TaxTMI 
TaxTMI 
2022 (8) TMI 196
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....erial on record are as under:- 3. Assessee is a company who filed its return of income for A.Y. 2014-15 declaring total income at Rs. 32,19,77,336/-. The case was selected for scrutiny and thereafter assessment was framed u/s. 143(3) of the Act vide order dated 29.12.2017 and the total income was determined at Rs. 34,35,06,549/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 29.11.2018 in Appeal No. 247/17-18 granted partial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds: "1. Learned CIT(A) has erred in law and on facts of the case in not accepting the methodology adopted by the Assessing Officer for ....
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....e, the AO has grossly erred in including investments in mutual funds for computing disallowance u/s. 14A where the reasons for applying provisions of section 14A in the assessment order was investment in equity shares. 8. That the respondent craves leave to add, alter, modify, amend any of the above grounds or raise any fresh grounds of cross objection at any time before or during the hearing before Hon'ble Appellate Tribunal." We now first proceed with disposing of Revenue's appeal: 5. During the course of assessment proceedings, AO noticed that assessee had borrowings (Short Term as well as Long Term) from banks and institutions and it was paying interest around 13% per annum. He also noticed that assessee had advan....
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.... paid by the assessee @ 16.59%. Assessee filed the correct working of the interest and on the basis of the working submitted by the assessee, CIT(A) at page 50 & 53 noted that the average rate of interest paid by the assessee was less than the average rate of interest earned. He therefore, held that assessee had not paid excessive average rate of interest on average borrowings than the average rate of interest charged on the average loans and advances. He therefore deleted the addition by holding that the addition made by AO was based on erroneous working. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 7. Before us, Learned DR supported the order of AO. 8. Learned AR on the other hand reiterated the submissions ....
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....the various grounds but he would like to argue only Ground No. 7 wherein, according to him, AO has grossly erred in including investments in mutual funds for computing disallowance u/s. 14A of the Act. 12. Before us, Learned AR submitted that while working out the disallowance u/s. 14A of the Act, AO has considered the investments which also included the mutual funds on which the income earned is taxable and therefore the AO should have excluded the mutual fund investments while working out the disallowance u/s.14A of the Act. He therefore, submitted that suitable direction be given to AO to work out the disallowance. 13. Learned DR on the other hand supported the order of AO and, thereafter, pointed to the schedule of investment whic....