2021 (10) TMI 745

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....de at Rs. 53,77,505/- by the AO after invoking the provisions of section 14A vide order u/s 143(3) dated 12-12-2017 as against Nil income declared in the return after claiming deduction u/s 80P of the Act. 2. That the Ld. CIT(A) erred on facts and law in not allowing enhanced deduction although assessee is entitled to the deduction u/s 80P(2)(a)(i) of the IT Act, 1961 for whole of the income earned from providing credit facilities to its members. 3. That the appellant craves leave to add/alter any/all grounds of appeal before or at the time of hearing of the appeal." 2. The sole issue is related to confirmation of the disallowance of Rs. 5,06,792/- out of total disallowance made by AO under provision of section 14A of the IT Act. 3. T....

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....d., is also a cooperative society as it is registered under the Cooperative Societies Act on 26.02.1958. Hence, the assessee entity is earning interest and dividend income from investments and deposits with another cooperative society. However, the assessee had not made any disallowance u/s 14A read with rule 8D of the income Tax Act, 1961 as it was earning such income from investments with other cooperative society. Also, in its computation of income and P & L account no such expenditure was shown. However, section 14A read with rule 8D is attracted in this case. Accordingly, the Assessing Officer by applying section 14A read with Rule 8D, made disallowance at Rs. 53,77,505/- pertaining to dividend income. 4. The ld. CIT(A) has restricted....

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....ough interest-free funds matching with the investment made. No such effort has been made to place on record as to when was the investment made, what was the amount of investment made and what were the interest-free sources. It has merely been argued that the Balance sheet for the year ending March 2015 contained paid-up share capital and reserve fund which were interest-free sources. Unless and until, the appellant organically links the source of investment with the interest-free sources, the benefit of the aforesaid decision cannot be extended. Hon'ble Punjab-Haryana High Court in the case of Punjab Tractors Ltd vs Commr. of Income Tax Patiala & Anr Income Tax Appeal No.458 of 2015 (O&M) on 3 February, 2017 held that the presumption of....

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.... 8D, the Assessing made disallowance at Rs. 53,77,505/- pertaining to dividend income. After considering the assessee's submissions, The Ld. CIT(A) has restricted the disallowance u/s 14A equivalent to exempt income of dividend to the extent of Rs. 5,06,792/- as against disallowance of Rs, 53,77,505/- made by the AO. 8. The basic contention of the assessee that although it is entitled to the deduction u/s 80P(2)(a)(i) of the IT Act, 1961 for whole of the income earned from providing credit facilities to its members out of surplus funds (APB, Pg. 12) is accepted by the ld. CIT(A) as the provisions of section 14A apply only to the dividend income which is exempt and not to the interest received on FDR and other investments. The allegation of....