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TMI Blog2019 (9) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... r the AY.2009-10. ITA No.2769/Mum/2017 (AY.2009-10): 2. The only issue raised by the Revenue in the present appeal is against the order of Ld.CIT(A) being perverse in directing the AO to withdraw the penalty levied on the issue of concealment of income u/s 271(1)(c) of the Act in view of the fact that the Tribunal has only set aside the issue to the file of AO. 3. We have heard the rival submissions of both the parties and perused the material on record including the impugned order. We observe from the facts before us that the Ld.CIT(A) has in view the order of Tribunal in quantum appeal, which was set aside to the AO, directed the AO to withdraw the penalty imposed u/s.271(1)(c) of the Act on the grounds that when the assessment order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the order of Ld.CIT(A) in this regard and accordingly we uphold the same by dismissing the appeal of Revenue for the AY.2009-10. 4. The assessee in its Cross-Objection No.249/Mum/2018 for the AY.2009-2010, has challenged the penalty proceedings initiated u/s.274 r.w.s.271(1)(c) of the Act on the ground that the AO has not specified one of the two limbs under which the penalty proceedings has been initiated. 5. Since we have already dismissed the appeal of Revenue for the AY.2009-10 in ITA No.2769/Mum/2017, challenging the order of CIT(A) in which the Ld.CIT(A) has directed the AO to withdraw the penalty as the issue is set aside to the file of AO by the ITAT in quantum appeal. Accordingly, the Cross- Objection of the assessee is ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5% on the average investments, at Rs. 3,90,430/- by ignoring the fact that in any case the disallowance cannot exceed the actual expenses which is Rs. 81,086/-. 8. In the appellate proceedings, Ld.CIT(A) allowed the appeal of the assessee by holding that so far as disallowance u/s.8D(2)(ii) is concerned, the assessee's own funds were far more than the investments made by the assessee in the share/securities yielding tax free income, therefore, the presumption is that the investments were made out of assessee's own funds and not out of interest bearing funds. In this connection the Ld.CIT(A) has relied on the decision in the case of HDFC Bank Ltd., [366 ITR 505]. On the disallowance of Rs. 3,90,430/- under rule 8D(2)(iii), the Ld.CIT(A) ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in brief are that during the year the total borrowing as on 31-03-2012 was at Rs. 53.48 crores whereas the total loans and advances to various parties were of Rs. 70.33 crores. The assessee was engaged in the business of dealing in shares and securities. The assessee paid interest on the total borrowings to the tune of Rs. 25,42,10,340/- and also received interest income of Rs. 3,21,47,940/-. The AO observed that since the interest expenditure was not comparable to the interest income and, therefore, issued show cause notice to the assessee as to why the provisions of Section 36(1)(iii) of the Act should not be applied in the case of the assessee for the reasons that the assessee has clearly diverted higher rate interest bearing funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and direct the AO to adopt the same for the purpose of disallowance u/s 36(1)(iii) of the. Act. However, the AO is at liberty to verify the correctness of the working and the method adopted. The appellant is hereby directed to supply this working to the AO at the time of giving effect to this order. The ground is allowed accordingly." 12. Ld. DR vehemently submitted before us that the CIT(A) has set aside the issue to the file of AO whereas the CIT(A) has no such power under the Act. Ld.DR submitted that the assessee has failed to submit any documentary evidences and explanation of interest paid on these advances to, whereas the same has been accepted and allowed the relief by the CIT(A) to the assessee. However, no such description w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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