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TMI Blog2012 (9) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... : a) Upholding the disallowances made by the Assessing Officer at ₹ 558007/- out of interest expenditure of ₹ 756445/- without appreciating the assessee s submission in this regard and the case law on the subject. b) Upholding the addition of ₹ 29128/- u/s 14A again without appreciating the assessee s submission in this regard and the case law on the subject. 3. The brief facts of the case are that the assessee is a partnership firm constituted of about 15 partners. The assessee had claimed interest expenditure of ₹ 7,56,445/-. The Assessing Officer noted the assessee to have advanced certain amounts to its partners and also to its sister concern. The explanation of the assessee to the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paper Book cumulative net balance of the partners as on the close of the year was about ₹ 1.64 crores i.e. the net result of the positive balance after adjusting negative balance as credit balance. It was further pointed out by the learned A.R. for the assessee that no interest had been paid on the credit balance of all the partners and even in the case of the partners reflecting debit balances, no interest was paid for part of the year when the said partner/s had credit balance. The submission of the learned A.R. for the assessee in this regard was that the said aspect has not been considered by the Assessing Officer and the interest has been charged on the debit balances of the said partners, though admittedly only in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insome Textile Industries Ltd. [319 ITR 204 (P H)]. 7. The learned D.R. for the Revenue placing reliance on the order of the assessee pointed out that the perusal of the capital account of Shri Mohinder Singh Bhogal placed at page 18 of the Paper Book reflect that up to 14t h September there was credit balance of ₹ 22 lacs in his capital account with the firm and thereafter simultaneously three cheques were issued on 24.9.2007 i.e. for ₹ 25 lacs, ₹ 5 lacs and ₹ 30 lacs and the balance of the partner of the assessee firm was debited at the close of the year. Similar entries were pointed out in the case of another partner against whom there was debit balance at the close of the year. In respect of the disallowance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which there was debit balance in the capital account of four of the partners as mentioned above. The perusal of the details tabulated at pages 3 and 4 reflect the break up of the number of days relatable to it. The said interest has been computed by the Assessing Officer. However, no credit has been allowed on account of positive balance available in the capital account of the said partners or even the overall capital balance of the partners in totality available with the assessee. In the case of partnership firm, i.e. the assessee before us, all the partners had made contributions by way of their capital accounts and cumulative opening balances was ₹ 4.32 crores alongwith additions during the year of ₹ 1.27 crores and withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land, which was registered in the succeeding year. Upholding the said disallowance, we direct the Assessing Officer to recompute the disallowance from 29.1.2008 to 31.3.2008. Thus ground No.1 a) raised by the assessee is partly allowed. 10. The second issue raised in the present appeal is against the addition made by invoking the provisions of section 14A of the Act. Admittedly, the provisions of Rule 8D of Income Tax Rules for computing disallowance under section 14A of the Act are applicable w.e.f. assessment year 2008-09. Under the provisions of section 14A of the Act it is provided that the expenditure relatable to the income which does not form part of the total income under the Act would not be allowed in the hands of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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