TaxTMI 
TaxTMI 
2021 (1) TMI 92
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....ppeals) erred in confirming the disallowance of Rs. 16,23,470/- made under section 14A of the Act. 2. The authorities below erred in taking the interest paid of Rs. 10,76,939/- as attributable to investments in the firms, the share income from which is exempt from tax u/s 10(2A) of the Act for disallowance u/s 14A r/w Rule 8D(2)(ii). 3 The authorities below should have seen that the borrowals on which interest was paid were directly advanced to various parties for interest and such interest of Rs. 27,62,380/- was offered for tax as income. 4. The appellant submits that there is a direct nexus between the borrowals and advances/loans given and therefore the interest paid has to be adjusted against the interest rece....
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.... prays that the disallowance of Rs,16,23,470/- made under section 14A may be deleted and justice rendered." 3. Brief facts of the case are that the assessee company is engaged in the business of development of property filed its return of income for the assessment year 2015-16 on 28.10.2015 declaring total income of Rs. 34,15,840/-.The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that assessee has earned exempt income being share of profit from partnership firm, whereas not disallowed expenditure incurred in relation to income which do not form part of total income under the Income Tax Act, 1961 (hereinafter referred to as "the Act"), therefore, called upon the assessee to ....
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.... of the assessee before the learned CIT(A) are that it has not incurred any expenditure in relation to exempt income being share of profit from the partnership firm and hence, question of disallowance u/s.14A of the Act does not arise. The learned CIT(A), after considering the relevant submissions of the assessee and by relied upon certain judicial precedents including the decision of Hon'ble Supreme Court in the case of M/s. Godrej & Boyce Manufacturing Co.Ltd., in Civil Appeal No.7020/2011 upheld the additions made by the Assessing Officer towards disallowance of expenditure u/s.14A of the Act. 5. The learned AR for the assessee submitted that the learned CIT(A) has erred in confirming the additions made by the Assessing Officer toward....
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....guments of the assessee that no disallowance can be made towards interest expenditure and other expenses. 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below along with the case laws cited by the learned counsel for the assessee . There is no dispute with regard to the fact that assessee has earned exempt income being share of profit from the partnership firm which is exempt u/s.10(2A) of the Act. Therefore, once there is exempt income which do not form part of the total income under the Act, then disallowance of expenditure in respect of said income required to be computed u/s.14A, read with Rule 8D of IT Rules,1962. Therefore, we are of the considered view th....