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TMI Blog2018 (7) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, Mumbai [CIT(A)] erred on facts and in law in confirming the disallowance made by the Assistant Commissioner of Income Tax 5(1)(4), Mumbai (AO) under Rule 8D(2)(iii). 2) The appellant prays that the disallowance made by the AO u/s. 14A read with Rule 8D(2)(111) and as confirmed by the CIT(A) may be deleted." 3. At the outset, it is to be stated that the assessee has earned dividend income of Rs. 10.75 only. The AO by invoking the provision of section 14A read with Rule 8D made disallowance at Rs. 4,89,511/- i.e. under Rule 8D(2)(iii) i.e. half percentage of average value of investment being administrative expenses. The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, now assessee is in appeal before us. 4. We find that this issue is squarely covered. The learned Counsel for the assessee as well as the learned Sr. Departmental Representative agreed that the issue is squarely covered by the decision of Hon'ble Delhi High court in the case of Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Delhi), wherein the disallowance is to be restricted to the extent of exempt income only. The Hon'ble Delhi High Court in the case of Cheminvest Ltd. (supra) held as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- "12.2 It is seen that not only has M/s NMW continued to credit the interest 13% for four quarters i.e. for Q1 to Q4 of the FY 2011-12 but also for Q1 of the subsequent FY 2012-13. 12.3 It is seen that M/s Next Media Work Ltd is a listed company who has to publish and submit the quarterly results to the SEBI. In none of the quarter M/s NMW realize about the financial hardship. It is seen that MIs NMW has audited its books of 08/05/2012. Till this date also there was no financial hardship to M/s NMW. Further there was no financial hardship when MM NMW has credited the interest for the Q-1 of the FY 2012-13 on 30.06.2012. It is seen that M/s NMW has reversed the interest credited only on 31/07/2012. It took five quarters and one month for M/s NMW to realize the financial hardship in respect of payment of interest. This shows that the reversal of the interest credited is just to reduce the taxable income of an associate company i.e. the assessee company. 12.4 It is further seen that M/s NMW has not revised the TDS return till 160914. It is seen that M/s WMW has revised the TDS return only when the assessee was told to reconcile the gross receipt with TDS return. This also sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 468.48 lakhs in the previous year registering a growth of 10% c) Another company M/s HT Media: Ltd. who runs a Fever 104 FM channel it is annual report for the FY 2011-12 has mentioned as under: the Indian Media & Entertainment Industry grew by 11.7 percent in the calendar year (CY) 2011 to '728 billion from '652 billion in CY 10. In view of the above the story of the assessee regarding 17% growth does not hold any ground. 12.8 All the above facts show only one thing that the reversal of interest credited is an afterthought arrangement by the assessee in order to reduce the taxable income. Further the tact, remains same that there was no reversal of interest during the.: PY Owl consideration by the payer and therefore there was no occasion for the assessee to reduce the Interest in its books. The arrangement made by the assessee Is nothing but the colorable device with the Intention to defraud the revenue. The transaction to question is not in accordance with the genuine spirit of the statute. Thus, it could be observed. 'that the planning made by. the assessee is not legitimate and made with fraudulent. motives and mate tide Intentions" Aggrieved, assessee pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation obtained from assessee company for AY 2012-13 was to the tune of Rs. 27,97,232/- The assessee filed copy of confirmation letter received from NMW and submitted before the AO, the CIT(A) and now before us. The assessee has also filed the copy of resolution for charging of interest rate from 13% to 3%. 10. On the other hand, the learned Sr. Departmental Representative heavily relied on the assessment order and the order of CIT(A). He stated that the assessee has only reversed the entry just to reduce the tax liability. He stated that the reasons stated in the assessment order. 11. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that NMW is a listed company and an associate concern of the assessee. The NMW a listed company has to publish and submit audited results to SEBI. We find from the facts that NMW continued crediting interest at the rate of 13% for the relevant FY 2012-13 relevant to AY 2013-14 for first quarter even . It is also fact that NMW has audited book of accounts, which were audited on 08-05-2012. We also find that the assessee is unable to prove the financial hardship faced by NMW despite the fact that NMW ..... X X X X Extracts X X X X X X X X Extracts X X X X
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