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2015 (9) TMI 1566 - AT - Income TaxCalculation of disallowance as per Rule- 8D sec 14A - Held that - We are of the opinion that the disallowance confirmed by the CIT (A) is proper but the same is subjected to the correctness of the calculations as per clause-(ii) & (iii) of Rule-8D(2). AO may examine the correctness before restricting the disallowance as held by the CIT (A). In this regard, we confirm the order of the CIT (A) in substance and therefore, it does not call for any interference. Accordingly, ground raised by the Revenue are dismissed Nature of income - treating interest earned on money lending operation under the head Profit and Gains from Business and Profession or Income from Other Sources - Hel that - CIT (A) s decision, in treating the interest income earned on money lending operation as Profits & Gains of Business or Profession , is reasonable and it does not call for any interference. In this regard, we have considered object clause authorizing the assessee to conduct the business of money lending and the entries in the books of accounts and the bank accounts. Accordingly, ground raised by the Revenue is dismissed
Issues Involved:
1. Disallowance of interest expenditure under section 14A of the Income-tax Act, 1961 2. Disallowance of administrative expenses under section 14A read with rule 8D(2)(iii) 3. Addition to Book Profit under section 115JB related to dividend income 4. Treatment of interest earned on money lending operation as Profit and Gains from Business and Profession instead of Income from Other Sources Analysis: Issue 1: Disallowance of Interest Expenditure under Section 14A The Assessing Officer (AO) disallowed interest expenditure of &8377; 78,36,495 under section 14A. The First Appellate Authority (FAA) restricted this disallowance to &8377; 6,36,389. The Tribunal confirmed the FAA's order, emphasizing the correctness of the calculations as per Rule-8D. The Tribunal dismissed the Revenue's appeal, upholding the FAA's decision. Issue 2: Disallowance of Administrative Expenses under Section 14A The AO disallowed administrative expenses under section 14A read with rule 8D(2)(iii). The FAA restricted the disallowance to &8377; 6,36,389. The Tribunal upheld the FAA's decision, finding no infirmity in the order. The appeal filed by the Revenue was dismissed. Issue 3: Addition to Book Profit under Section 115JB The AO added &8377; 1,02,50,794 to the Book Profit under section 115JB related to dividend income. The FAA restricted the disallowance to &8377; 6,36,389. The Tribunal, following its previous order, confirmed the FAA's decision and dismissed the appeal filed by the AO. Issue 4: Treatment of Interest Earned on Money Lending Operation The AO treated interest earned on money lending operation as Profit and Gains from Business and Profession instead of Income from Other Sources. The Tribunal, based on previous decisions, upheld the FAA's decision to tax the interest income under the head "profits and gains of business or profession." The appeal filed by the Revenue was dismissed. In conclusion, the Tribunal upheld the FAA's decisions on all issues, emphasizing the correctness of calculations and legal interpretations. The appeals filed by the Revenue were dismissed, affirming the orders of the lower authorities.
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