TaxTMI 
TaxTMI 
2018 (9) TMI 1405
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..../2012, 1857&5763/Mum/2013: The grounds raised by the department in all these appeals are common. The first common issue in ground nos. 1 & 2 of the aforesaid appeals relate to disallowance made of different amounts u/s. 14A read with rule 8D (2)(ii). Since, the facts relating to this issue are common in all the assessment years under appeal, except, the quantum, for the sake of convenience, we shall deal with the facts as involved in ITA No.4417/Mum/2012 for A.Y. 2008-09. 3. Brief, facts are the assessee - a company, is engaged in manufacture and trading of electrical goods. For the assessment year under dispute assessee filed its return of income on 30.09.2008 declaring total income at Nil under the normal provisions after set-off of b....
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....ingly, applying the methodology prescribed under Rule 8D he disallowed interest expenditure of Rs. 2,02,13,803/- under Rule 8D(2)(ii) and administrative expenditure of Rs. 21,26,124/- under Rule 8D(2)(iii), total disallowance aggregating to Rs. 2,23,39,927/-. However, the Assessing Officer allowed exemption in respect of dividend income of Rs. 19,82,960/-. Being aggrieved of disallowance made u/s. 14A read with Rule 8D, assessee preferred appeal before the CIT(A). 4. The learned CIT(A) after considering the submissions of the assessee in the context of fact and material available before him, observed that as against surplus interest free funds available with the assessee to the tune of Rs. 398.79 crore, the investments made by the assessee....
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.... demonstrate availability of interest free surplus funds with the assessee, the learned AR drew our attention to a chart indicating the surplus interest free funds available from A.Y. 1992-93 to A.Y 2008-09. He submitted, the investments on which assessee has earned exempt income during the year were made in A.Y. 1993-94 and in that assessment year also the assessee had sufficient interest free funds available with it to make investment. Thus, the learned AR submitted, learned CIT(A)'s decision to delete the disallowance of interest expenditure made under Rule 8D(2)(ii) is in consonance with the ratio of decision laid down by the Hon'ble Jurisdictional High Court in the case of CIT vs. Reliance Utilities Ltd (supra) and CIT vs. HDFC Bank Lt....
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..... 2008-09, each year assessee had sufficient interest free funds available with it, which is more than the investments made. Therefore, applying the ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT vs. Reliance Utilities Ltd (supra) and CIT vs. HDFC Bank Ltd.(supra), no disallowance of expenditure can be made under Rule 8D(2)(ii). That being so, we do not find any infirmity in the decision of the learned CIT(A) in deleting the disallowance made under Rule 8D(2)(ii) read with section 14A of the Act. This ground is dismissed. 8. The common issue raised in ground no.2 of all these appeals is with regard to applicability of section 14A read with Rule 8D while computing book profit u/s. 115JB of the Act. Briefly, fact....