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TMI Blog2018 (8) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... , ARs ORDER PER MAHAVIR SINGH, JM: These two appeals by Revenue are arising out of the different orders of Commissioner of Income Tax (Appeals)-21, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-21/IT/91 412/2010-11 2011-12 dated 12.11.2012 01.06.2012. The Assessments were framed by the Dy. Commissioner of Income Tax Income Tax Officer, Circle 10(2) ward-10(2)(3), Mumbai (in short DCIT/ITO/ AO) for the AY 2008-09 2009-10 order dated 30.09.2010 29.12.2011 under section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). 2. The only common issue in both the appeals of Revenue is as regards to the order CIT(A) deleting the disallowance made by AO in regard to expenses relatable to exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to AO the actual disallowable expenses relatable to this exempt income are to the tune of ₹ 3,10,04,504/- and hence, he required the assessee to explain as to why the disallowance under section 14A of the Act should not be considered at ₹ 3,10,04,504/- as against the suo moto disallowance made by assessee at ₹ 1,08,11,971/-. The assessee explained that in view of specific provisions of section 115JB of the Act, starts that a non-obstante clause, notwithstanding anything contained in any other provisions of this Act . Therefore, it has the effect of making the provisions relating to book profit tax, a self contained code so that one have not to look to any other section for determination of book profit. Hence, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding by the first appellate authority that the AO has not recorded any satisfaction as to why the assessee s claim of disallowance of expenditure is not correct. The CIT(A) observed as under: - As per provisions of see.14A(I) no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of total income under this Act. As per provisions of sec. 14A(2) where the A.O. is not satisfied with the correctness of claim of assessee in respect of such expenditure in relation to income which does not form part of total income, the A.O. shall determine amount of expenditure disallowable by applying the formula provided in Rule 8D(2). Thus the A.O. has to apply the provisions of Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income was correct. In my considered view the appellant's offer of disallowance u/s. 14A at ₹ 1,08,11,971 / - in the return of income was justified, logical and based on scientific working of actual day to day working of interest disallowable based on day to day utilization of borrowed funds for the purpose of making investments. In the facts and circumstances the provisions of Sec. 14A(2) were not applicable. Therefore, the A.O. was not justified in making further disallowance by applying the provisions of Rule 8D(2). In the return of income, the appellant had offered the correct interest expenditure disallowable u/s.14A(1) of the Act. The appellant had also offered all other expenses (Admn. Expenses) for disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the AO. 6. We find from the above proposition and the facts of the case that the AO has not at all recorded the satisfaction for rejecting the claim of expenditure suo moto disallowed by assessee in relation to exempt income. Once this is the position, we are of the view that the CIT(A) has rightly deleted the disallowance. Accordingly, we confirm the order of CIT(A). 7. The assessee has also raised the alternative propositions i.e. interest free funds available with it for making investment and also others. Since, we have already allowed the assessed claim on the issue of satisfaction, we need not to adjudicate the other propositions. 8. The facts and circumstances are exactly identical in AY 2008-09 and even CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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