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TMI Blog2022 (1) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... ties have grossly erred in disallowing interest expense to the tune of Rs. 12,02,094/- (out of total expense of Rs. 20,59,791/-) on the ground that the said proportionate expense claimed by the Appellant was for earning exempted income i.e. share in profit. 2. That on the facts and circumstances of the case as well as law on the subject, both the learned lower authorities have erred in disallowing interest expense to the tune of Rs. 12,02,094/- without considering the submissions made by the Appellant. 3. That both the learned lower authorities have failed to appreciate that the Appellant is a partner in various partnership firms and during the year under consideration she has received total interest of Rs. 11,26,549/- on the capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Tribunal in case of The Asst.Commr. of Income Tax Vs. Shri Harish P Shah - ITA No.5610/Mum/2009 (AY 2006-07) which is also ignored by the learned Commissioner (Appeals). Therefore, the Appellant craves leave to refer to and rely upon the said judgment once again. 5. That the Appellant submits that since she had not utilized full amount of interest paid by her, there does not arise any question of disallowance of interest under section 14A as done by the learned Assessing Officer in the impugned order. 6. It is therefore prayed that the above addition of Rs. 12,02,094/- made by the learned assessing officer may please be deleted." 2. Brief facts of the case are that assessee engaged in partnership firm and also derived r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) [CIT(A) for short], the Ld. CIT(A) upheld the order of Assessing Officer. The Ld. CIT(A) held that Assessing Officer after recording factual position disallowed @ 58.36% interest expenses which corresponding the proportionate to exempt income earned from the partnership funds. Further, aggrieved assessee has filed present appeal before this Tribunal. 3. We have heard the submission of Ld. Authorized Representative (AR) for the assessee and the Ld. Sr. Departmental Representative (DR) for the Revenue. The Ld. AR for the assessee submits that Assessing Officer made disallowance under section 14A without following the formula prescribed under Rule 8D. The Assessing Officer disallowed interest expenses of Rs. 12,02,094/- under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest expenses of Rs. 2,50,212/-. The Ld. AR of the assessee further submits that assessee is ready and willing to furnish the working of disallowance under section 14A in accordance with formula of Rule 8D. 6. On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities. 7. We have considered the rival submission of both the parties and perused the orders of lower authorities. We find that the Assessing Officer while passing the assessment order identified the issue of disallowance under section 14A, by examining the fact that assessee had earned exempt income and invested interest bearing fund for making investment for earning exempt income. However, the Assessing Officer instead of following the formula presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average total asset Total asset on 31.03.2014 Total asset on 31.03.2014 Average value of total asset Total asset of balance sheet 24,190,567 35,826,216 3,00,08,392 A. Disallowance u/s 14A on the basis of interest paid on new u/s loan taken The assessee has made disallowance u/s 14A on proportionate interest paid on new capital introduced in the partnership firm and new unsecured loan taken. Working of interest paid on new loan taken Total outstanding as on 31.03.2014 Total outstanding as on 31.03.2013 Increase in amount of loan Unsecured loan 2,17,62,352 1,49,06,675 68,55,677 Working of proportionate interest paid on new unsecured loan = interest paid on loan* amount of increase in unsecured lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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