2019 (4) TMI 616

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..... come Tax Rules. Disallowance u/s 14A - interest expenditure - HELD THAT:- Assessee has more interest free funds than the investment made by it which has resulted tax free income. Apart from above, we further find that the assessee has net interest income. Therefore, in view of the judgment in the case of Nirma Credit & Capital P.Ltd. [2017 (9) TMI 485 - GUJARAT HIGH COURT] no disallowance on account of interest expenditure is to be made in the present case. We allow this ground partly and confirm the disallowance to the extent of ₹ 6,790/- representing administrative expenses and ₹ 954/- which is relatable to direct expenditure. Interest expenditure of ₹ 1,43,261/- disallowed by the AO is deleted.- Appeal of the assesse .....

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..... at computation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully following the above decision of the Special Bench, we allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules. 5. In ground no.3, the grievance of the assessee is that the ld.CIT(A) has erred in charging of interest under section 234A/B/C of the Act. The ld.counsel for the assessee did not advance arguments on this issue, and agreed that it is consequential in nature. Hence, this ground is rejected. 6. In groun .....

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..... more interest free funds than the investment. Hon ble Gujarat High Court in the case of Pr.CIT Vs. Nirma Credit Capital P.Ltd., (2017) reported in 85 taxmann.com 72 (Guj) = 300 CTR 286 (Guj) held that if there is net interest income then the interest expenditure cannot be disallowed. The relevant observation of Hon ble Court reds as under: 14. While answering the question in favour of the assessee, we hold that for the purpose of applying the factors contained in clause (ii) of subrule (2) of Rule 8D, prior to its amendment with effect from 2.6.2016, what would be considered as amount of expenditure by way of interest would be the interest paid by the assessee on the borrowings minus the taxable interest earned during the financial y .....

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