2025 (8) TMI 625

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....erved that assessee has paid interest and bank charges of Rs. 41,99,598/- during the year against the loan taken by the assessee from NBFC. He also observed that assessee has received exempt income of Rs. 32,29,58,236/- from partnership firm, namely, Great Value Foods against the investment of Rs. 86,39,14,055/-. After considering the submissions of the assessee, the AO rejected the same and observed that provisions of section 14A of the Income-tax Act, 1961 (for short 'the Act') read with Rule 8D are applicable. Accordingly, he determined the disallowance under Rule 8D(2)(ii) of Rs. 39,29,130/- and disallowable under Rule 8D(2)(iii) of Rs. 20,38,452/-. 3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A)....

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....able in the hands of the partners u/s 28(v). The balance profits are taxed in the hands of the firm and exempt in the hands of the partners u/s 10(2A). As s. 10(2A) provides that the share of profit of the partner shall not be included in his total income, it is not possible to hold that the share income is not excluded from the total income of the partner because the firm has already been taxed thereon. When s. 10(2A) speaks of its exclusion from the total income it means the total income of the person whose case is under consideration i.e. the partner. As the share income is excluded from his total income, s. 14A would apply and any expenditure incurred to earn the share income will have to be disallowed." In light of the above j....

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....ked by the AO. Accordingly, the addition/ disallowance of Rs. 59,67,582/- computed by the AO is hereby confirmed." 4. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- "The learned Commissioner of Income Tax (Appeal) has erred in law as well as on facts in confirming the addition of Rs. 59,67,582/- made by Learned Assessing Officer by invoking provisions of Section 14A of the Income Tax Act, 1961 read with Rule 8D." 5. At the time of hearing, ld. AR of the assessee brought to our notice page 160 of the paper book which is Balance Sheet of the current assessment year wherein the assessee has taken long term borrowing of Rs. 1.24 crores against which assessee has incurred financial costs of Rs. 4....