TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1592
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....nterest and after netting off the interest paid and interest received,the resulted amount is net interest income, so no disallowance is warranted under Rule 8D (2) (ii) of the I.T. Rules, and disallowance under Rule 8D(2)(iii) should be computed by taking into account only dividend bearing securities. (ii) The CIT(A) erred in not allowing TDS credit to the tune of Rs. 60,004/- on mobilization advance and not entire contract receipts were received in the relevant Assessment Year. 3. Now, we shall take first grievance of the assessee, which relatesto disallowance made by the Assessing Officer and confirmed by the ld. CIT(A) u/s 14A read with rule 8D to the tune of Rs. 3,61,302/-, which is bad in law, as the assessee paid interest and received interest and after netting off the interest paid and interest received, there is net interest income, and disallowance under Rule 8D(2)(iii) should be computed by taking into account only dividend bearing securities. 4. The brief facts qua the issue are that during the assessment proceedings, the Assessing Officer noted thatthe Assessee has claimed Dividend Income to the tune of Rs. 5,91,832/- being exempt u/s 10(34) and 10(35) of the lncome ....
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....stments 0.5% of Rs. 3,80,09,828/- Rs. 1,90,049/- Aggregate of (i) + (ii) +(iii) 0+Rs.1,71,253 + Rs. 1,90,049 =Rs.3,61,302/- Hence, an amount of Rs. 3,61,302/- was treated by the AO as expenditure incurred for earning exempt income and the same was added u/s 14A of the Act. 6. On appeal by the assessee, the ld. CIT(A) confirmed the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. The ld. Counsel for the assessee submitted before us that in order to make the disallowance under Rule 8D(2)(ii) r.w.s 14A, there should be interest expenditure debited in the Profit & Loss Account. During the assessment year under consideration, the assessee has received interest and paid interest and after netting off the interest paid and interest received, the net result comes as interest income, therefore, no disallowance should be made under Rule 8D(2)(ii) of the I.T. Rules. With regard to disallowance under Rule 8D (2) (iii) of the I.T. Rules, the ld Counsel submitted that only those investments which yield dividend income during the relevant assessment year, should be considered. 7. On the other hand, the ld. DR for the Reve....
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....nterest debited can be disallowed as attributable to earning tax free dividend. The CIT(A) was thus quite justified in deleting the interest disallowance. We have also noted that entire expenses incurred by the assessee have been offered for disallowance, and once that happen, nothing remains for further disallowance u/s. 14A. The disallowance under section 14A can come into play only out of expenses claimed for deduction and expenses have been claimed for deduction, there cannot be any disallowance either. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A)." 9. With regard to the disallowance of Rs. 1,90,049/- under Rule 8D (2) (iii) is concerned, we are of the view that only those investments which yielded the dividend income during the relevant assessment year, should be considered for the purpose of disallowance. For that we rely on the judgment of the Coordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT 144 ITD 141 (Kol-Trib), wherein it was held that it is only the investments which yields dividend during the previous year that has to be considered while adopting ....
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....sessing Officer. Aggrieved by the order of ld CIT(A), the assessee is in appeal before us. The ld. counsel for the assessee has submitted before us that theassessee received a mobilization advance of Rs. 26,48,000/- and out of such advance, an amount of Rs. 6,00,000/- was offered to tax by the assessee, thereforethe proportionate credit of TDS should be given to the income offered. Section 199 of the Income Tax Act clearly provides that whenever the assessee offered income, the TDS credit has to be given to the assessee, therefore, proportionate TDS credit should be allowed in the assessment year under consideration and the balance TDS credit in relation to remaining sum of Rs. 20,48,000/- (that is, Rs. 26,48,000 - Rs. 6,00,000) should be allowed in subsequent years. 13. On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 14. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that assessee has received a mobilization advance of Rs. 26,48,000/- from the con....