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TMI Blog2019 (10) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, therefore, assessee was bound to incur certain expenditure to earn exempted income, therefore, in the absence of any explanation or any details submitted by assessee before the authorities below as well as before the Tribunal, disallowance is confirmed. Part of this ground is dismissed. Ground No.1 is partly allowed. Addition on account of deduction claimed u/s 36(1)(viia) - HELD THAT:- We are of the view that issue is covered in favour of the assessee by the aforesaid decision of the Tribunal in the case of assessee in which the Order of Tribunal for the A.Y. 2011-2012 have also been considered which is the sole basis for the A.O. to make the disallowance. We, accordingly, following the Order of the Tribunal above, set aside the Orders of the authorities below and delete the entire addition. In the result, Ground Nos.2 and 3 of the appeal of Assessee are allowed. - ITA.No.4520/Del./2016 - - - Dated:- 10-10-2019 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Vivek Gupta, C.A. For the Revenue : Ms. Rakhi Vimal, Sr. D.R. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. 4. The assessee challenged the addition before the Ld. CIT(A) and it was submitted that A.O. made the addition under Rule 8D without recording any satisfaction. The assessee relied upon decision of Hon ble Delhi High Court in the case of Maxopp Investment Ltd., vs. CIT 347 ITR 272 wherein it has been held that Rule 8D is not applicable automatically and before applying the same, A.O. has to first record his satisfaction and reject the claim of assessee with regard to extent of expenditure by having regard to the accounts of assessee and such rejection must be for disclosed cogent reasons. It is only then that the question of determination of expenditure under section 14A read with Rule 8D by the A.O. would arise. In the present case, the A.O. made disallowance without recording satisfaction. It was further submitted that Bank is having non-interest bearing funds as per audited balance-sheet for assessment year under appeal i.e., capital of ₹ 1921.76, reserve and surplus ₹ 57505.90, total non-interest bearing funds ₹ 64728.11. The average investment was 675.77. From the above, it is evident that average investment made in earning the exempted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest income and in earlier year, no similar disallowance out of interest have been made. The reliance of the assessee on the decision of UMIL Share Stock Broking Services Ltd., (supra) clearly apply to the facts of the case of the assessee. In this view of the matter, there were no justification for the authorities below to disallow interest expenditure relating to exempted income of ₹ 3,48,000/-. We, accordingly, set aside the Orders of the authorities below and delete the addition of ₹ 3,48,000/-. 8. However, as regards other addition of ₹ 3,38,000/- is concerned, assessee has not filed any reply before the authorities below. No details or explanation have been filed. No explanation have been given regarding the activities carried out by the assessee for earning the exempted income. Since assessee earned substantial dividend income, therefore, assessee was bound to incur certain expenditure to earn exempted income, therefore, in the absence of any explanation or any details submitted by assessee before the authorities below as well as before the Tribunal, disallowance of ₹ 3,38,000/- is confirmed. Part of this ground is dismissed. Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the previous year shall be aggregated separately ; (b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a) ; (c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank. Explanation : In this rule, rural branch and scheduled bank shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 36.] 4. In view of the Rules, the assessee computed the amount of provision as under: (Amount in thousands) S.No. Particulars Balance O/s. Amount of Provision 1. Standard Advances 14751401 6891 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 36(1)(viia) as the proviso deals with further deduction for provisions on bad and doubtful debts. Hence, we find that the orders of the authorities below cannot be sustained and the addition of ₹ 84,70,000/- is directed to be deleted. 7. As the issue in dispute involved in the year under consideration is identical to the issue in the appeal of the assessee for assessment year 2011-12, thus, respectfully following the decision of the Tribunal in ITA No. 1561/Del/2015 for assessment year 2011-12, the addition in dispute in the year under consideration is also deleted. The grounds of appeal of the assessee are allowed. 11. After considering the rival submissions, we are of the view that issue is covered in favour of the assessee by the aforesaid decision of the Tribunal in the case of assessee Dated 28.03.2019 (supra), in which the Order of Tribunal for the A.Y. 2011-2012 have also been considered which is the sole basis for the A.O. to make the disallowance. We, accordingly, following the Order of the Tribunal above, set aside the Orders of the authorities below and delete the entire addition. In the result, Ground Nos.2 and 3 of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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