2019 (3) TMI 1666

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....e revenue has raised the following grounds of appeal: i) "On the facts, and in the circumstances of the case, the Ld. CIT-(A) erred in directing the AO to exclude the investments made by the assessee in Garware Chemicals Ltd. While computing the disallowance of u/s. 14A read with Rule 80 of the I. T. Rules, 1962." ii) "On the facts, and in the circumstances of the case, the Ld. CIT-(A) erred in deleting the disallowance of interest expenses without appreciating that sub-rule 80(iii) starts with heading "Formula for determination of expenditure" and the three steps under this sub-rule to compute the expenditure in relation to exempt income and shall be applied collectively. Therefore, the total disallowance u/s. 14A has to be the ag....

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....m/2015, 2208/Mum/2014 & 31/Mum/2015 dated 27.12.2018. The ld. AR of the assessee furnished a tabulated chart narrating the grounds of appeal covered either in favour of assessee or against the revenue and copy of decision of Tribunal dated 27.12.2018 for Assessment Year 2008-09 to 2011-12. 3. After going through the grounds of appeal and in the decision of Tribunal, the ld. DR for the revenue agreed that ground no.1 is covered in favour of revenue and grounds no. 2 to 5 are covered in favour of assessee. 4. We have considered the rival submission of both the parties and perused the material available on record. We have also gone through the contents of decision of Tribunal for Assessment Year 2008-09 to 2011-12 dated 27.12.2018. Ground ....

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....ITR 529 (Bom)] 20. For the purpose of disallowance u/s 14A of the Act only those investments are to be considered form which exempt income has been received during the year for this purpose reliance is placed on following judicial pronouncement: 1. ACIT Vs. Vireet investment [165 ITD 25 (Del) (SB)] 2. ACB India Vs. ACIT [374 ITR 108 (Del)] 3. CIT vs. Interglobe Enterprises Ltd. (Delhi High Court) 4. M/s. Slyvex cable Co. Pvt. Ltd Vs. DCIT being ITA No. 8581/Mum/2011 for A. Y 2008-09 dated 24.02.2016. 5. Syntex Corp Pvt Ltd Vs. ITO being ITA No. 2994/Mum/2012 dated 21.06.2018. 21. In the A.Y 2009-10, we find that assessee was having own funds of Rs. 23,758.60 lakhs against which investment was only to the tune of Rs. 3,8....

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....ned by the assessee. We direct the AO to recomputed the disallowance taking only those investments which yield dividend income and apply Rule 8D(2)(iii) and such disallowance should not exceed the dividend income earned by the assessee": 18. In view of the above we direct the A.O to restrict the disallowance u/s 14A in all the years to the amount of exempt income earned by the appellant during the year under consideration. We also find support for this contention in the judgement of the Hon'ble ITAT, Mumbai in the case of Daga Global Chemicals Vs. ACIT in ITA No. 5592/Mum/2012 wherein the assessee had appealed against the excessive disallowance made u/s 14A of the Act. The ITAT subsequently held that even if disallowance u/s 14A of t....

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....e do not find any merit in the grounds of appeal raised by revenue. 10. Ground No.4 relates to computing the book profit under section 115JB on disallowance under section 14A. We have noted that this ground of appeal is covered by the decision of Tribunal in assessee's own case for Assessment Year 2008-09 to 2011-12 and by the decision of Special Bench of Delhi Tribunal in Vireet Investment (165 ITR 25 (Delhi SB). Therefore, considering the decision of Special Bench which was followed in assessee's own case for Assessment Year 2008-09 to 2011- 12, we do not find any merit in the grounds of appeal raised by revenue. 11. Ground No.5 relates to disallowance of set off of unabsorbed depreciation pertaining to Assessment Year 2001-02 against....