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TMI Blog2017 (11) TMI 1818X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,15,56,021/- made u/s 14A of the Act, and r/w rule 8D? 2. That the order of the Ld. CIT(A) be set aside and that of the AO be retored. 3. The Assessee has raised the following grounds of appeal in ITA No. 173/Chd/2016: That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. CIT(A)-1, Ludhiana is against law and facts on the file in as much as she was not justified to arbitrarily uphold disallowance made by the Ld. AO u/s 36(1)(iii). (a) of Rs. 1,51,71,075/- on account of interest on investments. (b) of Rs. 40,60,316/- on account of interest on interest free advances / loans to sister concerns / related parties. 4. Ground No. (a) in ITA No. 173/CHD/2016 for the AY 2011-12 has been withdrawn by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . DR relied on the order of the authorities below. 10. Crisply to say that the disallowance of interest under section 36(1)(iii) on advances confirmed by the Ld. CIT(A) is on the principle that the assessee utilized mixed funds for investment. The Ld. CIT(A) reliance that the funds utilized by the assessee are mixed funds it cannot be distinguished whether surplus funds or borrowed funds are used for the said investments cannot be accepted in view of the further development of the judicial pronouncements on the issue. When the assessee has got own funds available at their disposal no disallowance is called for as enunciated in various judgments. In the case of Bright Enterprises Pvt. Ltd. Vs. CIT (Punjab & Haryana High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions taken for the AY's 2008-09, 2009-10 & 201011 has deleted the addition and directed the Assessing Officer to consider the disallowance while calculating book profits under section 115JB. 14. Before us the Ld. DR argued that the assessee had not maintained separate books of accounts for funds being used for investments and to account for exempt income. He further argued that there is no basis for the disallowance made by the assessee under section 14A. Ld. DR further argued that a) One by simply assuming that the facts in the case of the assessee in AY 2008-09 is similar to the facts in present AY 2011-12 which is actually not so as has been discussed above. b) Secondly by not considering the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned by the assessee and he would be satisfied if the disallowance is restricted up to the exempt income. The Ld. DR has also not submitted anything contra. 17. We have heard Ld. Representatives of both the parties and perused the material available on record. Delhi High Court in case of Joint Investments Pvt. Ltd. Vs. CIT, 372 ITR 694 (Del), Amar Packaging Pvt. Ltd. Vs. ITO in ITA No. 2358/Del/2013 (ITAT Delhi Bench), and also in case of Daga Global Chemical Pvt. Ltd. (ITAT Mumbai Bench) in ITA No.5592/MUM/2012 has taken view that disallowance cannot exceed the exempt income. Hence keeping in view the abovementioned judgments it is hereby directed the disallowance under section 14A read with Rule 8D be restricted to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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