AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 1415
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.... present case. (ii) On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of expenses of Rs. 15,00,632/- claimed on earning of interest income on which no expense is admissible. (iii) On the facts and circumstances of the case, the Ld. CIT(A) has erred in restricting the deemed House Property income at R.4,20,000/- without any logic or on the basis of any documents instead of Rs. 8,40,000/- determining on the basis of report of Departmental inspector. (iv) The appellant craves leave to add, alter or amend any ground before or at any time of hearing." Shri Arinram Bhattacharjee, Ld. Departmental Representative appeared on behalf of Revenue and Shri Paras Nath Kehari, Ld. Authorized Representative appeared on behalf of assessee. 2. First issue raised by Revenue in ground No.(i) is that Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for Rs. 74,75,470/- u/s 14A r.w.r. Rule 8D of the Income Tax Rule, 1962. 3. Briefly stated facts are that assessee is an individual derived her income from investment in shares, debentures, government securities etc. The assessee during the year has ear....
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....nditure for the purpose of disallowance u/s.14A/Rule 8D even though there is positive interest income of Rs. 3,99,83,557/-.The AO has been swayed by the assessment 2011-11 which has been reproduced partly in para 2.1.1 of the present assessment order. The CIT(A)-XX has already decided on similar fact in 2010-11in favour of the appellant. Following the said appellate decision in assessment year 2010-11 the ground in respect of Rule 8D(2)(ii) & 8D(2)(iii) is allowed." The Revenue, being aggrieved, is in appeal before us. 5. Ld. DR before us vehemently relied on the order of AO whereas Ld. AR for the assessee filed paper book which is running pages from 1 to 99 and submitted that the own capital of the assessee is exceeding the amount of investment made in equity shares as well as in Public PF fund. He in support of assessee's claim drew our attention on the audited balance-sheet of assessee which is placed on page 29 of the paper book. Ld. AR further stated that the investment in equity shares and PPF was made in earlier year. It was also submitted that no satisfaction has been recorded by the AO while invoking the provision of u/s. 14A of the Act. The ld. AR also submitted tha....
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.... 319 wherein it was held as under:- "9.In the case before us, there is no dispute that part of the income of the assessee which such shares were acquired. 10. In our opinion, the mere fact that those shares were old ones and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan even for instance/ five or ten years ago/ it is for the assessee to show by the production of documentary evidence year; no interest is payable by the assessee for acquiring those old shares. In the absence of any such materials placed by the assessee/ in our opinion/ the authorities total income and the income from the exempt source. In the absence of any material the assessee, the assessing authority took a most reasonable approach in assessment. There is no presumption- provided in the Income tax Act,. 1961 that if the assessee has that the exempt income is out of its own funds. Rule 8D(2)(ii) of the I.T. Rules, 1962 income or receipt then the interest has to be calculated as per formula p....
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....00/- disallowance already made by the appellant in its return for the purpose of Section14A.Thus, irrespective of the merit Rs. 15,00,6432/- amounts to double addition by the said amount as the AO disallowed R.26,48,587/- u/s.14A/Rule 8D(2)(iii) and the appellant had already made addition u/s.14A of R.15,00,000/-. This addition, therefore, cannot be sustained. The ground in respect of the above amount is allowed." We respectfully following the consistent view of the Tribunal decline to interfere in the order passed by the Ld. CIT on this account. Accordingly, the ground taken by the Revenue is partly allowed for statistical purposes. 8. Next issue raised by Revenue in Ground No. (ii) in this appeal is that Ld. CIT(A) erred in deleting the disallowance made by the AO for Rs.15,00,632/- on account of no business activity. 9. The assessee, during the year has shown interest income under the head "business". The assessee against such business income has claimed an expense of Rs.41,49,219/- only. However, the AO was of the view that interest income of the assessee should be classified under the head "income from other source". Therefore, no such business expenses should be allo....
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.... Thus, total expenses disallowed by AO comes to Rs.41,48,587/-. Thus, in our considered view further disallowance of Rs.15,00,632/- will lead to the double addition in the hands of assessee. Moreover, the amount of disallowance cannot exceed the actual expense claimed by assessee in its income tax return. In this view of the above matter, we do not find any infirmity in the order of Ld. CIT(A). We uphold the same. Consequently, the ground raised by Revenue is dismissed. 13. Next issue raised by Revenue in Ground No.(iii) is that Ld. CIT(A) erred in restricting the addition made by the AO for Rs.8.40 lakh to Rs.4.20 lakh only. 14. During the course of assessment proceedings, AO observed that assessee was the owner of five shops but no rental income was shown in respect of such properties under the head "income from house property". Thus, the AO deputed an Inspector of Department to ascertain the market value of rent of this property who in turn submitted that the fair market value of rent is Rs.20,000 per month per shop. Thus, the AO determined the fair market value of rent of all the shops for Rs.12 lakh per annum. The AO against the fair market value of rent has allowed d....