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TMI Blog2021 (2) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and in law, Ld. CIT (A) has erred in restricting the disallowance of interest on customer's deposit account to Rs. 4,52,659/- as against disallowance of Rs. 41,11,348/- and in arbitrarily restricting the disallowance of interest to 11.01 % of total interest paid without any rational basis. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restricting the disallowance to only 0.5% of average investment income of Rs. 1,79,15,000/- as against Rs. 14,30,74,000/-." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is a Government of India public sector undertaking providing telephone services and internet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48/- made by the AO contended that any interest that accrues on the customers deposit account is also assessee's own income and is liable to be taxed in its own hands and relied upon the order passed by the AO. 6. However, on the other hand, to repel the arguments addressed by the ld. DR for the Revenue, the ld. AR for the assessee contended that this ground is covered by the Revenue's own decision passed in AY 2011-12 dated 01.03.2016 in assessee's own case and has not been challenged before the higher forum and supported the impugned order passed by the ld. CIT (A). 7. Ld. CIT (A) decided this issue in favour of the assessee by following its own order dated 01.03.216 for AY 2011-12 by returning following findings :- "7. Ground no. 3 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute that in AY 2006-07, ld. CIT (A) held that only the amount of Rs. 127,69,83,720/- was not payable out of the total deposit of Rs. 11,59,32,90,000/- having ratio of these two figures of 11.01% and this order was also followed in AYs 2008-09, 2009-10 & 2010-11. 9. We are of the considered view that when the method of determining the ratio between the payable amount out of total deposits has been consistently followed by the Revenue Department since AY 2006-07 and the order passed by the ld. CIT(A)'s has not been challenged nor any distinguishing facts and contrary provisions of law have been brought on record by the ld. DR for the Revenue, we find no scope to interfere the findings returned by the ld. CIT (A). So, ground no.1 is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rplus. As regards the disallowance under Rule 8D(2)(iii), it was observed that Respondent-Assessee's claim that no expenditure was incurred is not correct - expenditure was to be estimated under Rule 8D(2)(iii) being 0.5% of the average investment income which is exempt. It was noticed that value of average investment had been calculated as the average of total investments, mentioned in Schedule F. CIT (A) noted that since all the investments mentioned in Schedule F do not yield exempt income, disallowance under Section 14A read with Rule 8D(2)(iii) has been restricted only to 0.5% of the average investment income which is exempt, irrespective of whether such exempt income was received during AY 2011-12. This approach has been upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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