2022 (3) TMI 206

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....ment year 2012-13 on the grounds inter alia that :- "1. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in reducing disallowance of Rs. 1,85,95,109/- to Rs. 9,45,651/- u/s 14A of the Income Tax Act, 1961 without considering the legislative intent to introducing section 14A by the Finance Act, 2001 as clarified by the CBDT Circular No.5/2014 dated 10.02.2014? 2. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in holding a principal that quantum of expenditure cannot be exceed the income of the assessee? 3. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs. 98,430/- u/....

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....       (ii) Expenditure incurred by way of interest (A*B/C)   1,74,25,912           A = Amount of interest 3,08,77,136     B = Average value of investments       Investment as on 01.04.2011 12,86,32,549     Investment as on 31.03.2012 33,90,46,382       46,76,78,931     Average value of investments (467678931/2) 23,38,39,465             C = Average of Total Assets       Total Assets as on 01.04.2011 40,54,70,851     Total Assets as on 31.03.....

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.... Feeling aggrieved by the order passed by the ld. CIT(A), the Revenue has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1 & 2 6. Assessee company has earned dividend income of Rs. 9,45,651/- without making any suo motu disallowance. AO by invoking the provisions contained u/s 14A read with Rule 8D proceeded to make disallowance at Rs. 1,85,95,109/-. 7. Ld. CIT (A) following the decision rendered by Hon'ble Delhi High Court in case of Joint Investments (P.) Ltd. vs. CIT 372 I....

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....e Income-tax liability of the assessee and relied upon the decision of Hon'ble Karnataka High Court in case of Oriental Insurance Co. Ltd. vs. CIT (2009) 183 taxman 186. 10. Following the decision rendered by Hon'ble Karnataka High Court in case of Oriental Insurance Co. Ltd. vs. CIT (supra) wherein it is held that, "similar deduction towards payment of interest on delayed payment of TDS was allowed". Since this payment made by the assessee cannot be treated as a tax but compensatory in nature, hence allowable expenses u/s 37 of the Act. So, finding no infirmity or perversity in the impugned findings, ground no.3 is determined against the Revenue. GROUND NO.4 11. AO made a disallowance of Rs. 3,41,848/- @ 10% of the total expenses ....