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TMI Blog2019 (9) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed u/s 14A of the Act. So, in these circumstances, we find no illegality or perversity in the impugned order passed by the ld. CIT (A) restricting the disallowance from 2,69,64,423/- to 25,28,619/- u/s 14A of the Act. Consequently, the appeal filed by the Revenue is hereby dismissed X X X X Extracts X X X X X X X X Extracts X X X X ..... account 146020105 Less : added back in assessee's computation out of above 104566535 41453570 Less : Deduction claimed in assessee's computation 2221305 43674875 Less : Disallowed in assessment (other than under para 3) 3462793 Balance 40212082 Expenditure to be allocated ₹ 4,02,12,082 Allocation to investments in the ratio of loan : Investments of 1:2.04 = ₹ 40212082 x 2.04 / 3.04 = ₹ 2,69,84,423/-" 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has restricted the disallowance from ₹ 2,69,64,423/- to ₹ 25,28,619/- by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-. 6. Ld. DR for the Revenue challenging the impugned order contended that this case should be remanded back to the AO to decide afresh by taking into consideration surrounding facts and circumstances which may exhibit the expenses attributable to earning of the interest free income by following the decision rendered by the Tribunal in AY 2004-05. 7. However, on the other hand, ld. AR for the assessee in order to repel the arguments addressed by the ld. DR for the Revenue contended that the issue in controversy has been decided in favour of the assessee in AY 2005-06 in assessee's group cases by the ld. CIT (A), which order has been upheld by the coordinate Bench of the Tribunal in ITA No.499/Del/2013 AY 2005-06 order dated 01.04.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roportionate expenses (in ratio of dividend income to gross total income) attributable to earning of dividend. The AO has thereby made addition of ₹ 13,54,474 which is difference of disallowance worked out by the AO and as made by the appellant itself. 12.2 The appellant has submitted that investment on which dividend has been earned had been made in earlier years out of interest free funds. Further, the appellant has made submissions with reference to each of administrative expenses as appearing in P&L a/c as reproduced supra in para 1.6. It is clear from the said chart that the appellant has not considered expenses like rates & taxes, insurance, travelling, repairs & maintenance, freight, loss on sale of fixed assets, common serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble ITAT also. The appellant in its written submissions has followed the ratio of decision upheld in its own case for AY 2005-06 and computed the disallowance at ₹ 25.28 lacs. The computation is reproduced as under :- Particulars Amount Operating and other expenses 1426,55,061 Less :- Loss on sale of Asset 1,51,542 Loss on sale of investment 1006,17,950 Repair and Maintenance expenses 3,41,608 Rates and Taxes 2,076 Exchange loss 2,73,282 Insurance 1,15,913 Legal and Professional 60,51,224 Expenses (A) 351,01,466 Div % to total income (B) 7.20% (₹ 76,75,881 / ₹ 10,65,54,082) Disallowance(A *B) 25,28,619 7.4. The provision u/s 14A of the Act is very clear on the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason that no interest expenditure have been incurred for making an investment in the investment yielding tax free income. He submitted that the assessee has reserve and surplus of ₹ 1,36,15,29,740/- whereas the investment in tax free income earning assets made is ₹ 42,81,98,183/-. It shows that the interest free sources of funds available with the assessee were far more than the amount invested in tax free income yielding securities. He submitted that there is an error in the order of the ld CIT(A) in holding that it would have utilized the funds in more prudent ways as that cannot be the reasons for disallowance of interest u/s 14A of the Act. Therefore he submitted that interest disallowance of ₹ 150670/- made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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