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TMI Blog2016 (3) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... estricted to the amount of dividend is acceptable as the Coordinate Bench in the case of M/s Daga Global Chemicals Pvt. Ltd. [2015 (1) TMI 1204 - ITAT MUMBAI] has held that the disallowance u/s 14 r. w Rule 8D cannot be exceed the exempt income. Thus we restrict the disallowance u/s 14A to ₹ 60016 only. - Decided partly in favour of assessee. - I.T.A No.656(Asr)/2014 - - - Dated:- 18-3-2016 - SH. A.D.JAIN, HON BLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HON BLE ACCOUNTANT MEMBER Appellant by: Sh. Padam Bahl (CA.) Respondent by: Sh. Tarsem Lal (DR.) ORDER PER T. S. KAPOOR (AM): This is an appeal filed by assessee against the order of learned CIT(A) dated 11.09.2014 for Asst. Year. 2010-11. 2. The only g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes and as such are not allowable as business expenses. In this regard, assessee has submitted and relied on case-laws as discussed above for assessment year 2008-09. In view of above discussion for A.Y.2008-09 and applicability of Abhishek Industries decision of Hon ble Punjab Haryana High Court and further in view of rule 8D, disallowance of interest u/s 144A/36(1)(iii) is up held and action of the AO in this regard is confirmed. However, disallowance of interest had to be calculated in accordance with number of days basis and on that basis disallowance is restricted to ₹ 2,08,601/- instead of ₹ 3,05,694/-. The AO has disallowed a sum of ₹ 1,29,260/- being 1/5th of total expenses of Conveyance/Entertainment/Mobile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the learned AR filed a copy of balance sheet as on31.3.2010. While going thorough the balance sheet we observed that funds amounting to ₹ 14.81 crores were struck in sundry receivables and therefore, the learned AR was confronted regarding availability of funds of partners. The learned AR submitted that though a significant amount was struck up in sundry receivables yet the fact remain that assessee had not invested funds after borrowing from the bank and at the time of making investment there were very small bank borrowings and in this respect our attention was invited to paper book page 19 and it was submitted that on the date of making investments there were borrowing to the tune of approximate ₹ 55 lacs only. He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai Benches as the basic idea of making disallowance u/s 14A is defeated if the above order is followed because he submitted that if an assessee has incurred an expenditure for earning exempt income and does not receive dividend income or receives lesser dividend income then, it does not mean that the disallowance will be restricted to the amount of dividend. 10. We have heard the rival parties and have gone through the material placed on record. We find that the first argument of learned AR do not carry any force as the figures in the balance sheet suggest that the assessee had no surplus funds to make investment in mutual funds. The second argument of the learned AR that at the time of making investment there were little borrowings also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts clearly indicates, as claimed by the assessee that no borrowed funds were utilized for earning the exempt income by the assessee and further the dividend were directly credited in the bank account of the assessee and no expenditure was claimed. What it may me, we find that the assessee only received ₹ 1,82,362/- as dividend income, therefore, there is no question of disallowance of ₹ 14,58,412/- by invoking section 14A r.w Rule 8D under the facts available on record. It was also explained by the ld. Counsel for the assessee that on identical fact in earlier years, no disallowance was made. In the present assessment years, no disallowance was made. In the present assessment year also, no borrowed funds were invested by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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