9911796707
TMI Blog2011 (10) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... ere heard together and are being disposed off by this consolidated order for the sake of convenience. 3. The ground of appeal raised by the Revenue is as under : "1. That the Ld. CIT(A)-II has erred in law and on facts in deleting the disallowance of ₹ 3,08,64,359/- out of interest and disallowance of ₹ 1,06,16,355/- out of indirect expenses which were held by the A.O., as expenditure incurred to earn income exempt from tax u/s 14A of I.T. Act." 4. The Assessing Officer during the course of assessment proceedings had invoked the provisions of section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules and computed the disallowance out of dividend income received by the assessee. During the year under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is increase in investment to the tune of ₹ 0.50 crores. Thus there is net fall to the tune of ₹ 15.18 crores rather than increase in investments covered u/s 14A. In nutshell total increase in investments is as under : Increase in investments not covered u/s 14A ₹ 62.65 crores Fall in investments covered u/s 14A Rs.15.81 crores Rs.46.84 crores 6. The finding of the CIT (Appeals) in view thereof was that "there is no increase in investments covered under the provisions of section 14A". The CIT (Appeals) thus held as under : "On the contrary as explained in the written submission the assessee has earned income from the investments itself to the tune of ₹ 75.30 crores against total increase in investments to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through these statements placed in the paper book and find force in his arguments". The CIT (Appeals) thus held as under : "15. As rightly contended by the Ld.Counsel from these details, it becomes quite clear that the total increase in investments is only due to reinvestment of huge income from these investments itself. Further there is no increase in the investments which are covered u/s. 14A rather there is fall in the same to the tune of ₹ 15.81 Crores. The increase of ₹ 46.84 crores in investments is mainly, from where the income is the part of the total income and is taxable accordingly. 16. Considering the case of the appellant from all these angles there is considerable force in the contention of the Ld. Counsel that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m where the exempt dividend income had been earned with the interest bearing borrowings. The CIT (Appeals) also considered that the assessee had suo motu disallowed a sum of ₹ 1.52 crores being the expenditure incurred directly attributable to the exempt income. The CIT (Appeals) thus held that in view of the ratio laid down by the Tribunal in assessee's own case, which has been affirmed by the Hon'ble Punjab & Haryana High Court in judgment reported in 323 ITR 518 (P&H), in assessee's own case, there was no merit in any disallowance u/s 14A of the Act. 9. In the totality of the facts and circumstances of the present case where the assessee has explained the source of investment in the equities, income from which is exempt from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of this unit-wise balance sheets have been placed in the paper book before me. Further, letter from the State Bank of India lead bank regarding renewal of working capital limit dated 11.4.2005 also filed in support of contention that separate limits have been sanctioned to the other units. iv) Current year's investments include investment to the tune of ₹ 67.65 Crores in the debentures/Real Estate Funds from where the income is taxable. On the contrary there is fall in the investments in the mutual funds etc. as compared to the earlier year from where the income is tax free to the tune of ₹ 46.45 Crores and after considering increase in the investments in group companies shares at ₹ 30.13 Crores there is net d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards Administrative Expenses on estimate basis ignoring the facts that assessee has already disallowed a sum of ₹ 1,52,06,451/- on account of expenses incurred in relation to exempt income." 12. We find that the Hon'ble Bombay High Court in Godrej & Boyce Mfg.Co.Ltd V DCIT & Anr, [234 CTR 1 (Bom) reversing the order of Special Bench of Mumbai Tribunal on the issue held that the provisions of Rule 8D were not ultra virus the provisions of Section 14A and it was also held that the same do not offend Article 14 of the Constitution. It was further held that the provision of Rule 8D was to be applied prospectively w.e.f. 01.04.2007 i.e. in relation to assessment year 2008-09 and subsequent years as the Memorandum explaining the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
