TaxTMI 
TaxTMI 
2019 (9) TMI 803
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.... For this the assessee has raised various grounds i.e., from 1 to 6, which reads as under: "1) The learned Commissioner of Income Tax (Appeals) erred in holding that the provisions of Section 14A of the Act were applicable in the case of the Appellant, since the dividend from shares/units of mutual funds is subjected to tax in the hands of the payer under Section 115-O/ 115-Rof the Act and as the Appellant receives an amount after the tax has been paid, it cannot be said that such dividend income is not chargeable to tax under the Act and, consequent thereto, the provisions of Section 14A are not attracted. 2) The learned Commissioner of Income Tax (Appeals) erred in holding that interest expenditure on borrowings utilized for the purposes of the business activities of the Appellant was not allowable under Section 36(1)(iii) of the Act and in disallowing interest expenditure under Section 14A of the Act, as having been incurred towards the earning of exempt dividend income, in accordance with the provisions of sub-clause (ii) of clause 2 of Rule 8D. 3) Without prejudice to the Appellant's contention that no interest is allocable to the earning of exemp....
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.... not satisfied with the disallowancesuo motto made by the assessee and hence he invoked Rule 8D(2) of Rules. The AO made disallowance of direct expenses under rule 8D2(i) at Rs.0. The AO made disallowance under Rule 8D(2)(ii) of the Rules at Rs.2428.93 Lakhs and under Rule 8D2(iii) at Rs.538.02 Lakhs. Thereby, the AO disallowed under both under Rule 8D2(ii) and 8D2(iii) at Rs.2966.95 Lakhs. The AO allowed the benefit of already disallowance made by assessee at Rs.46.85 Lakhs. Thereby, the AO actually made addition on account of disallowance of expenses relatable to exempt income under rule 8D2(ii) and 8D2(iii) at Rs.2920.10 Lakhs.Aggrieved, assessee preferred an appeal before the CIT(A). 4. The CIT(A) directed the AO to re-compute the disallowance and the relevant directions are in para 7.4 of his order, which is as under: "7.4. In view of the above, the Assessing Officer is directed to recompute the disallowances made u/s.14A r.w.r 8D(2)(ii) & 8D(2)(iii) as under: A.Disallowance under Rule 8D(2)(ii) To calculate the average rate of investment by excluding from the total investments the following: (a) All investments the income from which are ....
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....ted the disallowance and has excluded certain investments based on the relevant facts for each Assessment Year, on the ground Thai the Hon'ble ITAT had given a finding that there were no borrowings attributable to investments in earlier years and consequent thereto, if such investments were still held by the Appellant Company in the current year, then no disallowance of interest expenditure was warranted on such investments. Along the same line of earlier years, the appellant has demonstrated that the investments of Rs. 6,804.16 lakhs made during the year under consideration was out of its net own available funds of Rs. 11,024.66 lakhs............................" 7. Clearly, the available interest free funds with the assessee i.e. the own funds are more than the investment made in the instrument giving rise to exempt income and investment is out of mixed funds. Hence, the presumption is in favour of assessee in view of the decision of Hon'ble High Court in the case of HDFC Bank Ltd. (supra). Hence, we find no infirmity in the order of CIT(A) and this issue of Revenue's appeal is dismissed. 8. As regards the ground raised by assessee relating to disallowance of administra....
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....Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in disallowing a sum of Rs. 1,16,125/- being the amortization of the premium paid for Leasehold land." 11. As regards to the said ground, it is observed that the issue involved therein relating to disallowance amounting to Rs. 1,16,125/- made by the A.O. and confirmed by the CIT(A) on account of amortization of premium paid by the assessee for leasehold land is squarely covered against the assessee by the orders of the Tribunal in assessee's own case for earlier years i.e. A.Ys. 2006-07 to 2010-11. Respectfully following the said orders of the Tribunal, we confirm the disallowance made by the A.O. and sustained by the CIT(A) on this issue and dismiss ground No. 7 of the assessee's appeal. This issue of assessee's appeal is dismissed. 12. The next common issue in these cross appeals is as regards the order of CIT(A), deleting the addition of un-utilized CENVAT Credit of Rs. 2,17,32,640/- by directing the AO to recast the accounts of excise duty and other taxes. For this Assessee has raised the following ground No. 8: - "The learned Commissioner of Income Tax (Appeals) erred in....