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TMI Blog2015 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Assessee filed its return of income for A.Y. 2008-09 on 29.09.2008 declaring total income of Rs. 2,18,86,580/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 28.11.2010 and the total income was determined at Rs. 2,23,10,110/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 28.08.2011 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following ground;- 1. On the facts and in the circumstances of the case the departmental authorities have erred in considering it a fit case for application of section 14Aof the I. T. Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A and in response to which Assessee interalia submitted that the investments have not been made out of borrowed funds and it has not incurred any expenditure for earning partnership income. The submission of the Assessee was not found acceptable to the A.O. He thereafter following the formula prescribed under Rule 8D of the I.T. Rules, worked out the disallowance u/s. 14A at Rs. 10,98,931/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who granted partial relief to the Assessee by holding as under:- 3.3 Decision: I have carefully perused the assessment order and the submissions given by the appellant. The A. O. has made the disallowance u/s. 14A by applying the Rule 8D. There are two components of disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year was purely for the purpose of assessee's main business and hence no disallowance of any administrative expenses should be made on presumption of incurrence. The submission of the appellant is not acceptable as the appellant is a partner in many firms which are involved in the business of construction. The directors of the company and other employees must be spending sufficient time and energy in running day to day business of these firms and also monitoring the business of these firms. Accordingly, it cannot be said that the disallowance has been made only on the basis of presumption. Further, from A. Y. 08-09, the disallowance on account of administrative expenses is to be made by applying the formula given in Rule 8D. The form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . has also made mistake in considering the amount of investment for the purpose of Rule 8D. The appellant has submitted that the quantum of opening and closing investment taken by the A. O. include profit element received from respective partnership firm which should be excluded for the purpose The disallowance should be made taking into the account the funds actually invested by the appellant and the profit element needs to be excluded from the amount of investment. The submission of the appellant is partly correct. For working out the amount of investment, the profit of the partnership firm worked out at the end of the year i.e. on 31/03/2008 should not be taken as it is worked out on that day and has not been invested throughout the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; (ii) Interest on FBT 5,467 (iii) Interest on TDS 408 (iv) Interest on Service Tax 108 Interest Expenditure to be considered for Rule 8D 11,01,251 The A.O., is therefore, directed to work out the disallowance after taking the various figures as mentioned above. The appellant in his submission has also taken a stand that profit of the partnership firm are first taxed in the hands of the firm and thereafter divided amongst the partners according to profit sharing ratio and, therefore, the income of the partner of the firm had already suffered taxation. Accordingly, it has been claimed by the appellant that provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and therefore also no disallowance on account of administrative expenses was warranted. Ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 8. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to disallowance u/s. 14A. With respect to disallowance of indirect interest as per Rule 8D(2)(ii) is concerned, we find that the ld. CIT(A), after considering the submissions of the Assessee has directed the A.O to work out the disallowance as directed by him in the order. Before us, ld. A.R. could not point out any fallacy or inconsistency of law in the directions of ld. CIT(A) and therefore we find no reason to interfere as far as the disallowance on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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