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TMI Blog2017 (1) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be taken and some charges apportioned for the purpose of computing the expenses. AO, except for the year under appeal,has allowed the interest expenditure for earlier and subsequent years. He has not given any reasons for deviating from the stand taken in earlier years. Thus we hold that there was no justification in disallowing the interest expenses - Decided n favour of assessee - I.T.A./4948/Mum/2016 - - - Dated:- 18-1-2017 - Sh.Rajendra, Accountant Member and Amarjit Singh,Judicial Member For The Revenue : Shri N.P. Singh, CIT-DR For The Assessee : Shri D.V. Lakhani (AR) PER Rajendra A.M. - Challenging the order,dated 23/06/2016 of the CIT(A)-33,Mumbai the assessee and the Assessing Officer(AO)have filed cross a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submission of the assessee,he worked out the quantum of disallowance u/s.14A r.w.Rule 8D at ₹ 35.37 Crores.Since the assessee had already disallowed ₹ 1.17 Crores u/s. 14 A, he restricted the disallowance two ₹ 34.39 Crores and added the same to the total income the assessee for the year under consideration. 3. Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him,the assessee made elaborate submissions and relied upon certain case laws. After considering the submission of the assessee and the assessment order,he held that the assessee had earned profit on sale of Unlisted securities amounting to ₹ 18.53 Crores and on sale of listed securities at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing rise to taxable business income.He upheld the disallowance, amounting to ₹ 33.14 Crores u/s. 14 A r.w.r. 8D(2)(ii) of the Rules. 3.1. With regard to the disallowance made under Rule 8D(2)(iii) of the Rules, the FAA held that the expenditure debited to profit and loss account and claimed as deduction can only be disallowed if it was attributable to earning exempt income,that if the assessee had not incurred any expenditure or claimed any expenditure the AO could not disallow the expendi - ture arbitrarily and on ad hoc basis, that the provisions of the Rule 8D (2) (iii) of the Rules were only in relation to a situation where the admitted give expenditure was incurred and the assessee had on exempt income is an taxable income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the basic facts of the case can be summarised as under: i. Dividend income earned by the assessee-Rs.1,12,67, 825/- ii. Suo-motu disallowance made by the assessee -Rs. 1,17,49,359/-(Rs.55,150/-direct expenses and ₹ 1,16, 94,209/-u/s.14 A read with Rule 8D (2)(ii) of the Rules. iii. Disallowance made by the AO- ₹ 35.57 Crores (Rs. 32.48 Crores under the head interest disallowance + ₹ 2.08 Crores under rule 8D (2) (iii) of the Rules. iv. Disallowance upheld by the FAA u/s.14 A r.w.R.8D-35.57 Crores v. Disallowance deleted by the FAA 14 A r.w.R.8D -2.08 crores(Except ₹ 1317/-only) We find that the FAA had held that for making disallowance u/s.14A r.w.r.8D of the Rules the purpose for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, that it had raised a specific Ground before the FAA during the appellate proceeding, that the FAA did not adjudicate the issue and treated it of consequential nature .The DR left the matter to the discretion of the Bench. 6.1. We find that the assessee had raised a specific Ground of appeal in the appellate proceed - ings about levy of penalty u/s.234A,that it was also part of statement of facts filed before the FAA,that he did not decide the issue.Therefore, we are of the opinion,that in the interest of justice the matter should be restored back to the file of FAA for fresh adjudication and he is directed to afford a reasonable opportunity of hearing to the assessee and pass a speaking order.Ground No.6 is decided in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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