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TMI Blog2014 (3) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... enue's appeal is covered against the revenue by the decision of Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. BSES Yamuna Powers Ltd. (2010-TIOL-636-HC-DEL-IT) in ITA no. 1267/2010 dated 31-08-2010, allowing depreciation on computer accessories and peripherals at the higher rate of 60%. The order of CIT(A) on the issue in question being in conformity with the aforementioned decision of Hon'ble Jurisdictional High Court, we uphold the order of CIT(A). Consequently, ground no. 2 taken by the revenue is dismissed. 4. Apropos first ground, brief facts are: The assessee is a multi cable operator engaged in the distribution of analog and digital cable television services and was incorporated on 10-7-2007. This year is the first year of operations, assessee furnished e-return on 30-9-2008 declaring a loss of Rs. 14,89,72,768/- along with suo motu disallowance of Rs. 14,676/- u/s 14A. 4.1. During the course of assessment assessing officer rejected the assessee's working and disallowed an amount of Rs. 75,41,105/- u/s 14A read with Rule 8D, applying rule 8D(2) formula. Aggrieved, assessee preferred first appeal challenging the disallowance on various gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt in view of the above, as regards to disallowance of Rs. 38,05,926/- under Rule 8D(2)(ii) the appellant is herby directed to furnish the cash flow statement regarding the loans and share capital before the AO within 30 days of receipt of this order to prove that the appellant has not incurred any expenditure by way of interest which is not directly attributable to any particular income or receipt. The AO is directed to verify the same and delete the disallowance of Rs. 38,05,926/- under Rule 8D(2)(ii), if the submissions of the appellant are found to be correct. As regards to disallowance of Rs. 37,49,875/- under Rule 8D(2)(ii), the appellant's own computation for 14A disallowance is an admission that qualified persons are handling their mutual funds portfolio. The total investments in mutual funds during the year are 98.19 crores while the investments in shares of the subsidiary company are Rs. 51.80 crores. The appellant had received the dividend income of Rs. 25,77,300/- during the year and has estimated the expenditure disallowance u/s 14A at Rs. 14,676/-. Sine this is only an estimate the provisions of Rule 8D(2)(iii) is clearly applicable as the AO had recorded that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend income of Rs. 25.77 lacs and furnished a working for suo motu disallowance of Rs. 14,676/- u/s 14A. The AO summarily held the working in question not in accordance with Rule 8D of the I.T. rules but did nto record any satisfaction for its being incorrect. In response thereto assessee vide letter dated 22-11-2010 replied as under: "No interest bearing funds have been utilized for investments in mutual funds and therefore, no interest is towards earning of income that are exempt from income tax (being dividend on mutual funds). Therefore, Rule 8D of Income tax Rules is not applicable. Please note that company used its idle share capital and reserves for investment in the mutual funds. Calculations of expenses disallowed u/s 14A are as per Annexure-E. It also may be noted that these have been disallowed by the assessee company in the computation of income filed along with return for AY 2008-09." 5.3. The AO, therefore, without considering the financial statements and correctness of assessee's working u/s 14A, disallowed the expenditure, by mechanically applying formula provided by Rule 8D. Ld. CIT(A) has given part relief without considering the issues, financial state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,702/2008 & others). - ITAT Delhi Bench order dated 30-12-2010 in the case of M/s Muzaffarnagar Distt. Co-op. Bank Ltd. (ITA no. 4604/Del/2010 A.Y. 2007-08); - ITAT Delhi Bench order dated 24-6-2011 in the case of M/s TSL Defence Technologies Pvt. Ltd. (ITA no. 2056/Del/2011 for AY 2004-05). - ITAT Delhi Bench order dated 2-3-2012 in the case of ACIT Vs. Mohan Exports (P) Ltd. 138 ITD 108 (Del); - ITAT Kolkata Bench order dated 29-7-2011 in the case of Balarampur Chini Mills Ltd. Vs. DCIT 140 TTJ (Kol)(UO) 73. - ITAT Panji Bench order dated 8-3-2013 in the case of SESA Goa Ltd. Vs. JCIT (2013-TIOL-285-ITAT-Panji). - ITAT Mumbai Bench order dated 13-3-2013 in the case of JK Investors (Bombay) Ltd. Vs. ACIT (ITA no. 7858/Mum/2011). 10. We have heard rival contentions and perused the relevant material available on record. The assessee has given a complete break up of the loans taken by it and interest paid thereon and has demonstrated that the entire loan of Rs. 10.64 crores was utilized for acquiring business assets and working capital amounting to Rs. 25.45 crores. Neither the AO nor the CIT(A) has disputed or controverted these facts which emanate from the record. In the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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