TaxTMI 
TaxTMI 
2022 (6) TMI 1325
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.... appeals which are directed against the order of learned Commissioner of Income-tax (Appeals)-1, Ahmedabad ("CIT(A)" in short) dated 20.01.2020 for Assessment Year 2014-15 and the same are being disposed of along with Cross Objection filed by the assessee being CO No.1/Ahd/2021. 2. The solitary common issue involved in these cross appeals relates to the disallowance of Rs.19,94,51,882/- made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 ("the Act" in short) which is restricted by the learned CIT(A) to Rs.55,55,000/-. 3. The assessee, in the present case, is a company which is engaged in the business of generation and sale of electricity. The return of income for the year under consideration was filed by it on ....
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.... the Assessing Officer under Section 14A of the Act r.w. Rule 8D was challenged by the assessee in an appeal filed before the learned CIT(A) and after considering the submissions made on behalf of the assessee as well as the material available on record, the learned CIT(A) restricted the said disallowance to Rs.55,55,000/- for the following reasons given in paragraph nos. 5.5 and 5.6 of his impugned order:- "5.5 It is observed that in year under consideration AO has made disallowance under Section 14A read with Rule 8D(2)(ii) for Rs.39,41,157/-. It is found that even during the year under consideration Appellant has earned net interest income as stated in para 2.4.1 of statement of facts. It is found that in earlier Assessment Year....
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....55,000/-. The Ground No.2 is, thus, partly allowed." 5. Aggrieved by the order of the learned CIT(A), the assessee and Revenue - both are in appeal before the Tribunal on the following grounds:- Ground Raised in Revenue's appeal The CIT(A) has erred in law and facts in restricting the addition of Rs.19,94,51,882/- made as per the provisions of Section 14A r.w. Rule 8D of the Act. Grounds raised in assessee's appeal 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance to the extent of Rs.55,55,000/- from out of total disallowance of Rs.19,94,51,882/- made by the Assessing Officer u/s 14A of the I.T. Act. 2. Without prejudice to ground No.1 ab....
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....ified in restricting the disallowance of Rs. 1,02,82,049/- made u/s. 14A of the Act to the extent of income earned of Rs. 55,604/- without appreciating that the assessee had paid interest of Rs. 1,45,52,632/- on borrowed funds?" 2. From the record it emerges that, during the period relevant to the assessment year 2008-09, the assessee had earned exempt income of Rs. 55,604/-. As against that, the Assessing Officer had worked out the disallowance of expenditure under section 14A of the Act read with Rule 8D to Rs. 1,02,82,049/-. The Tribunal, while restricting the disallowance to Rs. 55,604/-, relied on the decision of Delhi High Court in case of Joint Investments (P) Ltd vs. CIT reported in 372 ITR 694 holding that disallowance of ....