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TMI Blog2018 (4) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to income, which does not form part of the income under this Act. As find that in the case before us, the AO had issued a show cause notice to the assessee and after considering assessee’s written objections dt. 25-11-2011 and not being satisfied with the same, has held that the disallowance u/s. 14A r.w. Rule 8D is to be made. The Hon'ble Bombay High Court has held that Rule 8D is applicable from the AY. 2009-10. Working out disallowance u/s 8D - Held that:- Direct the AO to consider only the investments which have yielded exempt income during the relevant financial year for working out the disallowance u/s. 8D(2)(iii) of the Act. - I.T.A. No. 237/HYD/2016 - - - Dated:- 28-3-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of total income, the gross total income of ₹ 11,45,480/- was admitted after making suitable adjustments. After setting-off of brought forward losses, total income of ₹ 6,13,656/- was offered to tax. 3. Observing that assessee is in receipt of substantial income which is not forming part of the total income, the AO proposed to invoke the provisions of Section 14A of the Act to disallow the expenditure relatable to the exempt income. The assessee filed its written objections dt. 25-11-2011 stating that there is no disallowable expenditure u/s. 14A since the investment in shares and Mutual Funds was not made out of borrowed funds and no direct expenditure can be attributable to earning of dividend (exempt) income. AO did not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned A.O applying sec.14A on the basis of surmise conjecture of the A.O. The ratio of the order of the jurisdictional Hyderabad Bench in the case of DCIT Vs. AP Industrial Development Corporation in ITA No.858/Hyd/2008 dt.09-01-2009 has been ignored. 6. For these and any other grounds of appeal that may be raised at or before the date of hearing, it is prayed that the addition made by way of disallowance of ₹ 8,55,666/ - be deleted . 4.1. In addition to the above, assessee filed a letter stating that the Ground Nos. 2 3 raised in Form 36 may be treated as additional Grounds 1 2 as they were not raised before the CIT(A). Further, the assessee raised the following: 3. Lower authorities are not justified in takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that irrespective of whether the assessee has or has not incurred any expenditure for earning of the exempt income, the disallowance u/s. 14A is to be made as Rule 8D is applicable w.e.f. AY. 2009-10. She submitted that the decisions relied upon by the Ld. Counsel are relevant for the assessment years prior to AY. 2009-10. In support of her contentions, she placed reliance upon the following decisions: i. Bellwether Microfinance Fund (P.) Ltd., Vs. ITO [47 taxmann.com 260 (Hyderabad-Trib.); ii. ITA No. 1653/Hyd/2012 (AY. 2009-10) in the case of Spandana Sphoorty Financial Ltd., Vs. Addl. CIT, dt. 10-10-2014; 7. Having regard to the rival contentions and material on record, I find that the additional grounds raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this issue also needs no verification of any fresh facts and therefore, the same is admitted. I find that this issue is covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in ITA No. 1846/Hyd/2014 (AY. 2010- 11) in the case of Srinivasa Cystine Pvt. Ltd., Vs. ITO dt. 18-01- 2017(supra), wherein it was held as under: 15. Considered the rival submissions and perused the material facts on record. The assessee is aggrieved because CIT(A) has sustained the disallowance u/r 8D(2)(iii). The mute question before us is whether the investment which has not generated income should also be considered to calculate the quantum of disallowance or the whole investment as per balance sheet should be applied to di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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