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TMI Blog2016 (5) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... essee even when the assessee has not fulfilled the conditions set out in the said provision and the orders relied upon by the Tribunal has not reached finality? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the issue of disallowance under section 14A of the Act being sustained at 5% of exempted income i.e., Rs. 25,23,655/- does not call for any interference even when the assessing authority was correct in making disallowance under section 14A of the Act and the Commissioner of Income Tax (Appeals) had modified the same in the absence of proper reasonings? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.e.f. 24.3.2008 i.e. for -and from Assessment Year 2008-09. In holding that a reasonable disallowance of 5% of exempted income i.e. Rs. 25,23,655 is to be made in respect of the expenditure incurred to earn such income, the learned CIT (Appeals) followed the decisions of the co-ordinate benches of this Tribunal in the case of ING Vysya Bank Ltd. in ITA No.589/Bang/2006 dated 23.4.2008 and the case of ACIT V Ingersoll Rand India Ltd. in ITA No.7254/Mum/Bangalore 'A' Bench dated 30.8.2010. In view of the aforesaid judgments of the co-ordinate benches of this Tribunal (supra) and on an appreciation of the facts of the case on hand, we are of the view the order of the learned CIT (Appeals) on the issue of the disallowance under section 14A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicability of Ru le 8(D) of the I.T. Rules was accepted by Kerala High Court and therefore, a different view is said to have been taken. Under the circumstances, the appeal may deserve consideration on question No.2. 8. We may record that in the said decision of Kerala High Court, the question did not arise at al l for consideration before the Kerala High Court as to whether Rule 8(D) of the I.T. Rules is having retrospective effect or prospective effect. On the contrary at para-3 of the judgment, it has been recorded as under: "According to both counsel for the assessees proportionate disallowance is called for only under sub-s. (2) r/w r.8D of the IT Rules which came into force from 2007-08 onwards and the same cannot be applied fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital of its existing operational units at Seide and Filate for manufacturing fabrics and yarn. The learned Authorised Representative has furnished break up of the interest debited to profit and loss account for the relevant period which evidences that the interest of Rs. 44,71,565 was claimed as follows: a) On Term Loan for Filate & Siede units Rs. 44,20,762 and b) On working capital for Filate & Siede units Rs. 50,803. Therefore the facts that the entire interest paid on the Term Loan taken for acquiring fixed assets for its new unit at Hassan has been capitalized as work-in- progress has evidently not been claimed as a revenue expenditure is, in our view, factually established. 10.5.2 We also find from the submissions of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining to its existing manufacturing units at Filate and Seide. In this view of the matter, as discussed from para 10.1 to 10.5.3 of this order (supra), we are of the opinion that the disallowance of interest amounting to Rs. 44,71,565 under section 36(1)(iii) of the Act made and confirmed by the authorities below is unsustainable on facts and is, therefore, accordingly deleted. It is ordered accordingly." The aforesaid shows that the Tribunal has after undergoing the examination of the record found that the amount of Rs. 44,20,762/- was pertaining to the term loan taken for the existing manufacturing unit at Falite and Seide and it has also found that the amount of Rs. 50,803/- is pertaining to working capital loan taken for the existin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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