TaxTMI 
TaxTMI 
2018 (6) TMI 958
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.... to AO, related interest expenses ought to have been disallowed by the assessee in accordance with the provisions of sec. 14A of the Act read with Rule 8D(2)(ii) of the Rules. But on examination, the AO found that the disallowance of interest expenses made by the assessee was not in conformity with Rule 8D(2)(ii) of the Rules. Hence, he determined the related interest expenditure u/s. 14A of the Act at Rs. 3,91,07,732/- against the interest expenditure claimed by assessee at Rs. 37,56,87,038/- and accordingly, added back to the returned income of the assessee. The AO also disallowed expenditure under Rule 8D(2)(iii) of the Rules @ .5% of average value of investments of Rs. 102,47,40,000/- i.e. Rs. 51,23,700/-. Accordingly, the AO made the total disallowance at Rs. 4,43,94,734/- and deducted the amount added back by assessee at Rs. 1,63,302/-, therefore, total disallowance comes to Rs. 4,42,31,432/-. Aggrieved, assessee preferred appeal before the Ld. CIT(A), who deleted the addition by following decision of ITAT in assessee's own case for AY 2008-09 and deleted the disallowance made under Rule 8D(2)(iii) of the Rules by following the Hon'ble Delhi high Court decision in the case of....
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....Rs. 10.67 crores and sufficient free reserves of Rs. 123.67 crores as on 31.3.2007 and Rs. 137.99 crores as on 31.3.2008, but whereas the total investments as on 1.4.2007 was ITA No.2009-2010/Kol/2014 A.Ys. 2010-11 & 201-12 DCIT Cir-4 Kol. Vs. M/s Jay Shree Tea & Inds. Ltd. Page 4 Rs. 105.86 crores and as on 31.3.2008 was Rs. 94.68 crores. We find that the ld. CIT(A) had given relief after going through the copy of the agreement of consortium of the banks and sanction letters of the banks submitted by the assessee that the loan was sanctioned for the purpose of working capital and purchase of fixed assets. We hold that the assessee has got sufficient own funds to make the investments and when that point is not in dispute, no disallowance could be made u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules. Reliance in this regard is placed on the following decisions:- CIT-vs.- Reliance Utilities & Power ltd. reported in 313 ITR 340 (Bom.) Interest on borrowed capital- investments by assessee- finding that investments were from interest free funds available with assessee-borrowed capital for the purposes of business-interest deductible under Income Tax Act u/s 36(1)(iii). G.....
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....rdinate Bench rendered in A.Y. 2008-09 and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of proportionate interest under Rule 8D(2)(ii). Ground No. 1 of the Revenue's appeal is accordingly dismissed." Respectfully following the decision of co-ordinate Bench in assessee's own case (supra) as there was no change in the facts of the case. We uphold the impugned order of the Ld. CIT(A). Hence, AO is directed accordingly. This ground of Revenue's appeal is dismissed." Respectfully following the decision of Coordinate Bench cited supra and since there is no change in facts or law in the present case, we uphold the impugned order of the Ld. CIT(A) in deleting the addition as made by the AO under Rule 8D(2)(ii) of the Rules. However, coming to Rule 8D(2)(iii) of the Rules, we note that assessee had earned exempt income to the tune of Rs. 1.53 cr. However, the Ld. CIT(A) erred in relying on Hon'ble Delhi High Court decision in Holcim India Pvt. Ltd. wherein it was held that when there is no exempt income, no disallowance u/s. 14A of the Act is called for. Therefore, we set aside the order of Ld. CIT(A) on this issue a....
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....preciation on plant and machinery and other business assets purchased out of amount withdrawn from the credit available with NABARD. Briefly stated facts as observed by the AO are that the assessee company had withdrawn amounts from NABARD in earlier years and out of those amounts it purchased plant and machineries and other business assets. The AO as has been done in earlier years, 40% of the depreciation of Rs. 14,43,103/- claimed on plant and machineries and other assets purchased out of NABARD withdrawals was disallowed and added back for taxation. Aggrieved, assessee has preferred an appeal before the Ld. CIT(A), who directed to delete the addition by following the Coordinate bench decision in assessee's own case in ITA No. 684/Kol/2012 dated 02.02.2013. Aggrieved, revenue is before us. 8. We have heard rival submissions and gone through the facts and circumstances of the case. We note the issue is squarely covered in favour of the assessee by the decision of Hon'ble jurisdictional High Court in assessee's own case vide GA No. 687 of 2013, ITAT 63 of 2013 dated 17.06.2013 wherein the Hon'ble High Court has observed as under: "Having regard to the law, we are of the view tha....
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.....s 8D(2)(ii) of IT Rules. In this regard, we find that various courts has held that the disallowance made under the normal provision u/s.14A of the Act cannot be imported or cannot be equated to the disallowance made u/s. 115JB of the Act. It is because the provisions of MAT are self-contained code and begins with non-obstante clause. Therefore it has no relation with other provision of the Act. Indeed, the impugned issue of assessee is covered in its favour in assessee's own assessment in ITA No.684/Kol/2012 for AY 2008-09 dated 08.02.2013 and there is no dispute with regard to that. However subsequent to the ITAT order in the own case of the assessee, the Hon'ble jurisdictional High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 has held that the disallowance in relation to exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- "we find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be N....