2022 (6) TMI 1398

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....ounds of appeal:- "1. Whether on fact and in circumstances of the case Ld. CIT(A) is legally justified in not upholding the disallowance u/s 14A of the Act amounting to Rs.37,18,788/- even when assessee is in receipt of exempt income and when section 14A of the Act stipulates mandatory computation of direct and indirect expenses relating to the income and forming part of total income under all the clauses(i), (ii) and (iii) of Rule 8D(2) of the Rule? 2. Whether on fact and in circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance made of Rs.36277000/- by the assessing Officer as prior period expenses? " 3. At the outset, the ld. Counsel for the assessee submits that ground No. 1 ....

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....estments in securities is made out of common funds and the assessee has availed non-interest bearing funds larger than the investments made in tax-free securities then in such cases disallowance under Section 14A cannot be made. On observing the balance sheet, we find that the assessee has sufficient own funds much more than the investments. Therefore, ratio of the decision of the Hon'ble Supreme Court in the case of South Indian Bank Ltd. Vs. CIT (supra) squarely applies to the assessee. Respectfully following the said decision, we delete the disallowance made under Rule 8D(2)(ii) made by the Assessing Officer. Ground No. 1 is rejected. 6. Coming to the addition on account of disallowance relating to prior period expenses, the ld. Couns....

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.... in ITA. No. 2211 (Del) of 2013 dated 19.11.2014 accepted the claim of the assessee for netting off of prior period income against prior period expenses, observing as under:- "7.2. Ground nos. 3 and 4 are on the issue of disallowance of prior period expenses. The assessee has incurred prior period expenses of Rs.16,61,43,508/-. It had prior period income of Rs.10,22,60,782/-. The net prior period amount of Rs.63,88,272/-, was already added by the assessee in the computation of income. Thus, the finding of the First Appellate Authority that there is a double addition of Rs.63,88,272/- is factually correct. 7.3. As far as the balance amount is concerned the assessee's contention is that the amount has crystallised during the....