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TMI Blog2017 (5) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience. 3. The first issue raised by the assessee which is common in all its appeal relate to disallowance made under section 14A r/w rule 8D. 4. Facts being common in all the assessment years except figures, we propose to deal with facts invol ved in A.Y. 2008-09. 5. During the assessment proceedings, the Assessing Officer noticing that the assessee had earned dividend income from investment in mutual funds and equity shares called upon the assessee to explain why disallowance of expenditure incurred for earning such income should not be made under section 14A r/w rule 8D. The assessee objected to the proposed disallowance, inter-alia, on the ground, since the assessee had sufficient surplus interest free funds available with it to take care of the investment no disallowance for interest expenditure should be made. The Assessing Officer, however, did not find merit in the submissions of the assessee. He was of the view that as per the decision of the Hon'ble Jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT, [2010], 328 ITR 081 (Bom.), after introduction of rule 8D from the assessment year 2008- 09, disallowance h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nn.com 301 (Mum.); x) Union Bnak of India v/s DCIT, [2015] 44 CCH 466 (Mum.); xi) Dena Bank v/s DCIT, etc., ITA no.3676/Mum./2012, dated 09.04.2014; and xii) Videocon Industries Ltd. v/s ACIT, [2015] 43 CCH 113 (Mum.). 7. Learned Authorised Representative submitted, as far as disallowance of administrative expenses under rule 8D(2)(iii) is concerned, the strategic investments made in the shares of group concerns have to be excluded since such investments are for business purpose of the assessee. In support of such contention, he relied upon the following decisions:- i) Bhupinder Investment Co. Pvt. Ltd. v/s DCIT, ITA no.6326/Mum./2011, dated 09.06.2016; ii) KJMC Financial Services Ltd. v/s DCIT, ITA no.1818/Mum./2013, dated 26.07.2016; iii) ACIT v/s Proficient Real Estate Developers Pvt. Ltd., ITA no.3514/ Mum./2015, dated 18.03.2016; iv) Aptech Ltd. v/s DCIT, ITA no.946 & 923/Mum./2013, dated 06.10.2016; v) Interglobe Enterprises Ltd. v/s DCIT, ITA no.1362 & 1032/Del./2013, etc., dated 04.04.2014; vi) J.M. Financial ltd. v/s ACIT, ITA no.4521/Mum./2012, dated 13.03.2014; vii) CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. As could be seen from the facts on record, the Assessing Officer has worked out disallowance of expenditure under section 14A by applying the provisions of rule 8D(2)(ii) and 8D(2)(iii). As far as the disallowance of interest expenditure under rule 8D(2)(ii) is concerned, specific plea of the assessee before the Departmental Authorities as well as before us is, in all these assessment years assessee had sufficient interest free fUnd available with it to take care of the investment in equity shares and mutual funds. To demonstrate the factual position relating to availability of interest from fund and investment in shares and mutual funds the learned Authorised Representative has furnished the following chart. Particulars A.Y. 2008-09 A.Y. 2009-10 A.Y. 2010-11 A.Y. 2011-12 Total Own Funds 707.91 864.92 1119.72 1537.58 Investment in shares & M.F. 68.4 81.03 113.71 122.89 Percentage (%) 10% 9% 10% 8% 12. As could be seen from the figures mentioned in the chart, the interest free funds available with the assessee far exceed the investment made in exempt income yielding assets. In fact, investment made in shares and mutual fund in all these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) he has not given any finding on it. Therefore, in our opinion, the assessee's claim that strategic investment has to be excluded from the average value of investment for working out disallowance under section 8D(2)(iii) requires consideration by the Assessing Officer. However, the assessee is also required to substantiate that the investment in group companies / concerns were for protecting the business interest of the assessee or for business purpose. We, therefore, direct the Assessing Officer to examine this issue afresh after considering the submissions of the assessee and in the light of the decisions to be relied upon by the assessee. While doing so, the Assessing Officer must also consider assessee's claim that under no circumstances, disallowance under section 14A r/w rule 8D should exceed the exempt income earned in a particular assessment year. Needless to mention, the Assessing Officer must decide the issue after providing due opportunity of being heard to the assessee. 14. Before parting, we must observe, as far as assessment year 2011-12 is concerned, we have noted from the chart furnished before us by the learned Authorised Representative that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference found as a result of AIR information. However, the learned Commissioner (Appeals) has directed the Assessing Officer to re-examine the issue and if the assessee is able to reconcile the difference not to make any addition. We do not find any infirmity in the aforesaid direction of the learned Commissioner (Appeals). We, therefore, direct the assessee to submit relevant information / material available with it before the Assessing Officer for reconciling the difference. The Assessing Officer should examine the material submitted by the assessee and if the assessee is able to reconcile the difference, no addition should be made. 21. Next issue raised by the assessee which arises in assessment year 2011-12, relates to not giving credit of TDS. 22. Brief facts are, while completing the assessment, the Assessing Officer did not grant full credit of TDS as per TDS certificates furnished by the assessee. Being aggrieved, assessee raised the issue before the first appellate authority. 23. The learned Commissioner (Appeals) after considering the submissions of the assessee and taking note of the fact that the assessee has filed a rectification appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to justify its claim. In response to the query raised by the Assessing Officer, though, the assessee made detailed submissions objecting to the disallowance proposed by the Assessing Officer, however, the Assessing Officer while completing the assessment, disallowed assessee's claim of deduction on the reasoning that the marked to market loss claimed by the assessee being a notional loss is not allowable. The assessee challenged the disallowance before the learned Commissioner (Appeals). 27. The learned Commissioner (Appeals), after considering the submissions of the assessee, having found that in case of other assessees including assessee's group concerns, under identical facts and circumstances marked to market loss have been allowed, followed the same and deleted the addition made by the Assessing Officer. 28. Learned Departmental Representative relying upon the reasoning of the Assessing Officer submitted that the learned Commissioner (Appeals) has failed to appreciate the facts of the case properly, hence, incorrectly applied the ratio laid down in the decisions referred to by him. He further submitted, as per CBDT instruction no.3 of 2010 dated 23rd Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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