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TMI Blog2016 (10) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... lude the investments in bonds while calculating the disallowance u/s 14A read with rule 8D whereas the ld AR heavily relied on and supported the order of CIT(A) who rightly directed the AO to exclude the investments in bonds in the calculation of disallowance u/s 14A. We find no merit in the argument of the ld.DR that the CIT(A) was wrong in holding that the investments in bonds be excluded for the purpose of disallowance under section14A r.w.r 8D. We do not find any infirmity in the order of ld.CIT(A) who has recorded the finding of fact that the income from bonds was taxable and was not exempt as noted by the AO and do not require any interference . We, therefore uphold the order of ld. CIT (A) and dismiss the appeal of the revenue on this issue - I.T.A. No.2468 /Mum/2010, I.T.A. No.6479/Mum/2010 - - - Dated:- 16-8-2016 - SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Santanu Kumar Saikia For The Respondent : Shri Girish Balekundri ORDER PER RAJESH KUMAR, A. M: These are the appeals filed by the revenue against the order passed by the ld.CIT(A)-4, Mumbai dated 1.1.2010 and 25.6.2010 for the assessment years 2006-07 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of assessment proceedings, the assessee vide letter dated 24.12.2008 admitted the lapses on non-allocation of certain expenses to Silvassa unit and claim of deduction u/s 80IB was reduced to 1931.56 lakhs as against the claim as claimed earlier ₹ 1966.56 lakhs and thus thereby reducing the claim of ₹ 35 lakhs. The AO also worked out some variation under various head as regard allocation of expenses such as depreciation and financial charges which was calculated at ₹ 15 lakhs, and clubbed with the amount as offered by the assessee vide letter dated 24.12.2008 and thus, total deduction u/s 80IB worked out to ₹ 15 lakhs accordingly, the deduction 80IB was reduced to ₹ 1916.56 lakhs. The AO finally passed the order under section 143(3) of the Act vide order dated 29.12.2008 by assessing the income of the assessee at ₹ 25,17,02,430/- by making various disallowances including the reduction under the scheme u/s 80IB of the Act as discussed above. Thereafter, the assessee during the course of hearing before the ld.CIT(A) explained the various anomalies and discrepancies which were admitted before the AO vide letter dated 24.12.2008 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t business whereas the A.0. has computed. the disallowance at ₹ 50 lakh which is not correct, if the method followed by the A.O. is correctly applied then proportionate disallowance would be ₹ 35,000/- only. 12. I have duly considered the submissions of the A.R. and I find that the AO has allocated the expenses on the basis of the turnover of the company whereas the assessee has allocated the expenses on actual basis. Since the Silvassa unit is involved in export business only, the interest attributable to Silvassa unit amounting to ₹ 45 lakh has been allocated to Silvassa unit as the assessee is a debts free company and no borrowed funds have been used. Since the assessee has allocated the actual expense in respect of the Silvassa unit the same is required to be allowed. The AO is directed to allow deduction u/s 80IB as claimed by the appellant. 5. We have considered the rival submissions and perused the record including the orders of authorities below. We find that the assessee has committed mistake in discrepancy in the allocation of expenses to various units including the Silvassa unit on which it has claimed deduction u/s 80IB at ₹ 19,66,56,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA it was submitted that the provisions of section14A r.w.r 8D were not applicable to the assessment year 2006-07 which is the year under consideration and were applicable from the assessment year 2008-09. The ld. counsel also submitted before the ld. CIT(A) that the assessee has made investments which were inclusive of investment in bonds, the income from which is liable to be taxed and was not exempt. After considering the submissions of the ld.AR, the FAA partly allowed the appeal of the assessee by observing as under : 5. I have duly considered the submission of the A.R. and I find that the assessee was having interest income from bonds which is not exempt. In any case the assessee was having investment in unquoted shares to the extent of ₹ 225.82 lakh which was sold in this year. Hence, 0.5% of average of opening and closing balance of ₹ 225.82 lakh would amount to ₹ 112.91 lakh. Accordingly, the disallowance should be restricted to ₹ 89,000/- as computed above. The A.O. is directed to restrict the disallowance to ₹ 89,000/- u/s. 14A. 6. I do not agree with the submissions of the A.R. that Rule BD is not retrospective. The Hon'ble IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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