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TMI Blog2022 (12) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Both the Ld. AO as also the Ld. CIT(A), having regard to the accounts of the assessee reached the conclusion that the claim of the assessee that he did not incur any expenditure in relation to income which does not form part of the total income is not sustainable in the eye of law. If that be so, in our opinion, the Ld. CIT(A) was perfectly justified in holding that the provisions of section 14A r.w. Rule 8D of the Rules are attracted to the case of the assessee. We, therefore reject the ground No. 1 of the assessee. Disallowance of interest under rule 8D(iii) r.w.s. 14A ignoring that the assessee has capital and interest free fund far in excess of investments - As regards the alternate ground No. 2, it does not survive as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,68,168/- out of interest under rule 8D(iii) r.w.s. 14A ignoring that the assessee has capital and interest free fund far in excess of investments. 3. Briefly stated the facts are that the assessee individual is engaged in the wholesale and retail trading of machinery and hardware parts etc.. For A.Y 2013-14 the assessee e-filed his return declaring income of Rs. 11,03,960/- on 16.10.2013. His case was selected for scrutiny under CASS. The Ld. Assessing Officer ( AO ) found that as per balance sheet as on 31.03.2013 the assessee had assets in the form of shares worth Rs. 11,54,812/- and balance in PPF of Rs. 1,54,116/-. He further found that the assessee had claimed interest payment of Rs. 24,62,422/- on borrowed capital durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D of the Rules, the Ld. CIT(A) gave following direction to the Ld. AO:- In view of the principle enunciated by the Apex court in the case of Maxopp as detailed above, it is clear that expenditure attributable only to exempt income is to be considered for calculating the disallowance u/s 14A. A similar principle was enunciated by the jurisdictional High Court in the case of M/s ACB India Ltd. vs ACIT (ITA No 615/2014 dated 24.03.2015) wherein it was held that for the purposes of calculation of average value of investments under Rule 8D only the investments yielding non-taxable income have to be considered and not all investments. Therefore, the value of investment yielding only nontaxable income has to be taken for purposes of calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld still apply, if the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee. Both the Ld. AO as also the Ld. CIT(A), having regard to the accounts of the assessee reached the conclusion that the claim of the assessee that he did not incur any expenditure in relation to income which does not form part of the total income is not sustainable in the eye of law. If that be so, in our opinion, the Ld. CIT(A) was perfectly justified in holding that the provisions of section 14A of the Act r.w. Rule 8D of the Rules are attracted to the case of the assessee. We, therefore reject the ground No. 1 of the assessee. 10. As regards the alternate ground No. 2, it does not su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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