TaxTMI 
TaxTMI 
2020 (10) TMI 134
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....the Act' for short]. Hence these appeals were heard together and are being disposed of by this common order. 2. The assessee is engaged in the business of making investment in shares, providing guarantees to group companies. 3. We first take up the appeal filed by the parties for assessment year 2013-14. In this year, the assessee earned exempt income of Rs. 4.19 crores. The assessee did not make any disallowance u/s 14A of the Act. When questioned, the assessee submitted that the majority of its investments were made in the earlier years and further the loans taken during the year under consideration were used for general business purposes. The A.O. did not agree with the contentions of the assessee and accordingly proceeded to make ....
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....group concerns. The Ld. A.R. further submitted that the assessee had used interest free funds only for making investments and hence no disallowance out of interest expenditure is called for. 6. The Ld. A.R. also submitted that the dividend income had not been received from certain investments and hence they should not be considered for computing average value of investments as per the decision rendered by the special bench in the case of Vireet Investments Pvt. Ltd. 165 ITD 27. The Ld. A.R. further submitted that the A.O. has mechanically computed the expenditure disallowance under rule 8D(2)(iii) without having regard to the actual expenses incurred by the assessee. The Ld. A.R. submitted that the expenditure relating to exempt income is ....
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....he interest free funds available with the assessee is more than the value of investments and further the loan funds have not been used to make the investments, then no disallowance out of interest expenditure is called for under rule 8D(2)(ii). However, since the factual details relating to the issue require examination, we are of the view that the assessee, in the interest of natural justice, should be provided with an opportunity to present its case to the A.O. With regard to the disallowance of administrative expenses made under rule 8(D)(iii), it is the submission of the assessee that the majority of expenses debited to Profit & loss account are not related to the exempt income and further the expenses relatable to the exempt income co....