TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 934
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.... the extent of Rs. 44,63,736/- made by the AO to the income of Appel lant by way of disal lowing proportionate Finance charges alleged to have been incurred relating to exempt income invoking the provisions of section 14A r.w. rule 8D. ii) The ld. CIT(A) failed to appreciate that:- (a) there is no reason and basis in reaching to dis-satisfaction with the correctness of the claim of the Appellant that no expenditure other than Demat charges ofRs. 93,692/- was incurred in relat ion to dividend income which does not form part of the total income; and (b) that the investment in shares are made out of own capital and the shareholders funds were more than investment in shares; and (c) the net result of interest account (i.e. received-paid) was surplus. iii) In reaching to the conclusion and confirming such addition the Id. CIT(A) omi t ted to consider relevant factors, considerations, principles and evidences whi le he was overwhelmed, inf luenced and prejudiced by irrelevant considerations and factors. The Appellant craves leave to add, alter, amend or delete any or all of the above grounds of appeal." 2. Briefly stated, the facts of the case are that the assessee compa....
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....the basis of his aforesaid observations assessed the total loss of the assessee at Rs. 7,41,93,010/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) observed that as the assessee was not maintaining separate books of account, therefore, its contention that no expenditure was incurred for earning of the exempt dividend income could not be substantiated. The CIT(A) further deliberating on the facts, observed that the assessee had invested towards purchase of shares from the mixed fund. It was further observed by the CIT(A) that the assessee had debited finance expenses of Rs. 51,21,392/- and administrative and other expenses of Rs. 14,47,542/- in its profit and loss account for the year under consideration. The CIT(A) in the backdrop of the aforesaid facts concluded that as the financial expenses incurred by the assessee were composite and indivisible, therefore, the A.O had correctly invoked the provisions of Section 14A(2) r.w. Rule 8D(2)(ii) and disallowed a proportionate amount of Rs. 44,63,736/- in respect of the interest expenses incurred on earning of the exempt income. The CIT(A) further observed that as the demat charges of Rs. 93,692/....
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....wer authorities had mechanically applied the provisions of Rule 8D, therefore, the Tribunal in all fairness had restored the matter to the file of the A.O for fresh adjudication. It was submitted by the ld. A.R that as the facts and the issue involved in the present case were the same as were involved in the case of the assessee for A.Y 2009-10, therefore, the matter may be restored to the file of the A.O with a direction to re-adjudicate the same. Per contra, the ld. D.R relied on the orders of the lower authorities. 7. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have perused the order passed by the coordinate bench of the Tribunal, viz. ITAT "A" bench, Mumbai in the assesse‟s own case for A.Y 2009-10, viz. M/s Krishiraj Trading Ltd, Vs. ACIT-6(2) (ITA No. 4014/Mum/2013, dated 02.03.2016) and are unable to persuade ourselves to be in agreement with the claim of the ld. A.R that the issues involved in the present appeal are squarely covered by the aforesaid order of the Tribunal. We find that in the aforesaid case the indulgence of the Tribunal was sought to adjudi....
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.... ITA No. 4014/Mum/2013, dated 02.03.2016, as relied upon by the ld. A.R, would not be of any assistance for adjudicating the issue as regards the validity of disallowance made under Sec. 14A r.w Rule 8D(2)(i) and 8D(2)(ii) in the case before us. 8. We now in the backdrop of the facts emerging from the record, advert to the validity of the disallowance of Rs. 44,63,736/- made by the A.O under Sec. 14A r.w Rule 8D(ii). We find that the A.O in the present case had disallowed the interest expenditure under Sec. 14A(2) r.w Rule 8D(2)(ii), by merely referring to the fact that the investment towards the exempt income yielding investments in shares was made from the mixed funds of the assessee. We are of the considered view that keeping in view the judgment of the Hon'ble High Court of Bombay in the case of Commissioner of Income-tax vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom), the A.O prior to arriving at the aforesaid conclusion, ought to have verified the availability of the owned funds with the assessee. We thus restore the issue pertaining to disallowance made by the A.O under Sec. 14A(2) r.w Rule 8D(2)(ii) to the file of the A.O for fresh adjudication. The A.O is directed to readjud....
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....was made by the AO, as per the rule prescribed in 8D. 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 10. We find that the revenue had assailed before us the order of the CIT(A) on the ground that he had erred in restoring the disallowance of Rs. 3,75,07,020/- made under Sec. 14A(2) r.w. Rule 8D(2)(iii) to the file of the A.O for fresh adjudication. We find that the assessee had averred before the CIT(A) that the administrative expenses of Rs. 13,53,850/- (excluding demat charges of Rs. 93,692/-) were not incurred for earning of exempt income. We find that the CIT(A) taking cognizance of the aforesaid claim of the assessee and further observing that the disallowance of Rs. 3,75,07,020/- made by the A.O under Sec. 14A(2) r.w. Rule 8D(2)(iii) was highly pitched, had thus restored the matter to the file of the A.O for making necessary verifications. We find that the CIT(A) while restoring the matter to the file of the A.O had directed him to verify the veracity of the claim of the assessee that expenses to the extent of Rs. 13,53,850/- were not related to earning of exempt income and were incurred wholly and exclusively for ....