AI Drafter 
TaxTMI 
TaxTMI 
2016 (10) TMI 1270
X X X X Extracts X X X X
X X X X Extracts X X X X
....4A read with Rule 8D amoungint to Rs. 12082774/- for earning exempted income. 2. That is the facts and in law of the case the Ld. CIT(A) erred in restricting the disallowance u/s. 14A to Rs. 8313550/- in violation of the calculation prescribed by Rule 8D of I. T. Act." 3. The assessee is a company it is engaged in the business of making investments earning commission income and dealing in shares. In the course of assessment proceedings u/s.143(3)of the Act. The AO noticed that the assessee had earned exempt dividend income of Rs. 83,13,550/- which is not chargeable to tax and is exempt. 4. In view of the provisions of Section 14A of the Income Tax Act, 1961 (Act), which lays down that any expenditure incurred in earning incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; 1,13,91,576 Rule 8D (2) (iii) ½ % of Rs. 13,82,39,781 6,91,198 Total 1,20,82,774....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellant's contention that provisions of section 14A are not applicable to the appellant company. It is submitted the disallowance u/s.14A cannot in case exceed the amount of dividend income earned during the year. Reliance is placed in this regard on the decision of Hon'ble ITAT, Chandigarh in case of ACIT vs. Punjab State Coop & Marketing wherein the Hon'ble Tribunal has held that disallowance u/s.14A cannot exceed the exempt income. Further, it is stated that in appellant's own case for A. Y.2009-10, the AO has vide his order u/s 143(3) dated 17.11.2011 restricted the disallowance u/s14A to the extent of dividend income earned. In support of this contention a copy of assessment order for A.Y.2009-10 is furnished for ready reference.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame are dismissed. 8. Ground no.3 raised by the Revenue read as under: "2. That is the facts and in law of the case the Ld. CIT(A) erred in allowing the interest on loan amounting to Rs. 862668/- which was not utilized for business purpose." 9. The AO disallowed interest expenses claimed by the assessee for the following reasons: "DISALLOWANCE OF INTEREST The assessee has debited Rs. 1,29,16,413/- secured loan and unsecured loan for Rs. 14,61,16,864/- and Rs. 3,95,67,216. Examination of balance sheet also shows investment in unquoted share for Rs. 57,51,120/- as per Sch. 5 and also loan and advance as per Sch,5 for Rs. 88,35,187/-. The assessee was asked to explain vide order sheet dated 08.02.2008 why inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses relied upon, perused the facts of the case including the findings of the AO in the impugned assessment order and other materials brought on record. The AO has made the disallowance of the interest paid towards the loan and advances on pro-rata basis on account of non use of the fund for the purpose of business of the appellant since no benefit derived the appellant during the year out of the said loan amount. However, in this regard, the AR of the appellant submitted that the main business of the appellant company is dealing in shares, leasing and finance in all kinds of goods and securities and making investments etc. During the year under assessment, the appellant company has purchased share of Apollo Tyres Ltd. sold shares of Sunlife....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring the submission of the appellant and the findings of the AO and perusing the entire facts of the case and keeping in view the principle of the judgments of the cases relied upon. I am of the view that the AO was not justified in making the impugned disallowance of the interest paid towards loan and advances on pro-rata basis by holding that the funds were not used for the business purposes of 3 appellant. It is seen that one of the main business activities of the appellant has dealing in shares along with leasing and finance in all kinds of goods and securities and making investments. Therefore, I agree with the contention of the appellant that the appellant company has not derived any benefit from the investment of shares in the releva....