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TMI Blog2018 (11) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... th the decision rendered by the Special Bench referred supra. Accordingly we modify the order passed by the CIT(A) and direct the AO to exclude the investments made in growth funds as well as investments which did not yield dividend income during the year under consideration while working out average value of investments. The amount of ₹ 1,26,000/- voluntarily disallowed by the assessee should be given set off against the amount of disallowance computed under Rule 8D(2)(iii) of the I.T. Rules for the reasons discussed above. We order accordingly. AO has not recorded proper satisfaction as contemplated under Section 14A(2) of the Act. However, he did not press the same during the course of hearing and hence we decline to adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed by the assessee and added ₹ 101.56 lakhs to the returned income of the assessee. 3. The learned CIT(A) noticed that the assessee possessed sufficient amount of interest free funds and hence no disallowance of interest expenditure under Rule 8D(2)(ii) of the I.T. Rules is called for. In this regard the learned CIT(A) placed reliance on the decision rendered by the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. 383 ITR 529. Accordingly he deleted the disallowance of interest expenditure made under Rule 8D(2)(ii) of I T Rules. The disallowance of ₹ 1,26,000/- made by the assessee was considered by Ld CIT(A) as disallowance of direct expenditure under Rule 8D(2)(i) of the I.T. Rules. With regard to dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Tax amounting to ₹ 16,97,462/- and the same constitute direct expenditure covered under Rule 8D(2)(i) of the I.T. Rules. We noticed that the tax authorities have not considered this disallowance. The assessee has also disallowed a sum of ₹ 1,26,000/- under Section 14A of the Act. According to the learned A.R. the same pertains to administrative expenditure falling under Rule 8D(2)(iii) of the I.T. Rules. 6. We have noticed that the learned CIT(A) has already deleted the disallowance of interest expenditure made under Rule 8D(2)(ii) of I.T Rules. Though the Ld CIT(A) has held that the disallowance of ₹ 1,26,000/- made by the assessee pertains to direct expenditure, yet we notice from the discussions made in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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