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TMI Blog2021 (8) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of interest under Rule 8D(2)(ii) of the Rules. With regard to disallowance of administrative expenses under Rule 8D(2)(iii) of the Rules, we direct the ld. AO to consider only those investments which had actually yielded dividend during the year and apply 0.5% on the average value of such investments alone for the purpose of disallowance under Rule 8D(2)(iii) of the Rules. This would be in consonance with the decision of Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] . From the disallowance figures so arrived, the ld. AO is hereby directed to reduce the voluntary disallowance made by the assessee in the return of income under normal provisions of the Act. Disallowance of expenses u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of R D facility (both Revenue and capital expenditure) and such R D facility is also approved by DSIR, New Delhi, the assessee would be entitled for weighted deduction u/s.35(2AB) of the Act. Considering the plain reading of the said Section, coupled with its intention of granting weighted deduction to the assessee for encouraging development of R D facility, we hold that assessee would be entitled for weighted deduction u/s.35(2AB) of the Act in the facts and circumstances of the instant case. - Decided in favour of assessee. - ITA No. 4488/Mum/2019 - - - Dated:- 16-8-2021 - SHRI VIKAS AWASTHY, JUDICIAL MEMBER And SHRI M.BALAGANESH, ACCOUNTANT MEMBER Assessee by : Ms. Hanisha Jatania Revenue by : Shri Tharian Oommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same as exempt. We find that assessee had made suo-moto disallowance of expenses u/s.14A of the Act amounting to ₹ 3,78,562/- both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act treating the same as expenses incurred for the purpose of earning exempt income in the return of income filed. The ld. AO however, disregarded the same and proceeded to make disallowance by applying the computation mechanism provided in Rule 8D(2) of the Rules as under:- i) Under Rule 8D(2) (ii) - ₹ 13,41,480/- ii) Under Rule 8D(2)(iii) - ₹ 10,31,354/- Total ₹ 23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it could be safely presumed that the investments were made by the assessee out of own funds and not with the borrowed funds. Hence, by respectfully following the decision of the Hon ble Jurisdictional High Court in the case of HDFC Bank reported in 366 ITR 505, we direct the ld. AO to delete the disallowance of interest under Rule 8D(2)(ii) of the Rules. With regard to disallowance of administrative expenses under Rule 8D(2)(iii) of the Rules, we direct the ld. AO to consider only those investments which had actually yielded dividend during the year and apply 0.5% on the average value of such investments alone for the purpose of disallowance under Rule 8D(2)(iii) of the Rules. This would be in consonance with the decision of Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment activities as follows:- Expenditure related to research development activities are as follows :- Revenue expenditure on research development Particulars Amount Bonus salary ₹ 3,57,000/- Conveyance expenses ₹ 30,736/- Employee welfare expenses ₹ 13.715/- Incentive ₹ 19,302/- Leave encashment ₹ 11,286/- Leave travel allowance ₹ 40,463/- Materials Purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture to the tune of ₹ 20.67 lakhs and Revenue expenses to the tune of ₹ 57.21 lakhs. The total expenditure approved comes to ₹ 77.88 lakhs and that assessee would be effectively eligible for weighted deduction u/s.35(2AB) of the Act only to the extent of ₹ 1,55,76,000/- (₹ 77,88,000/- * 200%). Since assessee had claimed weighted deduction u/s.35(2AB) of the Act in the sum of ₹ 1,56,82,506/- in the return, the excess sum representing difference of ₹ 1,07,222(₹ 15,62,506 ₹ 1,55,76,000/-) was sought to be disallowed by the ld. AO in the assessment. This was upheld by the ld. CIT(A). 6.3. We find that once an expenditure is approved as incurred for development of R D facility (both Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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