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TMI Blog2015 (2) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ources and proper infrastructure. Therefore, we are of the considered opinion that the Assessing Officer had rightly disallowed 0.5% of expenditure as disallowance u/s 14A of the Act. In view of the above, we restrict the disallowance to the extent of ₹ 5,64,016/- and delete the addition of ₹ 18,39,156/- on account of disallowance of interest u/s 14A of the Act. - Decided partly in favour of assessee - I.T.A. No.4223/Del/2011 - - - Dated:- 23-11-2012 - SHRI RAJPAL YADAV AND SHRI T.S. KAPOOR, JJ. For the Appellant : Shri Gautam Jain, Advocate For the Respondent : Shri Sanjay Jain,CIT- DR ORDER PER TS KAPOOR, AM: This is an appeal filed by the assessee against the order of Ld CIT(A) dated 8.7.2011. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and business activities were being maintained and due to huge investments and dividend income it was not possible that no expenditure was incurred for earning exempt income and in view of that the Assessing Officer on the basis of various judgments of Courts calculated the disallowance u/s 14A amounting to ₹ 24,03,172/- consisting of interest of ₹ 18,39,156/- and other expenditure of ₹ 5,64,016/- calculated on the basis of 0.5% of average investment as per Rule 8D. 3. Dissatisfied with the order the assessee filed appeal before Ld CIT(A) and reiterated its submissions. The submissions of the assessee were not accepted by Ld CIT(A) and he upheld the addition made by the Assessing Officer. 4. Aggrieved, the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 8.49 crores which was invested fully in the net current assets in the form of inventories of ₹ 12.7 crores, sundry debtors ₹ 24.88 crores, cash and bank balance ₹ 1.84 crores, loans advances ₹ 13.93 crores. Out of these investments in current assets, ₹ 20.46 crores was financed through current liabilities and provisions leaving net investment in working capital to the extent of ₹ 32.26 crores. In view of the fact that specific term loans were obtained for specific assets and investment in net working capital was much more than working capital limit, it can be said that no borrowed funds were used for making investment and therefore disallowance of interest u/s 14A was not justified. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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