2021 (1) TMI 1049

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....ue has proposed the following substantial questions of law for consideration of this Court : "[A] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in deleting the disallowance of Rs. 10,78,591/­ made by the Assessing Officer on account of interest expenses under section 14A r.w. Rule 8D (ii) ? [B] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal has erred in directing to treat the income arising on transaction in shares and securities as "Capital Gain" as against "Business Income" treated by the Assessing Officer ? [C] Whether on the facts and in the circumstance of the case and in law, the Appellate Tribunal ....

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....issue for adjudication before us relates to disallowance u/s.14A for the proportionate interest computed under Rule 8D(2) (ii) of the I.T.Rules. Interest disallowance of Rs. 10.78 lacs, Rs. 10.96 lacs and Rs. 35.20 lacs for Assessment years 2010­11 to 2012­13 respectively, Ld. CIT(A) deleted the addition on finding that the appellant had Net Interest income during the year. The facts and figures for Assessment years 2010­11 to 2012­13 are similar. The interest income received during the year is more than the interest paid by the assessee for all the three assessment years. Further form perusal of the audited financial statements it emerges that the interest free funds available with the assessee in the form of share capital ....

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.... the case Morgan Stanley India Securities Private Limited. He however considered the administrative expenses to be 0.5 of the average investments and disallowed the same. 8. Before us the Revenue could not bring any material on record to controvert the findings of CIT(A). we therefore find no reason to interfere the order of CIT(A). Thus dismissed. " In the instant case, the total interest expenditure claimed was Rs. 3,79,05,391/­. out of the said amount, A.o. Considered interest ofRs. 56,12,695/for working out the disallowance under Rule­8D(2) (ii). Out of the said amount, Rs. 29,70,835/was paid to banks against O.D. And Rs. 26,41,860/ was paid on unsecured loans. As against this appellant earned interest income o....