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TMI Blog2017 (9) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... tment in tax free securities no disallowance of interest expenditure u/s 14A can be made. Disallowance being ½% of the average value of investment - Held that:- As the assessee suo motu offered disallowance of ₹ 25,003/- u/s 14A in its return of income. This factual finding recorded on page 19 of the impugned order has not been controverted by the ld. DR. If the assessee offered disallowance of this magnitude, then naturally the total amount of disallowance u/s 14A ought to have been reduced with the amount already offered by the assessee. In the given circumstances, we sustain the disallowance u/s 14A read with Rule 8D(2)(iii) for a sum of ₹ 46,361/- (Rs.71,364/- (-) ₹ 25,003/-). Addition on account of downward sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 5059/Del/2014 - - - Dated:- 9-8-2017 - Shri R.S. Syal, Vice President And Shri K. Narasimha Chary, Judicial Member Assessee by : Shri Ved Jain, CA Respondent by: Ms Rachna Singh, CIT, DR Shri Anshu Prakash, Sr. DR ORDER Per R. S. Syal, VP These two cross appeals one by the assessee and the other by the Revenue arise out of the order passed by the CIT(A) on 15.07.2014 in relation to Assessment Year 2010-11. 2. The first issue raised in the Revenue s appeal and one of the issues raised in the assessee s appeal is against the disallowance u/s 14A of the Income-tax Act, 1961 (hereinafter also called the Act ). 3. Briefly stated, the facts of the case are that the assessee made investments in SBI Magnum I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the assessee s balance sheet, a copy of which has been placed on record. This balance sheet indicates the assessee s net worth at ₹ 70.85 crore. As against the shareholders fund of this magnitude, the assessee made investment in the Fund, yielding exempt dividend income, only to the tune of ₹ 1.00 crore and odd. This shows that investment in Funds is much less than the assessee s shareholder s fund. The Hon'ble Karnataka High Court in CIT Anr vs. Microlabs (2016) 383 ITR 490 (Kar), has held that when investments are made from common pool and non-interest bearing funds are more than the investment in tax free securities no disallowance of interest expenditure u/s 14A can be made. This view has been taken by foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2)(iii) for a sum of ₹ 46,361/- (Rs.71,364/- (-) ₹ 25,003/-). This disposes of the grounds taken by both the sides. 6. The only other issue which survives in the appeal of the Revenue is against the deletion of addition of ₹ 327,65,554/- made by the Assessing Officer on account of downward sales adjustment. 7. Briefly stated, the facts of the case are that the assessee is engaged in the business of manufacturing automatic components, which are supplied to Maruti Udyog Limited. The assessee entered into a Basic Price Agreement with Maruti Udyog Ltd. The price stated in this order was indicative and subject to revision based on material cost and cost incurred by the assessee. The assessee revised sale amount with adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to our notice either by the assessee or by the Department, respectfully following the precedent, we order for the deletion of addition of ₹ 3.20 crore and remit the matter to the Assessing Officer as regards reconciliation difference amounting to ₹ 7.45 lac to be decided in conformity with the view canvassed in the preceding year pursuant to the order passed by the Tribunal. 9. The only issue other than section 14A which is raised in the assessee s appeal is against confirmation of addition of ₹ 55,92,096/- and ₹ 12,828/- made by the Assessing Officer on account of interest. 10. The facts apropos this issue are that the assessee claimed deduction towards interest (Prior period item) in the computation of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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