2019 (7) TMI 1621

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.... learned CIT(A) grossly erred in upholding the disallowance made  by the AO of Rs. 9,08,174/-, under Section 14A of the Act r.w.r 8D. The appellant prays that the said disallowance is unjustified and may please be deleted. Ground No. 2: On the facts and in the circumstances of the case and in law, the learned CIT(A) grossly erred in upholding the disallowance made by the AO of Rs. 5,72,805/- under Section 14A of the Act r.w.r 8D(2)(ii) towards the finance cost, without netting off interest income with the interest expenses. The appellant prays that the disallowance out of interest expenses, if any, should be net off interest income. Ground No. 3: On the facts and in the circumstances of the case and in law, the learned CIT(A)....

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....ppeal before us. ISSUE No. 1 4. Under this issue no specific adjudication is required being the relief claimed in this issue is relates to issue nos. 2 & 3. ISSUE NO. 2 5. Under this issue the assessee has challenged the confirmation of the disallowance made by the AO of Rs. 5,72,805/- u/s 14A of the Act r.w. Rule 8D (2)(ii) of the Rules. The Ld. Representative of the assessee has argued that the assessee received the interest income to the tune of Rs. 2,114,950/- which was credit to the profit and loss account as against the interest expenses of Rs. 1,332,797/-. It is also argued that while computing the disallowance of interest expenses, the interest should be net off from the interest received. In this regard, the Ld. Representativ....

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.... the disallowance of interest should be made with reference to the net interest only. A similar view was taken by the Tribunal Mumbai Bench (same combination) in the case of Paresh K. Shah in ITA No. 8214/M/2011. The Ld. CIT(A) has rightly directed the AO to verify the given by the assessee and only net interest may be taken, if any, computation as per Rule 8D. We do not find any error or infirmity in this findings of the Ld. CIT(A). The decisions relied upon by the Ld. DR are distinguishable on the facts of the case. In so far as the disallowance in respect of administrative expense is concerned, the Ld. Counsel for the assessee has filed a chart giving details and bifurcation of expenses between head office and division. We find that the ....