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TMI Blog2015 (11) TMI 1712X X X X Extracts X X X X X X X X Extracts X X X X ..... A) further noted that there is no finding of fact in respect of earlier years that the disallowance of interest was made in the earlier years in connection with the investments carried forward and held during the year. Basing on these factual findings, Ld. CIT (A) thought it fit to delete the addition of ₹ 75,94,474/- made under Rule 8D(ii) of the Rules. We see no reason to disturb this finding of fact based on record. In view of the fact that making investment, maintaining or continuing with any investment in a particular share/mutual fund etc. and the time when to exit from one investment to another are all the activities requiring well coordinated and well informed management decisions, involving not only inputs from various sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, find that the Ld. CIT (A) is not justified in exercising any discretion with the figure reached by the AO under Rule 8D(iii) of the Rules. However, keeping in view the fact that the total administrative expenses debited to the profit and loss account is only ₹ 31.85 lacs, we hold that the disallowance under Rule 8D(iii) of the Rules could be restricted to 31.85 lacs. To this extent, we allow the grounds of appeal. - Decided partly in favour of revenue - ITA No.-273/Del/2015 - - - Dated:- 3-11-2015 - SHRI G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI K.N. CHARY, JUDICIAL MEMBER For The Assessee : Sh. F.R. Meena, Sr. DR For The Revenue : Sh. Ved Jain, CA Ms. Devina Sharma, Adv. ORDER PER SHRI K.N. CHARY, JUDICI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. AO calculated the disallowance by invoking Rule 8D of the Act and he reached a sum of ₹ 75,93,474/- under Rule 8D(ii) and a sum of ₹ 37,58,360/- under Rule 8D(iii) of the Rules, the aggregate of which comes to ₹ 1,13,51,834/-. In appeal Ld. CIT (A) reduced the disallowance to ₹ 2,65,500/-, by totally deleting the addition under Rule 8D(ii) of the Rules and reducing the addition under Rule 8D(iii) of the Rules. The Revenue, therefore, filed this appeal challenging the same. 3. It is the argument of the Ld. DR that merely because the assessee had their own funds derived out of sale of investments, it cannot automatically be presumed that no part of borrowed amount was used for investment. As far as the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment of ₹ 1.3 crores. Ld. CIT (A) further found from the record that the funds borrowed during the year were used for the business purposes and no part of borrowed funds was used for earning the exempt income. Ld. CIT (A) further noted that there is no finding of fact in respect of earlier years that the disallowance of interest was made in the earlier years in connection with the investments carried forward and held during the year. Basing on these factual findings, Ld. CIT (A) thought it fit to delete the addition of ₹ 75,94,474/- made under Rule 8D(ii) of the Rules. We see no reason to disturb this finding of fact based on record. 5. Now coming to the addition made under Rule 8D(iii) of the Rules, both the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmula prescribed under Rule 8D(iii) of the Rules. Here, in this matter, no error in calculation of the amount under Rule 8D(iii) is pointed out. Ld.CIT (A) also did not disturb the quantification of this amount. However, with reference to ₹ 31.85 lacs, the administrative expenditure debited to profit and loss account, Ld. CIT (A) stated that out of this ₹ 31.85 lacs a sum of ₹ 26.54 lacs being spent on travelling cannot be allocated to the investment portfolio and has to be excluded from consideration. He apportioned the balance amount of 5.31 lacs to trading and investment and reached the figure of 2,65,500/- under Rule 8D(iii) of the Rules read with Section 14A of the Act. In our opinion this discretion is not available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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