TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 682
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.... AO has recorded satisfaction while making the disallowance u/s 14A? 2. Whether in the facts and circumstances of the case and in law, Ld. C1T(A) is correct in deleting the addition u/s 14A r.w.r 8D without considering the fact that the impugned order is passed during set aside proceedings wherein Hon'ble Tribunal had remanded back the matter only for limited purpose of verification regarding suo-moto disallowance of the assessee and the question whether disallowance u/s 14A is applicable in this case was already decided by the tribunal in its order dated 21.06.2021? 3. Whether in the facts and circumstances of the case and in law, Ld. CIT(A) is correct in deleting the addition u/s 14A r.w.r 8D by holding that there is no clarity and satisfaction of the AO by which he has made disallowance, without considering the facts that detailed findings have been given in the Assessment order by AO on Page no. 7-11 regarding non-acceptance of suo-moto disallowance of the assessee and AO has also recorded satisfaction for application of Section 14 A?" 1.1 For A.Y.2015-16 the Revenue has raised the following grounds of appeal : "1. Whether in the facts, and circumstances of the case ....
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....allowance u/s 14A is applicable in this case was already decided by the tribunal in its order dated 21.06.2021? 3. Whether in the facts and circumstances of the case and in law, Ld.CIT(A) is correct in deleting the addition u/s 14A r.w.r 8D by holding that there is no clarity and satisfaction of the AO by which he has made disallowance, without considering the facts that detailed findings have been given in the Assessment order by AO in para no.2.7 to 2.17 regarding non-acceptance of suo-moto disallowance of the assessee and AO has also recorded satisfaction for application of Section 14A ?" Submission of ld.AR : 2. The ld. Authorised Representative(ld.AR) for the Assessee submitted a paper. Ld.AR supported the order of ld.CIT(A). Ld.AR vehemently submitted that ld. CIT(A) had correctly appreciated the facts of the case and applied the Principle of law laid down by the Hon'ble High Court. Ld.AR submitted that once it was set-aside by ITAT, the ld.CIT(A) has jurisdiction to decide all the aspects of the impugned issue. Submission of ld.DR : 3. Ld.DR for the Revenue read out the relevant part of the ITAT Order dated 21.06.2021. Ld.DR submitted that ITAT had set-aside the issue ....
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....nly one half percent of the average value of investment i.e. 0.50% of Rs. 406,47,45,829/- i.e. Rs. 2,03,23,729/-. Therefore, it becomes essential to verify whether the assessee had actually made suo-moto disallowance of Rs. 16.8 lakhs and whether the same had been analyzed by the Assessing Officer while making disallowance of 0.50% at the time of assessment. For this exercise, in the interest of justice, the issue needs to be remanded back to the file of Assessing Officer for adjudication after detailed verification as indicated hereinabove while complying with the principles of natural justice and as per law. Thus, Ground Nos. 2 8s 3 raised in appeal by the Revenue are allowed for statistical purposes." Unquote. 4.2 Thus, the ITAT in ITA No.499/PUN/2020 had set aside the issue of disallowance u/s. 14A for a limited purpose. The Assessing Officer passed an order u/s. 143(3) r.w.s254 to give effect to the order of the ITAT in ITA No.499/PUN/2020. The Assessing Officer in the order dated 30/09/2022 passed u/s 143(3) r.w.s. 254 held that an amount of Rs. 99,27,035/- is to be disallowed u/s 14A read with rule 8D of Income Tax rules. Aggrieved by the said order of the AO, the assessee ....
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....ook filed before me. I find there is force in the argument of the appellant that based on the facts of the case, the investments could be deemed to be made out of its own funds and not out of borrowed funds. On perusal of the Audited Financials, it can be seen that assessee has owned surplus funds of Rs. 6,77,07,80,782/- which were invested in Mutual Funds and Tax Free Bonds. The only addition pertains to Investment in Mutual funds particularly Liquid funds which comes from the surplus funds available with the company during the year. It has been decided by various Courts that when own funds are more than the investments made to earn exempt income, then presumption has to be drawn that investments were made out of 'own funds' and not out of borrowed funds. This particular points is quite applicable in this case. In support of this point, a reliance placed on decision of jurisdictional High Court in , the case of CIT V/s UTI Bank (2013)32 taxmann. Com 370" (Guj) which reads as under:- "where the assesses1 had sufficient interest free funds to meet its tax free investments yielding exempt income, it could be presumed that such investments were made from interest free funds and not ....
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....he I.T. Rules. Hence, the disallowance as worked out by the AO u/s. 14A r.w. Rule 8D is unwarranted and, therefore, requires to be deleted. Hence, these grounds of appeal are allowed." 5. Aggrieved by the order of the Ld.CIT(A), the Revenue has filed this appeal before ITAT. 6. On careful reading of the ITAT order in ITA No.499/PUN/2020, we are of the opinion that the ITAT had set aside the impugned issue for a limited purpose for verification of "suo-moto disallowance" claimed to be made by the assessee and whether the suo-moto disallowance was 0.5% or more. Thus, in our opinion the impugned issue was set aside for a very limited purpose. However, Ld.AR vehemently argued that it was set aside for reworking hence AO had to consider all the things and therefore, Ld.CIT(A) was correct in deleting the disallowance. However, we do not agree with the submission of Ld.AR, we have already stated that the ITAT had set aside the impugned issue for a limited purpose. However, the Ld.CIT(A) had exceeded the jurisdiction and travelled to the area which was already decided by the ITAT. The ITAT had already held that there was proper satisfaction recorded by the AO. Once the ITAT had held that....