2017 (10) TMI 1287

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....er of the Ld.CIT(A) in not deleting the entire disallowance made under section 14A r.w. Rule 8D by the Assessing Officer and the Revenue in its appeal is challenging the order of the Ld.CIT(A) in restricting the disallowance u/s. 14A r.w. Rule 8D to Rs..5,10,610/- as against Rs..26,98,662/- made by the Assessing Officer. 3. Briefly stated the facts are that, the Assessing Officer while completing the assessment noticed that assessee received dividend income of Rs..1,83,500/- and claimed this as exempt income. However, he noticed that assessee debited interest and bank charges to the Profit and Loss Account at Rs..1,76,16,357/-. The assessee was required to explain as to why provisions of section 14A r.w. Rule 8D should not be invoked. As....

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....owed funds for investments, Ld.CIT(A) recomputed the disallowance under section 14A at Rs..5,10,601/- i.e., u/s. Rule 8D(2)(i) at Nill, Rule 8D(2)(ii) at Rs..3,42,870/- and Rule 8D(2)(iii) at Rs..1,67,731/- agreeing with the contention of the assessee that bank charges of Rs..26,98,662/- were relating to over draft, D.D charges etc., and not incurred in connection with investments in shares. Therefore, the same should not be considered for the purpose of disallowance u/s. 14A r.w. Rule 8D. Further, Ld.CIT(A) observed that the Assessing Officer wrongly taken the total value of investment on the first and last day of the previous year as against average values for the purpose of computing the disallowance under Rule 8D(2)(ii). Thus he recompu....

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....e facts and circumstances of the case, the Hon'ble ITAT is justified in law to hold that the disallowance made under section 14A read with Rule 8D cannot exceed the exempt income, in the absence of any such restriction being there in the relevant section or rule?" The Hon'ble High Court affirmed the order of the ITAT in holding that the disallowance u/s. 14A r.w. Rule 8D as worked out by the Assessing Officer is not in accordance with law for the reason that Assessing Officer has disallowed entire tax exempt income and this is not permissible in view of the judgment of the Hon'ble Delhi High Court. 9. The Hon'ble Delhi High Court in the case of Joint Investment Private Limited in ITA.No. 117/15 dated 25.02.2015 held that b....