TaxTMI 
TaxTMI 
2018 (11) TMI 1318
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....'Act'), dated 02.07.2014. 2. The grievances raised by the assessee are as follows: "1. In the facts and circumstances of the case, the ld. Commissioner of Income tax(Appeals) has erred in confirming disallowance of Rs. 6,25,975/- made u/s 14A of Income-tax Act, 1961 despite the fact that the appellant did not claim any direct or indirect expenditure with reference to investment made. 2. In the facts and circumstances of the case, the ld. Commissioner of Income-tax (Appeals) has erred in deciding the appeal ex parte without giving adequate and reasonable opportunity of being heard. 3. The appellant reserves the right to add, amend, alter and omit all or any of the grounds of appeal with permission of the Hon'ble Appellate Authority." ....
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....A of I.T. Act read with Rule 8D of I.T. Rules was made by assessing officer as follows : "The total amount of disallowance s.14A read with Rule 8D of I.T. Rules (i) Direct expenditure : Nil (ii) Disallowance of interest (A X B / C) : Nil Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year is Nil. B= the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year (Rs, 12,51,95,000/-) [(Rs, 13,28,90,000/- + Rs. 11,75,00,000 / 2] ; C = the average of total assets as appearing in the balance....
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....involved in the present appeal is no longer res integra. The only issue in this case is disallowance of Rs. 6,25,975/- made by the AO u/s 14A read with Rule 8D (2) (iii). It is not disputed that the assessee has substantial investments and has received tax free income. The AO has made no disallowance under rule 8D(2)(i) and Rule 8D(2)(ii) of the Income Tax Rules. So far disallowance under rule 8D (2) (iii) is concerned, we note that Coordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT 144 ITD 141 (Kol-Trib) has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(iii) of the Rules. The afo....