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TMI Blog2023 (3) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... and in such a case the investment would be presumed to be made out of assessee s own funds. Therefore, AO is directed to delete the disallowance made under section 14A r/w Rule 8D(2)(ii). In the present case, it is undisputed that during the year, the assessee earned exempt income totaling Rs.11,20,109. We find that in Nirved Traders (P.) Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] has held that disallowance under section 14A of the Act cannot be more than exempt income. Therefore, AO is directed to restrict the disallowance made under section 14A r/w Rule 8(2)(iii) to the exempt income earned by the assessee. Grounds challenging the assumption of jurisdiction under section 154 of the Act are dismissed. - ITA no.3215/Mum./2022 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 of the Act assessing the total income of the assessee at Rs.24,84,148, on the following basis:- It was seen from Para 4 of Assessment Order that Department had disallowed an amount of Rs. 8,04,894/- u/s 14A. From the computation of disallowance u/s 14A by the department it was noticed that negative investment in 'Integrated Joint Venture' was taken in account for calculation of average investment. Negative investment is actually a debit balance which do not generate income. Therefore it is not eligible for computation of disallowance under Rule 8D(2). Further, disallowance under clause (ii) of Rule 8D was not considered though there was interest expenses debited in P L Account. Therefore disallowance u/s 14A under clause (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Difference amount was added by the AO to the total income of appellant, by way of order u/s 154. Accordingly, the order of the AO is a correction of a mistake apparent from the record and the same is legally tenable. Thus, the order of the AO is upheld. Grounds of Appeal No. 1-4 against rectification order u/s 154 are dismissed. GOA No. 5-8 relating to disallowance computation under Rule 8D are also dismissed. Being aggrieved, the assessee is in appeal before us. 4. We have heard the rival submissions and perused the material available on record. In the present appeal, the assessee is aggrieved against the exercise of jurisdiction under section 154 of the Act by the AO. The assessee has also challenged the computation of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of investment, income from which does not or shall not form part of the total income as appearing in the Balance Sheet of the assessee, on the first day and the last day of the previous year. 0.5% of Rs.16,09,78,739/ Rs.8,04,894/ Total Expenditure disallowed u/s. 14A Rs.8,04,894/ 5. From the perusal of audited financial statement of the assessee, forming part of the paper book, we find that during the year, the assessee debited interest expenses of Rs.2,90,08,082. Since, while computing the disallowance under section 14A r/w Rule 8D vide assessment order passed under section 143(3), the said interest expenditure was not taken into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. Vs. Dy. CIT, I.T. Appeal No.149 of 2017, vide judgment dated 23.04.2019, has held that disallowance under section 14A of the Act cannot be more than exempt income. Therefore, respectfully following the aforesaid decision of the Hon ble jurisdictional High Court, the AO is directed to restrict the disallowance made under section 14A r/w Rule 8(2)(iii) to the exempt income earned by the assessee. 7. As a result, grounds challenging the assumption of jurisdiction under section 154 of the Act are dismissed. While grounds challenging the disallowance under section 14A r/w Rule 8D are partly allowed. The issues arising in grounds no.9-12 are consequential in nature and do not require any specific adjudication. 8. In the result, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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