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TMI Blog2014 (11) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as having not been utilized for business purposes and, hence, toward financing the investment/s. Thus e matter is restored back to the file of the A.O. to allow the assessee an opportunity to present and exhibit its case as stated hereinabove, the onus for which would only be on it. - Decided in favour of assessee for statistical purposes. Disallowance u/s. 14A is in respect of indirect administrative expenditure, covered under Rule 8D(2)(iii) - Held that:- The same stands made applying the said rule. While the A.O. effected the disallowance invoking the said rule, mandatory for the current year, the ld. CIT(A), in appeal, rejected the assessee's contention of the rule being arbitrary. Further, the A.O. having rendered his satisfaction with reference to the facts of the case, rule 8D stood triggered and, accordingly, the disallowance was to be, in his view, confirmed. No specific contention in this regard stood made before us. The assessee failing to substantiate its claim of having not incurred any expenditure in relation to income not forming part of the total income, we find no infirmity in the orders of the authorities below and, accordingly, confirm the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore apply, even as the assessee had made no disallowance of any expenditure in relation to this income. The same was worked out under Rule 8D, at ₹ 35,70,437/-, as under: ( a ) Qua direct expenditure (r. 8D(2)(i)) Nil ( b ) Qua indirect expenditure (r. 8D(2)(ii) Rs.25,60,423/- ( c ) Qua indirect expenditure - other than interest (r. 8D(2)(iii)) Rs.10,10,014/- The same being confirmed in first appeal, the assessee is in second appeal. Additional ground is also raised before us for the first time in respect of the corresponding adjustment in computing the book profit u/s.115JB; the relevant facts being on record. The issue being legal, we admit the said ground. We shall proceed issue-wise. With regard to interest, the assessee contended to have sufficient capital of its' own, i.e., a capital base of ₹ 160.98 crores, as against a total investment of ₹ 85.32 crs. as on 31.03.2009, so that investment in shares (Rs. 14.79 crs.) and in partnership firm (Rs. 10.39 crs.), yielding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (i.e., net of all expenses) income, whether positive or negative, being liable to, or not so, i.e., as the case may be, to tax. The relevant discussion appears at paras 85-86 (pgs. 135-137 of the reports), a part of which we consider it relevant to reproduce, as under: 'In all these decisions, the Tribunal held that no nexus had been established between borrowed funds and investments by the assessee in dividend yielding shares/income yielding mutual funds. Now assuming that this is so, the only conclusion which emerges is that the assessee had utilized its own funds for the purpose of making the investments. The fact that the assessee has utilized its own funds in making the investments would not be dispositive of the question as to whether the assessee had incurred expenditure in relation to the earning of such income. Even if the assessee has utilized its own funds for making investments which have resulted in income which does not form part of the total income under the Act, the expenditure which is incurred in the earning of that income would have to be disallowed. That is exactly a matter which the Assessing Officer has to determine. Whether or not any expenditure was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 8D(2)(iii), at ₹ 10.10 lacs The same stands made applying the said rule. While the A.O. effected the disallowance invoking the said rule, mandatory for the current year, the ld. CIT(A), in appeal, rejected the assessee's contention of the rule being arbitrary. Further, the A.O. having rendered his satisfaction with reference to the facts of the case, rule 8D stood triggered and, accordingly, the disallowance was to be, in his view, confirmed. No specific contention in this regard stood made before us. The assessee failing to substantiate its claim of having not incurred any expenditure in relation to income not forming part of the total income, we find no infirmity in the orders of the authorities below and, accordingly, confirm the disallowance of the indirect administrative expenditure, which is the subject matter of disallowance under r.8D(2)(iii), i.e., in principle. We may though further clarify that the disallowance qua investment in partnership firm, i.e., to the extent it survives our directions afore-said, shall be computed in terms of the decision by the larger bench of the tribunal in Vishnu Anand Mahajan (supra). We decide accordingly. 3.2 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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