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TMI Blog2022 (2) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... directed against the order dated 30-05-2017 passed by Ld CIT(A)-11, Bangalore and they relate to the assessment year 2008-09. All the grounds urged in the above said appeals relate to the disallowance made u/s 14A of the Income-tax Act,1961 ['the Act' for short]. 2. This is second round of proceedings. Earlier, the appeal filed by the assessee against the addition made u/s 14A of the Act was disposed of by the Tribunal, vide its order dated 28-08-2014 passed in ITA No.1522 (Bang) 2012. In the above said order, the Tribunal restored the issue of disallowance of interest expenditure under Rule 8D(2)(ii) and the administrative expenses u/r 8D(2)(iii) to the file of the AO with the following observations:- "8. No doubt, in the case b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the AO also not recorded the satisfaction with regard to the claim of the assessee that own funds were sufficient to meet the increase of investments. Decision of the Co-ordinate Bench in the case of Reliance Utilities & Power Ltd. (supra) would definitely come to the aid of the assessee. Nevertheless, whether such own funds were sufficient to cover the additional investments when aggregated with the advances given to subsidiary companies, and whether the latter could be considered is investments giving rise to tax free income requires a fresh look by the AO. Similarly, whether Rule 8D has to be applied with regard to the claim of indirect expenditure also requires a fresh look by the AO. We therefore, set aside the orders of the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure disallowance of Rs. 15,31,08,546/- u/s 8D(2)(iii). Accordingly, after setting off the voluntary disallowance made by the assessee, the AO added the amount of Rs. 29,70,81,132/- to the total income and also while computing book profit u/s 115JB of the Act. 5. The Ld CIT(A) has prepared following chart showing details of own funds, investments and Loans and advances:- Sl.No. Details of own funds and non-interest bearing funds As on March 31st 2008 (Rs.in crorese) Details of investments As on March 31st 2008 (Rs. in crores) 1 Share capital (a) Equity (b) Preference 364.13 0 Investment in subsidiaries, other companies and units of Mutual fund which yield dividend/capital gains 4753.34 2 Reserves and surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A), however, confirmed the disallowance of expenses made u/r 8D(2)(iii) of IT Rules. Aggrieved by this decision of Ld CIT(A), the revenue has filed this appeal. 6. We heard the parties on this issue and perused the record. From the table extracted in the preceding paragraph, it can be noticed that the own funds available with the assessee would become lower, only if the value of investments and the amount of Loans and advances are aggregated together. If we compare the own funds with the value of investments, then the own funds is more. Hence the ratio laid down by the jurisdictional High Court in the case of Microlabs Ltd (supra) to the effect that, in such kind of cases, the presumption would be that the investments have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(2)(iii) of I T Rules. 8. We heard the parties on the issue of disallowance made u/r 8D(2)(iii) of IT Rules. We noticed earlier that the assessee had made disallowance of Rs. 25 lakhs, while the AO determined the disallowance at Rs. 15,31,08,546/-. At the time of hearing, the Ld A.R took us to the various types of expenses incurred by the assessee and submitted that most of the expenses are not related to the earning of exempt income. When the bench proposed that this issue may be restored to the file of the AO to re-determine the disallowance by excluding the value of investments which did not yield exempt income while computing average value of investments, as per the decision rendered by Delhi Special bench of ITAT in the case of Vir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R submitted that this is a legal issue and further the principles should be correctly followed by the AO. 11. We heard the parties on this issue and perused the record. The issue urged by the assessee is a legal issue and the same has since been settled by the Special bench in the case of Vireet Investments (P) Ltd (supra), wherein it was held that the disallowance made u/s 14A of the Act cannot be imported in sec.115JB of the Act, meaning thereby, the disallowance required to be made under clause (f) of Explanation 1 to sec.115JB should be computed separately without having regard to Rule 8D of IT Rules. Even though the AO has not computed the total income u/s 115JB of the Act, yet there is merit in the contention of Ld A.R that the corr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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