2016 (6) TMI 1460

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....come Tax Act, 1961 (hereinafter the Act) read with Rule 8D of the Income Tax Rules, 1962 (hereinafter the Rules). The assessee has disallowed the interest etc. 2. During hearing of these appeals, the ld. counsel for the assessee contended that identical issue arose for consideration for Assessment year 2008-09, wherein, the Tribunal send these issues to the file of Ld. Assessing Officer. Reliance was placed upon the decision in CIT vs HDFC Bank Ltd. 366 ITR 505 (Bom.) and CIT vs. Reliance Utilities Power Ltd. [2009] 313 ITR 340 (Bom). Assessee also filed paper book running into 6 pages containing balance sheet as on 31/03/2010. On the other hand, the ld. DR, defended the conclusion arrived at in the impugned order by adding that the impu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....assessee on 21.0.2011 against the order of CIT (A)-9, Mumbai dated 30.6.2011 for the assessment year 2008-2009. 2. In this appeal, assessee raised the following grounds which read as under: " The CIT (A) erred,- 1.1. in confirming a disallowance u/s 14A by mechanically applying Rule-8D. 1.2. Without prejudice, in erroneously computing the disallowance by including interest pertaining to loans specifically taken for other purposes. 2.1. in disallowance of interest assumed to be extended on investment in property at Bharat Diamond Bourse and other similar advances given which were business assets. 2.2. in not appreciating that no funds had been specifically borrowed for the purposes of making this investmen....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ards the expenditure for earning the said exempt income @ 10% of the exempt income. Without rejecting the claim of the assessee, AO invoked the provisions of section 14A read with Rule-8D of the Act and relied on the binding judgment of the jurisdictional High Court judgment in the case of Godrej & Boyce Mfg. Ltd. vs. DCIT, 328 ITR 81. CIT (A) confirmed the same. In this background of the facts, Ld Counsel mentioned that invoking the said provisions mechanically without rejecting the claim of the assessee ie Rs. 55,530/- is the expenditure incurred for earning of the exempt income, is unsustainable in law and relied on the jurisdictional High Court judgment in the case of Godrej & Boyce Mfg. Ltd (supra). In this regard, Ld Counsel prayed fo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the advances are not out of interest bearing funds. Further, Ld Counsel mentioned that assessee has Rs. 26.9 Crs worth of interest free funds by way of capital, reserves and interest free loans, which is quantitatively much higher than the advances given by the assessee. It is the claim of the assessee that considering the jurisdictional High Court judgment in the case of CIT vs. Reliance Utilities Power Ltd. [2009] 313 ITR 340 (Bom), the benefit should be given to the assessee considering the existence of excess interest-free funds. Further, Ld Counsel fairly mentioned that the facts about the issue of existence of excess funds were not examined by the lower authorities. Therefore, for this purpose, this issue may also be set aside for exa....