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TMI Blog2014 (3) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, assessee has not been able to demonstrate before us as to how the disallowance confirmed by ld. CIT(A) in a sum of ₹ 1,43,479/- was not sustainable. - Decided against asssessee and revenue in part. - ITA No. 975/Del/2013, ITA No. 13/Del/2013 - - - Dated:- 21-3-2014 - SHRI G.D. AGARWAL AND SHRI BHAVNESH SAINI, JJ. For the Appellant by: Sh. Y. Kakkar, Sr. DR For The Assessee/ Respondent by: None ORDER PER BHAVNESH SAINI, J.M. Both the cross appeals are directed against the order of ld. CIT(Appeals)-XI, New Delhi dated 27/11/2012 for A.Y. 2009-10. 2. The Revenue in their appeal challenge the order of ld. CIT(A) in holding that the disallowance of interest of ₹ 12,77,835/- under the Rule 8D read with section 14A of the Act is not warranted. The assessee in its appeal challenge the part of the addition sustained by ld. CIT(A) in a sum of ₹ 1,43,479/- on the same issue. 3. We have heard ld. DR and perused the findings of authorities below. However, none appeared on behalf of the assessee despite notifying the date of hearing through Registered Post. The appeals are, therefore, heard in the absence of the assessee. 4. Since the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and surplus profits of ₹ 164.58 crores as on 31/03/2009 and earned interest income of ₹ 4.66 crores on fixed deposits. The disallowances was not justified in view of the fact as no expenditure directly, indirectly is incurred or is even remottedly related to investments in share nor has been actually incurred in earning the dividend income claimed exempt. It was also explained that the secured loans were nil as on 31/03/1999 which can be seen from the audited accounts the details of the same were also filed and decision of Delhi High Court in the case of Max Opp. Investment Ltd. vs. CIT, 347 ITR 272 was relied upon on the proposition that no disallowance could be made in the case of the assessee. 6. The ld.CIT(A) considering the submissions of the assessee and finding of the AO in the light of provisions of section 14A of I.T. Act read with Rule 8D and decision cited before him, restricted the disallowance of ₹ 1,43,479/-. Both parties are, therefore, in appeal as above. The findings of ld. CIT(A) in the impugned order are reproduced as under: After considering all documents on record I shall now take up the various grounds of appeal. All the grounds of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said Rules. The said Rule 8D also makes it clear that where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with (a) the correctness of the claim of expenditure made by the assessee; or (b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income under the said Act for such previous year, the Assessing Officer shall determine the amount of the expenditure in relation to such income in accordance with the provisions of subrule (2) of Rule 8D. We may observe that Rule 8D(1) places the provisions of sec. 14A(2) and (3) in the correct perspective. As we have already seen, while discussing the provisions of sub-sections (2) and (3) of sec. 14A, the condition precedent for the AO to himself determine the amount of expenditure is that he must record his dissatisfaction with the correctness of the claim of expenditure made by the assessee or with the correctness of the claim made by the assessee that no expenditure has been incurred. It is only when this condition precedent is satisfied that the AO is required to determine the amount of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarity I am quoting Rule 8D2(i). The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely: i) The amount of expenditure directly relating to income which does not form part of total income. ii) In a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely: AXB/C Where A= amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year; Where B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. C = the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. iii) An amount equal to one half per cent of the average of the value of investment, income from which does not or shall not form part of the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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