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2018 (5) TMI 505

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.... (Act). 2. Case called twice. None appears at assessee's behest. It is accordingly proceeded ex parte. 3. The learned Departmental Representative vehemently contended during the course of hearing that the CIT(A) has erred in law as well as on facts in deleting the impunged disallowance. He takes to the CIT(A)'s detailed discussion on the issue reading as under :- "4. The second, third, fourth and fifth grounds of appeal are against the disallowance of interest of Rs. 43,21,772/ - and expenses of Rs. 14,75,525/- u/s 14A of the Act read with Rule 8D. The AR of the appellant furnished a written submission in which it was stated that expenses including interest of only Rs. 82,83,964/- had been claimed as against which, interest income of Rs....

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.... law. On these facts also the appellant submits that the disallowance of Rs. 57,97,297/ - be deleted. The appellant therefore submits that the disallowance made by the AO under section14A ex-facie in excess of the expenditure actually incurred and claimed as deduction in arriving at the profits of the business. The appellant submits that the disallowance under Sec. 14A cannot exceed the actual claim of the assessee for the expenditure. The term "disallowance" in itself. means to disallow something what is claimed to be allowed. The AO cannot notionally assume and disallow imaginary expenditure which has never been incurred by the assessee. Section 14A of the Income-tax Act, 1961 read as follows: "For the purposes of computing the tota....

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....tion and expenses have been claimed for deduction, there cannot be any disallowance either. The conclusions arrived at by the CIT(A) are, therefore correct alld admit no interference by us. We, approve and confirm the order of the CIT(A). " Similar view has also been expressed by the co-ordinate benches of Income-tax Appellate Tribunal at Delhi & Mumbai in the cases of Gillette Group Income Pvt. Ltd(ITA No. 267/ Del/2012) and Search Enviro Ltd(ITA No. 3464/ Mum/2011) respectively. Copies of these judgements are enclosed. In view of the foregoing the appellant submits that the disallowance computed by the AO under Section 14A read with Rule 8D was grossly unjustified and bad in law. The very fact that the disallowance computed under Rul....

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....der Rule 8D(2)(ii) over and above the isallowance made by the appellant on the basis of the gross interest claim of Rs. 80,03,552/-. It is the stand of the appellant that only net interest expenditure should be the basis of the disallowance. In the appellant's own case in ITA No.1277 /Kol/2011 for the A.Y. 2008-09, the Hon'ble ITAT, Kolkata has held in its order dated 30.03.2012 that there cannot be any disallowance under section 14A. The same view has been taken by Hon'ble ITAT, Kolkata in its order dated 06.03.2013 in ITA No. 1682/Kol/2011 in the case of Biswanath Pasari v ACIT, Circle-34, Kolkata after referring to the above decision andthe judgement of Hon'ble Calcutta High Court in the case of ISG Traders Ltd. v CIT(200....