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TMI Blog2014 (7) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... funds and investments which are capable of yielding exempt income, has not been examined properly either by the AO or by the CIT(A) – the decision in The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] – the AO is directed to re–examine the nexus of interest free funds and investment made – Decided partly in favour of Assessee. - ITA no. 7676/Mum./2011 - - - Dated:- 13-9-2013 - SHRI B. RAMAKOTAIAH AND SHRI AMIT SHUKLA, JJ. For the Appellant : Mr. Dilip . Lakhani For the Respondent : Mr. P.K. Shukla ORDER PER AMIT SHUKLA, J.M. The present appeal has been preferred by the assessee, challenging the impugned order dated 2nd August 2011, passed by the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,35,85,508, which was claimed as exempt. In the computation of total income, the assessee has worked out the disallowance under section 14A at ₹ 55,21,289. 3. In response to the show cause notice as to why the disallowance should not be re worked on the basis of rule 8D, the assessee submitted that the provisions of rule 8D will not be applicable as the investments were held as stock in trade. The Assessing Officer rejected the assessee s contention and held that the disallowance has to be worked out as per rule 8D in the following manner: Particulars Mar 08 (Rs.) Mar 07 (Rs.) Average (Rs.) Balance of investment capable of yielding exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the total income of the assessee under section 14A r.w. rule 8D of the I.T. Act, 1961. 4. Before the learned Commissioner (Appeals), the assessee submitted that it was having total networth of ₹ 1261 crores and the total investment in shares which was capable of yielding exempt income was ₹ 1066 crores. Since the assessee s networth was far in excess of average investment, therefore, there should not be attribution of interest while working the disallowance under section 14A. Further, it was also submitted that the assessee was holding shares partly as investment and partly as stock in trade and any disallowance under rule 8D cannot be made on stock in trade because the assessee is showing business income from such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, the learned Departmental Representative relying upon the findings given by the Assessing Officer as well as the learned Commissioner (Appeals), submitted that once provisions of rule 8D are applicable, then the disallowance has to be worked out as per formula given therein. Moreover, it is not a case that the assessee has not paid any interest and, therefore, interest element cannot be excluded in the working. For the other proposition also, he raised strong objection. 8. We have heard the rival contentions and have perused the relevant findings of the Assessing Officer and the learned Commissioner (Appeals) and the material available on record. The Assessing Officer has worked out the disallowance under section 14A as per rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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