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TMI Blog2012 (7) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, u/s 14A disallowance of balance interest of Rs.24,486/- (Rs.17,16,952 – 16,92,466) can be allowed. The AO has made separate disallowance of Rs.16,92,466/- on account of interest free advances given to the sister concerns. Therefore, for the purpose of sec. 14A interest of Rs.16,92,466/- would not be considered and only remaining expense of Rs.24,486/- would be liable to be considered under sec. 14A,thus CIT(A) was justified in restricting the disallowance u/s 14A to the extent of Rs.24,486/- decided in favour of assessee. - I.T.A. No.976/Del/2012 - - - Dated:- 28-6-2012 - SHRI RAJPAL YADAV, AND SHRI K.D. RANJAN, JJ. Appellant by : Shri Satpal Singh, Sr. DR. Respondent by : Shri Amit Goel, CA. O R D E R P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,345/- as proceeds received on redemption of other mutual funds in which the investment had been made by the assessee. Accordingly the sale consideration received by the assessee on redemption of mutual funds was treated as taxable income. 3. Before the CIT(A) it was submitted by the learned AR of the assessee that the dividend income of Rs.19,86,345/- consisted of HDFC Cash Management Fund (Rs.l6,93,902/-); HSBC Floating Rate Fund (Rs.1,90,996/-); ICICI Liquid Plan (Rs.11,445/-). The learned AR of the assessee further submitted that the assessee had submitted details of dividend received vide its letter dated 18.12.2008. On receipt of said letter the AO did not ask any further questions. However, he had disallowed the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. He accordingly perused the documents pertaining to investments in HDFC Cash Management Fund, HSBC Floating Rate Fund and ICICI Liquid Plan. These documents had been furnished by the assessee along with application filed u/s 154 dated 20th January, 2009 and were available at Pages 11 to 46 of the Paper Book. On perusal of these documents the learned CIT(A) noted that in none of the aforesaid three funds the assessee company had any opening investments. The entire investment and redemption of units had taken place during the F.Y. 2005-06 and therefore, investment in the aforesaid funds did not find place in the balance-sheet ending on 31st March, 2005 and 31st March, 2006. Since the assessee company had furnished complete deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t free loan give to sister concerns. 8. Before the CIT(A) it was submitted by the assessee that out of total payment of interest of Rs.17,16,952/- a sum of Rs.16,92,466/- was disallowed on account of interest free advance of Rs.17,37,45,900/- to sister concerns. It was also submitted that only balance amount of Rs.24,486/- should have been considered for disallowance under sec. 14A of the Act. It was also submitted that Rule 8D was not in operation for Assessment Year under consideration in view of decision of Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. vs. DCIT, 328 ITR 81. However, reasonable disallowance was permissible. It was also argued that after excluding Rs.16,92,466/- further disallowance of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned AR of the assessee submitted that Rule 8D was not applicable during the year under consideration. 10. We have heard both the parties and gone through the material available on record. The AO while disallowing amount of Rs.46,41,358/- has applied Rule 8D. The assessee had paid interest of Rs.17,16,952/- out of which the AO had disallowed Rs.16,92,466/-. Therefore, u/s 14A disallowance of balance interest of Rs.24,486/- (Rs.17,16,952 16,92,466) can be allowed. The AO has made separate disallowance of Rs.16,92,466/- on account of interest free advances of Rs.7,37,45,900/- given to the sister concerns. Therefore, for the purpose of sec. 14A interest of Rs.16,92,466/- would not be considered and only remaining expense of Rs.24,486/- wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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