9911796707
TMI Blog2015 (11) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in restricting the addition to Rs. 6,00,000/- out of total addition of Rs. 44,42,330 made u/s.14A of the Act towards interest and other administrative expenses. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above, since the assessee has failed to disclose his true income. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2.1. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 29/12/2008, thereby the Assessing Officer (AO in short) made disallowance of NSE penalty of Rs. 2,38,675/-, disallowance of loss of sale stock-in-trade treated as deemed speculation transaction of Rs. 25,39,171/- disallowance of interest of Rs. 1,82,398/-, disallowance of Excess depreciation of Rs. 25,23,437/- and disallowance by invoking provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT 41 ITR 350 relied upon by assessing officer, it is a case where that assesses imported DATE from Iraq which prohibited.... The provisions of Seas Customs Act for the violation of the relevant provisions of the Act and there was no question of compensatory element being part of such penalty. Even, the facts of CIT vs. Maddi Venkatarantnam & Co. relied upon by AO cannot be applied to the present case as in that case payments were made in violation of FERA provisions. In the case of appellant, payment is towards compensation for delayed submission of compliance report to NSE and that too which is not an offence or towards infraction of law. It view of aforesaid facts, ratio of aforesaid decision relied upon by AO is not applicable to the facts of case of appellant. The case of appellant is squarely covered by decision of Hon'ble Mumbai I.T.A.T. in case of Crest Capital Market vs. ITO referred supra and respectfully following said order, addition made by the Assessing Officer is deleted." 4.1. We find that the ld.CIT(A) has followed the decision of the Coordinate Bench (ITAT - Mumbai) passed in ITA Nos.1240 & 1241/Mum/2006 in the case of Goldcrest Capital Markets Lt. vs. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est income of Rs. 1.79 crores. Therefore, it cannot be said that the assessee has claimed any expenditure on interest. He submitted that this is so because in assessee's case there is a common pool of interest income and interest outgo. Therefore, netting of interest is required in the light of judgement of Hon'ble Apex Court in the case of Keshavji Ravji & Co. vs. CIT reported at (1990) 183 ITR 01(SC). This judgement of the Hon'ble Apex Court has been applied by the Hon'ble Jurisdictional High Court in the case of CIT vs. Wintex Mills Ltd. reported at (2000) 245 ITR 266 (Guj.). Further, ld.counsel for the assessee submitted that the dividend income earned is of Rs. 3 lacs. 8. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the Rule-8D is not applicable in the year under appeal. The ld.CIT(A) has decided this issue by observing as under:- "7.2 I have carefully considered the submission made by appellant and observation made by the Assessing Officer. I follow the decision of Hon'ble Mumbai High Court in the case of Godrej & Boyce Mfg. Co. Ltd tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to from administrative expenses even if the appellant denies that expenditure was incurred for earning exempted income. Considering the investments made by appellant and dividend... The disallowance is, therefore, restricted to Rs. 4,00,000/- from interest expenditure nd Rs. 2,00,000 from other administrative expenses and the ground of appeal is partly allowed." 8.1. Since the Rule-8D of I.T.Rules, 1962 is not applicable, therefore in our considered view the AO was not justified in applying the Rule 8D for making disallowance. The ld.CIT(A) has given a finding that the assessee was having substantial funds and lesser borrowed funds. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any contrary material on record, therefore, we do not see any reason to interfere with the finding of the ld.CIT(A), same is hereby upheld. Thus, this ground of Revenue's appeal is rejected. 9. Remaining grounds of Revenue's appeal are general in nature which require no independent adjudication. 10. As a result, Revenue's appeal is dismissed. 11. Now we take up Assessee's Cross Objection No.158/Ahd/2011 for AY 2006-07 (arising out of ITA No.1181/Ahd/2011 for AY 2006-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt income before invoking disallowance u/s.14A. Reliance is placed on the decision of the Coordinate Bench in the case of Dresdner Bank AG vs. Addl.CIT reported at (2007) 11 SOT 158 :: 108 ITD 375 (Mum.-Tribunal). Further, ld.counsel for the assessee submitted that provisions of section 14A do not confer power upon the AO to deem or assume certain expenditure to have been incurred in relation to tax-free income, not only incurring of expenditure but also its relationship with exempted income must be clear and must be capable of being ascertained. Reliance is placed on the decision of Coordinate Bench in the case of Impulse (India) (P) Ltd. vs. Asstt.CIT reported at (2008) 22 SOT 368 (Delhi Tribunal). Further, ld.counsel for the assessee placed reliance on the decision of Coordinate Bench in the case of Asst.CIT vs. Eicher Ltd. reported at (2006) 101 TTJ (Delhi) 369. 13.1. On the contrary, ld.Sr.DR supported the order of the AO. 14. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the decisions/judgements relied upon by the ld.counsel for the assessee. As per section 14A(2) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
