TMI Blog2014 (4) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act – Held that:- The decision in Godrej & Boyce Mfg.Co.Ltd. vs. Dy.CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - proportionate disallowance u/s. 14A should be limited to only interest liability and not overhead or administrative expenditure, which should be considered for disallowance under Rule 8D of the I.T. Rule, 1962 from 2007-08 – the AO is directed to delete the addition – Decided in favour of Assessee. - I.T.A. No. 1008/Ahd/2011 - - - Dated:- 4-4-2014 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Appellant : Ms. Urvashi Shodhan, Adv. For the Respondent : Shri P. L. Kureel, Sr.DR ORDER Per Shri Kul Bharat, Judicial Member : This appeal by the Assessee is directed against the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on account of shortage of weight amounting to Rs.5,38,121/- and disallowance u/s.14A r.w.Rule 8D of Rs.48,746/-. The AO has also made disallowance of bad debts as claimed by the assessee. Against this, the assessee preferred an appeal before the ld.CIT(A), who after considering the submissions, partly allowed the appeal, thereby the bad debts disallowed by the assessee were deleted and the other disallowances; namely expenses claimed on account of shortage of weight and disallowance made u/s.14A r.w. Rule 8D were confirmed were confirmed by the ld.CIT(A). Now, the assessee is in further appeal before us. 3. Apropos to ground No.1, the ld.counsel for the assessee submitted that the assessee is engaged in trading of ready cotton bales si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom the material was supplied, therefore the authorities below were not justified in disallowing the expenses claimed by the assessee. We therefore direct the AO to delete this addition. Accordingly, ground raised by the assessee is allowed. 5. Second ground is against the disallowance of expenditure on adhoc basis of Rs.48,748/- by invoking the provisions of section 14A of the Act. The ld.counsel for the assessee submitted that it is settled position of law that Rule 8D is not applicable in the year under appeal. He placed reliance on the judgement of Hon ble Bombay High Court rendered in the case of Godrej Boyce Mfg.Co.Ltd. vs. Dy.CIT reported at (2010) 328 ITR 81 (Bom.). She further submitted that the investment was not made out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive efforts were necessarily required for earning the exempt income. Hence, I am of the opinion that the disallowance of Rs.3 lakhs made by the Assessing Officer is quire justified and this ground is dismissed. We find that case law cited by Ld. AR in the matter of Catholic Syrian Bank Ltd. Ors. (supra), wherein the Hon'ble Kerala High Court has held that so far as disallowance of administrative expense is concerned, there is no precious formula or proportionate disallowance, no disallowance called for, for proportionate administrative cost, attributable to earning of tax free income until Rule 8D of the I.T. Rule, 1962 came into force. It is further held that the proportionate disallowance u/s. 14A should be limited to only inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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