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TMI Blog2021 (2) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that no error could be said to have been committed by the Tribunal in taking such view. Disallowance u/s 14A of the Act in respect of the interest expenditure - HELD THAT:- In case of the assessee that netting of interest income and outgo is required to be done while invoking Rule 8D (2)(ii) of the IT Rules in the light of the decision of the Hon ble Gujarat High Court in the case of Pr.CIT Vs. Nirma Credit Capital (P.) Ltd. [ 2019 (7) TMI 33 - GUJARAT HIGH COURT] in view of the decision holding that interest earned by the assessee is required to be factored for the purpose of ascertaining the amount of expenditure incurred by the assessee by way of interest, we find merit in the plea of the assessee that Rule 8D(2)(ii) shall h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to the year in which such income is held to be liable to tax ? [B] Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance of ₹ 4,01,30,089/made under Section 14 A of the Act in respect of interest expenditure ? [C] Whether the Appellate Tribunal has erred in law and on facts in restricting the addition made to book profit under section 115JB of the Act from ₹ 4,51,72,278/to ₹ 30,03,637/being a mere 1 % of exempt income ?" 3. We have heard Mr. Manish Bhatt, the learned Senior Counsel appearing for the Appellant Revenue and Mr. Bandish Soparkar, the learned counsel appearing for the respondent - Assessee. 4. The first question as proposed by the Revenue is with respect to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned income to the total income of the assessee in the year under consideration. Hence, we are not inclined to uphold the findings of the authorities below. Accordingly, we set aside the order of the "Ld.CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. The next issue raised by the assessee is that the "Ld.CIT(A) erred in confirming the addition of ₹ 2,35,338/out of the total development expenses of ₹ 12,89,839/despite the fact the same was not debited in the profit and loss account." 5. Thus, it appears that the Tribunal has taken the view that the assessee had offered tax in the subsequent year and if any addition is made in the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exceeds interest expenditure claimed in the profit and loss accounts. IN fact there was no interest expenditure claim by the assessee in the profit and loss account. The disallowance of the interest income and interest expenditure stands as under: Particulars Amount Rs. Interest Income 32,05,71,036/ Interest Income from Partnership Firm 3,40,45,823/ Less: Interest expenses 31,51,07,023/ Net interest Income (expenses) 3,95,09,836/7.3 We further note that the ITAT in the own case of the assessee bearing No.162/Ahd/2013 vide order dated 06.09.2018 has deleted the addition made by the AO on account of interest expenses by observing that the interest income exceeds interest expenses. The relevant extract of the order is reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Rules in the light of the decision of the Hon'ble Gujarat High Court in the case of Pr.CIT Vs. Nirma Credit & Capital (P.) Ltd. [2017 85 Taxmann.com 72 (Gujarat)]. In view of the decision of the Hon'ble Gujarat High Court holding that interest earned by the assessee is required to be factored for the purpose of ascertaining the amount of expenditure incurred by the assessee by way of interest, we find merit in the plea of the assessee that Rule 8D(2)(ii) shall have no application in the given facts where the interest income earned outweigh the interest expenditure. In consonance with the decision of the Hon'ble Gujarat High Court, we decline to interfere with the conclusion drawn by the CIT(A) on the issue in favour of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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