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TMI Blog2023 (9) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... his satisfaction, which is also ignoring the books of accounts of the assessee. First of all, the statute mandates the ld. AO to record his satisfaction in terms of section 14A(2) of the Act read with Rule 8D(1) of the Rules and the same cannot be supplemented by the action of the ld. CIT(A) in recording satisfaction on behalf of the ld. AO. Against the aforesaid finding of ld. CIT(A), the revenue is not in appeal before us. Hence it could be safely concluded that in the instant case, there is a clear violation of provisions of section 14A(2) of the Act read with Rule 8D(1) of the Rules. Hence we have no hesitation in deleting the entire disallowance made by the Ld. AO u/s. 14A of the Act, in the facts and circumstances of the instant case. Limitation period for considering any fresh claim of an assessee - Action of the lower authorities in not considering the revised computation of income filed during the course of assessment proceedings - HELD THAT:- We find that in the recent Supreme Court decision rendered in the case of Wipro Finance Ltd. [ 2022 (4) TMI 694 - SUPREME COURT] after considering the decision rendered in the case of Goetze (India) Ltd. had reiterated that the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee before the ld. AO. The ld. AO did not record any objective satisfaction with cogent reasons as to why the suo-moto disallowance made by the assessee in the return of income is incorrect. Without doing the same, he directly proceeded to apply the computation mechanism provided in Rule 8D(2)(ii) of the Rules as under:- Disallowance under Rule 8D2(i) - Rs. 67,885/- Disallowance under Rule 8D2(ii) - Rs. 32.1372 lakhs Disallowance under Rule 8D2(iii) - Rs. 6.671625 lakhs Total - Rs. 39,48,767/- Less: Disallowance already made by the assessee -Rs 67,885/- Balance disallowable u/s. 14A - Rs 38,80,882/- 3.2. Before the ld. CIT(A), the assessee stated that it had sufficient own funds in its kitty to make the investments and gave the details of the same with corresponding reference to the financial statements of the assessee. The ld. CIT(A), however, did not heed to the contention of the assessee and confirmed the disallowance of interest made under Rule 8D(2)(ii) of the Rules by rejecting the presumption of own funds availability theory. The Ld. CIT(A) reworked the disallowance of interest at Rs. 20,97,000/- by considering only those investments which had yielde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the investments. The resultant SLP of the Revenue challenging the Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the Bombay High Court would now be appreciated in the following discussion. 18 to 26................................................................... 27. The aforesaid discussion and the cited judgments advise this Court to conclude that the proportionate disallowance of interest is not warranted, under section 14A of Income Tax Act for investments made in tax-free bonds/securities which yield tax-free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments. With this conclusion, we unhesitatingly agree with the view taken by the learned ITAT favouring the assessees. 3.4. Hence there cannot be any disallowance of interest in terms of Rule 8D2(ii) of the Rules. The ld. AO is directed to delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 8D(1) of the Rules. Hence we have no hesitation in deleting the entire disallowance made by the Ld. AO u/s. 14A of the Act, in the facts and circumstances of the instant case. 3.6. We further find the similar disallowance was in assessee's own case for A.Y. 2011-12 to 2016-17 by the Ld. AO and Ld. CIT(A) had deleted the disallowance on the ground that no objective satisfaction was recorded by the Ld. AO for rejecting the plea of the assessee and Ld. CIT(A) had also accepted the availability of own funds theory together with the presumption thereon. It is pertinent to note that against these orders of Ld. CIT(A), no further appeal has been preferred by the revenue before this tribunal. 3.7. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, the grounds no. 1, 1.1, 1.2, 1.3, 2 and 2.1 raised by the assessee for A.Y. 2009-10 are allowed. 4. The ground no. 3 and 3.1 raised by the assessee are challenging the action of the lower authorities in not considering the revised computation of income filed during the course of assessment proceedings. 4.1. We have heard rival submissions and perused the materials available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) for denovo adjudication on merits, in accordance with law. Accordingly, the ground 3 and 3.1 raised by the assessee are allowed for statistical purposes. 5. The ground no. 4 raised by the assessee is challenging the chargeability of interest u/s. 234B of the Act, which would be consequential of nature. 6. The ground no. 5 and 6 are general in nature and does not require any specific adjudication. 7. In the result, the appeal of the assessee for A.Y. 2009-10 is allowed for statistical purposes. 8. The only issue to be decided in the appeal filed by the assessee for A.Y. 2010-11 is challenging the disallowance of expenses made u/s. 14A of the Act. Both the parties mutually agreed that the facts prevailing in A.Y. 2010-11 are exactly identical with the facts prevailing in A.Y. 2009- 10. Hence the decision rendered by us for AY 2009-10 with regard to the issue of disallowance u/s. 14A of the Act, hereinabove, shall apply mutatis mutandis to A.Y. 2010-11 also, except with variance in figures. Accordingly, the grounds raised by the assessee for A.Y. 2010-11 are allowed. 9. To sum up the appeal of the assessee for A.Y. 2009-10 is allowed for statistical purposes and appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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