9911796707
TMI Blog2015 (9) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... vide his order dated 10.05.2012. Assessee's Appeal (in ITA No. 5019/Mum/2012) 2. The same raises a single ground, reading as under: 'On the facts and circumstances of the case, the Learned CIT(Appeals) has erred in not deleting the entire addition of Rs. 98,66,326/- made u/s.14A and instead in restricting the disallowance to Rs. 45,63,028/- u/s.14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii).' 3. At the very outset, it was submitted by the ld. Authorized Representative (AR), the assessee's counsel, that the disallowance u/s.14A, made suo motu by the assessee by estimating the impugned expenditure at 5% of the tax exempt income in the form of dividend, i.e., at Rs. 7,51,999/-, stood worked by the Assessing Officer (A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, July, November and December, 2008. There was, thus, correspondingly no business activity, so as to entail deployment of capital, for four to six months during the year. He, accordingly, attributed 1/3rd of the total interest for the year (at Rs. 204.52 lacs) towards investment in shares, yielding or liable to yield the tax-exempt dividend income, working the disallowance under rule 8D(2)(i) at Rs. 68,17,444/-. The balance interest claim of Rs. 136.35 lacs, being the difference of the total claim of Rs. 204.52 lacs and that disallowed as direct expenditure (Rs.68.17 lacs), was considered for disallowance under r. 8D(2)(ii) on a proportionate basis, i.e., in the ratio of the average investment in shares to the total assets as per the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been rather a decline in the investment in mutual funds, i.e., the relevant investment, during the year, i.e., from Rs. 3090.24 lacs as at the beginning of the year to Rs. 973.45 lacs at its end. Though the fund position as at the year-end, would not, in our view exhibit whether the surplus funds of the business were or were not utilized in whole or in part toward the tax exempt investment during the non-seasonal months, the same is a matter of fact and, accordingly, required to be established as so. It is only the assessee's balance-sheet as at the end of the relevant months, or the fund flow statement for the same, or the relevant period, that would show the avenue of the funds released from the inventory of yarn maintained during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, consider it a serious lapse on the part of the ld. CIT(A) in not so directing the A.O. So much so, in our view, the parties themselves should have pointed out this during hearing, which exhibits or reflects smugness on the part of the assessee and a lack of preparation on the part of the ld. Departmental Representative (DR). We direct accordingly, so that the disallowance of interest u/s.14A r/w Rule 8D(2)(ii) shall be with reference to the interest cost for the entire year, i.e., Rs. 204.52 lacs, and not Rs. 136.35 lacs. As regards our competence to so direct, we rather consider it our bound and duty to do so. The case law on the powers of the tribunal is legion, and for which we may, for ready reference, refer to the decisions inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal, the assessee found favour with the ld. CIT(A) in-as-much as section 50C only applies for computing 'capital gains' arising to the assessee on the transfer of capital assets specified therein, so that the same would have no implication toward computing the WDV of the relevant block of assets. Aggrieved, the Revenue is in appeal before us. 7. We have heard the parties, and perused the material on record. The Revenue bases its claim on the decision by the special bench of the tribunal in the case of ITO vs. United Marine Academy [2011] 130 ITD 113 (Mum)(SB). Even as noted by the ld. CIT(A), the said decision, in ratio, only holds that section 50C shall apply equally in respect of depreciable assets; it being the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
