A for pre rule 8D period. Thus the view taken by the CIT (A) is against the legislative intent? 5. Whether on the facts and circumstances of the case & in law, while granting relief on the issue of disallowance u/s 14A,t he ld. CIT (A) has erred in travelling beyond the specific direction given by the Hon'ble ITAT in its order dated 16.02.2012? 6. That the order of Ld. CIT (A) is erroneous and is not tenable on facts and in law. 7. That the grounds of appeal are without prejudice to each other. 8. That the appellant craves leave to add, alter, amend or forego any ground(s) of the appeal raised....
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....ailed of other loans on interest @ 5% to 9.25% and paid the total interest to the tune of Rs. 3,09,26,161/- during the year under assessment. AO also noticed that the borrowed funds have been utilized in the mutual funds and shares attracting exempt income. Finding the justification furnished by the assessee not tenable for borrowing the funds at higher rate and advancing its own funds at lower rates, AO disallowed the portion of interest expenditure as deduction by the assessee to the tune of Rs. 2,36,09,070/- and made addition thereof to the total income of the assessee. However, ld. CIT (A) restricted the addition to Rs. 70,69,155/- 6. The assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has partly allowed the appeals in both the assessment years. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A) by filing the appeals in AYs 2001-02 & 2006-07 and the assessee filed the cross objections challenging the impugned order for AY 2006-07. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders pas....
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....ee fund of Rs. 35,00,00,000/- in AY 2006-07; that section 14A read with Rule 8D is not attracted in case of the assessee; that in case of mis-pool of the funds, presumption has to be drawn in favour of assessee; that in AY 2006-07, the assessee has only earned dividend income to the tune of Rs. 3,53,647/- by investing an amount of Rs. 88,00,00,000/- as few investments were not earning any dividends. 12. So far as deletion of addition of Rs. 90,32,506/- qua AY 2001-02 is concerned, undisputedly, only amount of expenditure incurred for earning exempt income, namely dividend in this case can be disallowed u/s 14A of the Act. The fact that the assessee has made investment out of its own free reserves viz. share capital and reserves & surplus on which no interest was being paid by the assessee is also not in dispute. When we peruse the availability of funds with the assessee company as on 31.03.2001 in the light of its investment, it goes to prove that the assessee has made total investment for earning exempt income during the year under assessment was Rs. 9,04,03,525/- as against the total investment of Rs. 33,65,81,747/-. Assessee was having own funds of Rs. 34,44,42,623/- which ar....
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....Capital + Reserves & Surplus) Rs.445,363,733 F Interest bearing loan amount used for long term investments (other than trade) i.e. to earn exempted income (F-E) RS.353,274,483 G Net Interest Paid Rs. 23,609,070 H Total Unsecured Loan Interest attributable to long term investments disallowable u/s 14A G*F / H Rs.573,061,763 Rs. 7,069,155 15. Ld. CIT (A) has picked up the amount of Rs. 35,32,74,483/- from the balance sheet as free reserves available with assessee and granted relief thereon by restricting the disallowance to Rs. 70,69,155/-. However, the ld. AR for the assessee contended that in case of mispool of funds, presumption must have been drawn in favour of the assessee and filed cross objection against the part addition sustained by ld. CIT (A). No doubt, by invoking theory of presumption, no addition can be made. When the assessee has earned dividend income to the tune of Rs. 3,53,643/- only by investing an amount of Rs. 88,00,00,000/- it needs to be worked out as to whether dividend income has been earned by the assessee from the investment made out of tax free fund as contended by ld. AR for the assessee or from the borrowed fund. 16. N....