2021 (6) TMI 610

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.... appeal of assessee was decided by Co-ordinate Bench of the Tribunal vide order dated 20/12/2019. Thereafter, the assessee filed M.A. No.145/Mum/2020 under section 254(2) of the Income Tax Act, 1961 (in short 'the Act') with a prayer to recall the said order as the additional grounds raised in the appeal with regard to: (i) disallowance of interest under section 14A r.w.r 8D(2); and (ii) ground No.3 raised in main grounds of appeal in respect disallowance made under section 43B(f) of the Act, remain to be adjudicated. The Co-ordinate Bench of the Tribunal allowed the Miscellaneous Application of the assessee vide order dated 06/01/2020 and recalled its order dated 20/12/2019 for the limited purpose of adjudicating Additional Ground No.1 & 2....

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....sallowance in respect of indirect expenses u/r.8D(2)(iii) Rs. 3.02 crores, the Assessing Officer accepted the disallowance made u/r.8D(2)(i) and 8D(2)(ii). However, in respect of disallowance u/r 8D(2)(iii), the Assessing Officer made additional disallowance of Rs. 19.44 crores. The ld. Counsel for the assessee submitted that assessee's own interest free funds are much more than the investments made. It is now well accepted legal proposition that where the assessee is having own interest free funds, the presumption would be that the investments are made from interest free funds available with the assessee. In support of his contention the ld. Counsel for the assessee placed reliance on the following decisions: (i) PCIT vs. Ashok Ap....

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....nal adjudication, therefore, disallowance already made should not be disturbed and status quo be maintained till the issue is finally decided by Hon'ble Apex Court. However, the ld.Departmental Representative fairly admitted that the Tribunal on similar set of facts has decided this issue in assessee's own case in assessment year 2008-09 and 2010-11. 6. Both sides heard, orders of authorities below examined. The assessee in additional grounds of appeal has assailed disallowance of interest made under section 14A r.w. Rule 8D during the impugned assessment year. The contention of assessee is that the assessee is having sufficient own interest free funds to cover the investments. Therefore, the presumption is that the investments are made ....

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....tments made. However, for the purpose of verification of this fact, we deem it appropriate to restore this issue back to the file of Assessing Officer. The Assessing Officer after examining the financial statements of the assessee, if satisfied, that own interest free funds of the assessee are more than the investments made, shall make no disallowance u/r.8D(2)(ii)". As regards disallowance made under section 14A r.w. Rule 8D(2)(iii), the Tribunal held as under:- "5.3 The third contention of the assessee is that for the purpose of computing disallowance u/r.8D(2)(iii) only those investments are to be considered which have yielded exempt income. This contention of the assessee is supported by the decision rendered in the....