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TMI Blog2020 (6) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue authorities in terms of section 14A of the Income-tax Act, 1961 [the Act] r.w. Rule 8D of the Income-tax Rules, 1962 [the Rules]. 3. The grounds of appeal raised by the assessee are as follows:- "Based on the facts and circumstances of the case and in law, the Appellant, respectfully craves leave to prefer an appeal against the order passed by the Commissioner of Income tax Appeals - 10 [hereinafter referred to as the "CIT(A)"] under section 250 of the Income-tax Act, 1961 ("Act") for Assessment Year ("AY") 2011-12 dated 24 January 2020, inter-alia on the following grounds, which are without prejudice to each other: That on the facts and circumstances of the case and in law: 1. The order of the Learned CIT(A) is bad in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice to the above, the learned CIT(A) has erred in law and on facts, in not considering the net interest expenditure (net of interest earned) instead of gross interest expenditure incurred by the Appellant while applying Rule 8D. The Appellant submits that each of above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law." 4. The assessee is a public limited company engaged in manufacture, sale and distribution of beverage alcohol. During the course of scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance u/s. 14A was also a subject matter of dispute in AY 2012-13 in assessee's own case. The matter has been decided by the ITAT vide its order dated 29 May 2020 in IT(TP)A No.489/Bang/2017, wherein the ITAT has accepted the below mentioned arguments of USL: * Disallowance under section 14A cannot exceed the exempt income earned. * Only those investments to be considered for the purpose of disallowance under section 14A which yield tax free income during the year. * Where no separate books of accounts are maintained for earning tax free income and taxable income and value of own funds exceed the value of investments, then no disallowance under section 14A is called for. 7. The ITAT held as under:- 36. We heard the parties o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments are made out of common pool of funds and non-interest bearing funds were more than the investments in tax free securities, no disallowance of interest expenditure u/s. 14A can be made. 42. In the light of above said decisions, we are of the view that disallowance of interest expenses in the present case of Rs. 49,42,473 made under Rule 80(2)(ii) of the I. T Rules should be deleted. We order accordingly." Thereafter, it was held by Hon'ble Karnataka High Court as under:- "The aforesaid shows that the Tribunal has followed a decision of the Bombay High Court in the case of CIT v. HDFC Bank Ltd. [2014] 366 ITR 505/226 Taxman 132 (Mag.)/49 taxmann.com 335. When the issue is already covered by a decision of the High Court of Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. (d) The Ld AR also contended that the disallowance should not exceed the amount of exempt income. In this regard, he placed his reliance on the decision rendered by jurisdictional High Court in the case of Pragathi Krishna Gramin Bank vs. JCIT (2018)(95 taxmann.com 41). We direct the AO to take into consideration above said binding decision while examining this issue. Accordingly, we restore this issue to the file of the AO for examining it afresh in the light of discussions made supra." 8. We are of the view that similar direction to the AO to decide the issue afresh in line with the directions of the Tribunal in AY 2012-13 would be just and appropriate in this assessment year also. We hold and direct accordingly. 9. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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