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TMI Blog2016 (1) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... that 0.5% of dividend yielding investments should be disallowed and not on the entire investments . We, therefore direct the AO to calculate the disallowance of 0.5% under rule 8D(2)(iii) by taking those investments which yielded dividend during the year. Thus, the appeal of the assessee is partly allowed. The AO is directed accordingly. - Decided in favour of assessee. - I.T.A. No. 7115/Mum/2013 - - - Dated:- 15-1-2016 - Shailendra Kumar Yadav (Judicial Member) And Rajesh Kumar (Accountant Member) For the Appellant : Sanjukta Chowdhury For the Respondent : Satya Pal Kumar ORDER Rajesh Kumar (Accountant Member) This appeal by the assessee is directed against the order dated 17.10.2013 of Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that provisions of section 14A r.w.r. 8D of the Act were applicable and accordingly made the disallowance of ₹ 11,18,976/- as computed in para 4.3 of the assessment order. The ld. CIT(A) dismissed the appeal of the assessee by holding as under:- I have considered the facts of the case and the arguments of the appellant. I have carefully considered the submission of the appellant and the argument of the Assessing Officer. I find that with the insertion of Rule RULE 8D r.w. the provisions of sub-section 2 3 of section u/s 14A(2) lay down a procedure for determining expenditure to be disallowed u/s. 14A. this being procedural in nature, it is to be applied to all the pending proceedings as on the date of its insertion. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking transactions of shares which yielded exempt income. Apparently, any expenditure incurred for undertaking transactions for shares which subsequently yielded exempt income is required to be treated as expenditure incurred for earning of exempt dividend income. Therefore, the assessee s contention that no expenditure had been incurred for earning of exempt income is not acceptable. The amount of such expenditure is, therefore, required to be determined as per provisions of Rule RULE 8D. In view of above discussion, the Assessing Officer has correctly calculated the disallowance u/s.14A r.w. Rule RULE 8D and thus, the addition is confirmed. Thus, the ground of appeal is dismissed. 3. The ld. AR submitted before us that the ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal investment, dividend received on shares, dividend received on mutual funds and loan/ creditors and Provisions filed at page no. 13 of the paper book . The total investment value of shares was 13,93,91,986/- and the balance in the capital account as on that date was ₹ 18,40,73,180/- which unequivocally proved that all these investment were made out of assesse s own funds and not out of borrowed funds. The borrowed funds were utilized for the purpose of share trading the income from which was returned as income from business during the year. 4. As regards the additions under rule 8D(2)(iii) of ₹ 4,21,973/- being 0.5% of average investments, it was argued that the 0.5% should be calculated by taking into account only those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would be out of the interest free funds available with the assessee. In the case of CIT Vs Gujrat Power Corporation Ltd (supra) the Hon ble Gujrat High Court has held that the assessee had demonstrated that it had other sources of investments and no part of the borrowed could be stated to be used for the purpose of earning tax free income, the invocation of the provisions of section 14A for taxing such interest was not justified. The facts of the case of the assessee are squarely covered by the above decisions and we respectfully following the ratio laid down, delete the addition of ₹ 5,49,368/- under rule 8D(2)(ii). As regards the balance addition of ₹ 4,21,973/- we find merit in the arguments of the ld AR that 0.5% of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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