2016 (8) TMI 1415

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..../- in the assessment year 2006-07 & 2007-08, respectively u/s.14A of the I.T.Act. 3. Rival contentions have been heard and record perused. Facts in brief are that in the assessment year 2006-07 the assessee had claimed exemption of Rs. 1,11,25,000/- being tax-free interest on bonds, in its Return of Income. The assessee out of abundant caution had offered Rs. 81,28,000/- being interest allocated in respect of the disallowance u/s 14A of the Act. During the course of original assessment proceedings, the assessee submitted that that the suo-moto disallowance amounting to Rs. 81,28,000/- was made on a conservative basis and that there should be no disallowance u/s.14A of the Act. The assessee further submitted that its net worth i.e. capita....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d. Now, the assessee is again in appeal before us. 5. We have considered rival contentions and deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by ld. AR and DR during the course of hearing before us. From the record we found that at the time of filing the return of income for A.Y.2006-07, the decision of Tribunal in assessee's own case for A.Y.2001-02 to 2005-06, ITA No.4529/Mum/2005, was not available and hence on a conservative basis, suo moto disallowance of proportionate interest was made u/s.14A by the assessee in the computation of income. The ITAT vide order dated 29-6-2011, deleted the disallowance of interest u/s.14A on the ground that where interest free funds....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e offered by the assessee in the return of income can be deleted/reduced by the ITAT, ld. AR relied on the decision of the Mumbai ITAT in the case of TATA Industries Ltd. V. ITA (ITA No. 4894/Mum/2008]. 8. We had carefully gone through the order of tribunal in the case of TATA Industries Ltd. V. ITO (ITA No. 4894/Mum/2008), wherein Tribunal has allowed similar claim by following the decision of Hon'ble Bombay High Court in the case of Pruthvi (supra). In the said case, the assessee had suo moto disallowed an amount of Rs. 39 crores u/s. 14A of the Act. The assessee had received exempt income of Rs. 6.16 crores. The AO made further disallowance in the assessment order which was upheld by CIT(A). However, during the course of proceedin....