TaxTMI 
TaxTMI 
2023 (11) TMI 584
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..... CIT Appeal Jamnagar Erred on law as well as on fact to Partially confirm the Order of ld AO to retain addition of Rs. 493268/- u/s. 14A i.e. difference between addition made by AO Rs. 1019529/- ( Arbitrary working of disallowance u/s. 14A) Less arbitrary retained by HON CIT A amounting to Rs. 493268/- hence addition made by AO and partly retained by CIT(A) is prejudicial and illegal and contrary to the fact of the case hence Rs 493268/- retained by CIT Appeal from addition made by AO amounting to Rs. 493268/- may be deleted. 2. Any other grounds presented with the permission of your honor at the time of hearing." 3. The brief facts of the case are that during the course of assessment, the Assessing Officer observed that assess....
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....ing the appeal of the assessee, the ld. CIT(A) made the following observations:- "This entire finding of the AO as given in the assessment order for making disallowance u/s. 14A of the Act are found to be tenable. The fact is that the appellant as per her submission as filed through tapal has stated that she had invested her own fund along with the borrowed fund on which she had got taxable income of Rs. 38,75,849/-. As per appellant due to this specific product mix of earning, she had interest income of Rs. 1,40,82,874/- and she had paid interest of Rs. 1,02,07,025/- and as a result of which she had net taxable interest income of Rs. 38,75,849/- (i.e. Rs. 1,40,82,874/- - Rs, 38,75,849/-). The appellant in her submission has furnis....
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....ppellant on the investment made. In view of this the addition of Rs. 10,19,529/- as made by the AO u/s. 14A r.w.r 8D is reduced to Rs. 4,93,268/-. Thus the ground of appeal no. 2 and 3 of the appellant are partly allowed." 5. The assessee is in appeal before us against the aforesaid appeal passed by the ld. CIT(A) confirming the disallowance u/s. 14A of the Act to the extent of exempt income earned by the assessee. The counsel for the assessee pointed out that during the impugned year under consideration, the assessee was admittedly having interest free funds to the tune of Rs. 5.69 crores. It was also submitted that the assessee had earned interest income of Rs. 1,40,82,874/- and she had paid interest of Rs. 1,02,07,057/- as a result of....
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....me, disallowance under section 14A was not justified. Again, in the case of UTI Bank Ltd[2018] 99 taxmann.com 392 (Gujarat), the Gujarat High Court held that no disallowance could be made under section 14A where assessee's interest-free funds far exceeded its interest-free investments. In the case of Gujarat Narmada Valley Fertilizers Co. Ltd [2014] 42 taxmann.com 270 (Gujarat), the Gujarat High Court held that where assessee-company received dividend on UTI and shares and investment in same was made in earlier years and interest free funds available with assessee were much larger as compared to investment, disallowance of assessee's claim for interest expenditure by applying section 14A was incorrect. In case of Gujarat Fluoro chem....