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TMI Blog2018 (5) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... terest bearing funds cannot be appreciated, since for the year under consideration assessee has substantially demonstrated before Ld.CIT(A) regarding sufficient funds being available for investment purposes other than the interest bearing funds which has not been refuted by Ld.CIT,D.R. Ld.CIT(A) has observed that the funds are to be strictly utilised by assessee as per guidelines issued by RBI - No infirmity in Ld.CIT(A) deleting disallowance computed by Ld.AO under Rule 8D (iii). - Decided in favour of assessee. - ITA No. 4490/Del/2014 And ITA No. 4168/Del/2014 - - - Dated:- 15-5-2018 - SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER For The Assessee : Sh. Tarandeep Singh, Adv. For The Department : Sh.Sanjit Singh, CIT, D.R. ORDER PER BEENA A PILLAI, JUDICIAL MEMBER The present Cross Appeals are filed by revenue and assessee against order dated 27th May, 2014 passed by Ld.CIT(A)-23, New Delhi for A.Y. 2009-10 on the following grounds of appeal. ITA 4490/Del/2014 (Revenue s appeal) On the fact and circumstance of the case the Ld. CIT(A) has erred in restricting the addition made by AO on account on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation ₹ 556,32,317/- (c ) Disallowance of prior period expenses as discussed in para 10 ₹ 3,23,02,360/- (d) Disallowance u/s 14A read with Rule 8D(2)(ii) as discussed in para 17 Rs.20,91,37,000/- Net taxable income Rs.537,47,23,354/- Or ₹ 537,47,23,350/- 3. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld.CIT(A) who partly allowed the appeal of assessee. 4 . Aggrieved by the order of Ld.CIT(A) revenue as well as assessee are in appeal before us. 5 . At the outset both the parties submitted that Ground no.1 raised by revenue stands squarely covered by various orders of this Tribunal in assessee s own case for A.Y. 2004-05, 2005-06, 2006-07 and 2008-09 wherein it has been held that assessee was entitled to deduction u/s 43B of the Income Tax Act, 1961 (the Act) irrespective of payments. It has further been submitted that Hon ble Delhi High Court has dismissed revenue s appeal against order of the Tribunal for A.Y. 2006-07 in ITA 1291/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 raised by Revenue is against deleting the disallowance made by Ld.AO u/s 14A r.w. Rule 8D (2)(ii) (iii) amounting to ₹ 19,35,95,000/-. Ld.D.R. referred to observations of Ld.CIT(A) which are as under. I have carefully considered the submissions made by the appellant, the arguments of the Ld.AR, the case laws cited by him in his favour and the evidences placed on record by him. I have taken note of the fact that the total amount of interest bearing funds borrowed by the appellant Society amounts to Rs.l2,802 crores during the year, whereas its total requirement of Working Capital and Fixed Assets amounts to ₹ 13,589 crores. Moreover, I have also taken note of the evidences placed on record by the Id. AR in the form of Sanction Letters of various Banks etc., wherein, it has been clearly mentioned that the funds are being sanctioned specifically for capital expenditure and/or other purposes in compliance with End-Use Guidelines dt.01.07.2005 of the RBI as amended from time to time and that the funds borrowed were not permitted for on-lending or investment in capital market including subscription/purchase of shares or any other speculative business and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments made by the appellant Society in its joint venture in OMIFCO, Oman, the income from which is chargeable to tax under DT AA with Sultanate of Oman and also its investments in other Co-operative Societies, income from which is deductible u/s. 80P(2)( d), will not form part of the investments, which are to be taken into account for the purpose of calculation of disallowance in accordance with Rule 8D(2)(iii). 4.12 However, I have taken into consideration the fact that the total investment made by the appellant Society during the year under consideration in 14A investments amounted to ₹ 392.64 crores, as against similar investments during the immediately preceding assessment year at ₹ 229.02 crores. Looking at the increase in such investments, income from which does not form part of total income of the appellant Society, it is clear and apparent that certain expenses must have been incurred to make such investments. Therefore, I am not in agreement with the contention of the Id. AR of the appellant that no expenses were incurred for making such investments either in the terms of manpower or other administrative expenditure, despite the fact that such investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further in Schedule 18 to the profit and loss account assessee is paying interest on loan of ₹ 118.99 crores, bank charges to an extent of ₹ 265.57 crores and other charges to an extent of ₹ 4.81 crores. 3.3. As this issue has already been set aside by this Tribunal vide order dated 30/11/16 to be recomputed by Ld.AO, we also set aside this issue back to ld. AO. Assessee shall file all relevant details in order to establish its claim regarding interest expenditure not to be attributable for the purposes of earning the dividend income. Assessee shall furnish all the details in respect of interest expenditure before Ld. AO thereafter Ld. AO shall verify the same having due consideration of the audited accounts of assessee and recompute the claim of assessee. 10 . On the contrary Ld.AR submitted that Ld.A.O. computed disallowance under Rule 8D(2)(ii) and (iii). In so far as disallowance under Rule 8D(ii) is concerned Ld.Counsel submitted that the dividend earned from foreign investments cannot be considered for the purpose of disallowance under 14A. He submitted that this issue has been decided by this Tribunal for A.Y. 2008-09 vide order dated 30.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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