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TMI Blog2024 (6) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8D(2)(iii) - Special Bench of the Tribunal in the case of ACIT v/s. Vireet Investment (P) Ltd. ( 2017 (6) TMI 1124 - ITAT DELHI ) held that only those investments are to be considered for computing average value of investments, which yield exempt income during the year. Therefore, we direct the AO to recompute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of the aforesaid decisions, and if the disallowance so computed by applying above said principles works out to be lower than the value of exempt income, then the disallowance under section 14A should be restricted to the lower amount so computed. Accordingly, the impugned order in respect of deletion of disallowance under section 14A read with Rule 8D(2)(ii) of the Rules is upheld. While in respect of disallowance made under section 14A read with Rule 8D(2)(iii) of the Rules, the impugned order is modified, and the AO is directed to compute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of directions as rendered in the foregoing paragraph. As a result, the grounds raised by the Revenue pertaining to deletion of disallowance under section 14A of the Act are pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeal before the Tribunal. It is submitted that due to the aforesaid circumstances the present appeals are delayed. 3. We find that the reasons stated by the AO for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the Revenue did not stand to benefit by the late filing of the present appeals. In view of the above and having perused the condonation applications filed by the AO, we are of the considered view that there exists sufficient cause for not filing the present appeals within the limitation period and therefore, we condone the delay in filing the appeals by the Revenue and we proceed to decide the appeals on merits. 4. Since all the appeals pertain to the same assessee involving similar issues arising out of a similar factual matrix, therefore, as a matter of convenience, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was received in Appeal Module of ITBA portal of Pr.CIT-19, Mumbai on 23.03.2023, however, due to technical glitch the order could not be opened for reading. After raising ticket on ITBA helpdesk, the said order was re-uploaded on ITBA Portal on 17.08.2023. Therefore, the appeal in this case is late by 98 days. The appellant prays that the delay in filing of appeal due to technical glitch may kindly be condoned. 8 h. The appellant prays that the order of the Ld. CIT(A), on the grounds be set-aside and that of the Assessing Officer be restored ? 9 i. The appellant craves leave to amend or alter any grounds or odd a new ground which may be necessary during the course of Appellate proceedings? 5. The first issue that arises for our consideration pertains to deletion of disallowance under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 ( the Rules ). 6. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and has earned share of profit from various firms, which was claimed as exempt, interest income, and income from other sources. For the assessment year 2012-13, the assessee filed his return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and consolidated balance sheet as on 31/03/2012, which forms part of the paper book on page no.12. From the perusal of the details in capital account and consolidated balance sheet, we find that the investment in shares (unquoted) is Rs. 5,43,02,835, and investment in shares/debentures (quoted) is Rs. 69,97,724. We further find that the assessee own funds are Rs. 6,01,97,179 and he received interest-free advances/loan of Rs. 24,05,23,708, during the year. From careful perusal of the consolidated balance sheet and capital account of the assessee, it is further pertinent to note that the assessee has also given interest-free loan/advances amounting to Rs. 17,60,28,513. However, it is sufficiently evident that the assessee's own funds and interest free funds are more than investments, including the investments for earning exempt income, and interest-free advances given. This factual position is not in dispute. The financial position of the assessee, as per the consolidated capital account and balance-sheet, is summarised as follows:- Sr. No. Particulars Amount 1. Owned Funds (Capital) 6,01,97,179 2. Interest-free advances received 24,05,23,708 3. Total Interest Free/Capital F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly those investments are to be considered for computing average value of investments, which yield exempt income during the year. Therefore, we direct the AO to recompute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of the aforesaid decisions, and if the disallowance so computed by applying above said principles works out to be lower than the value of exempt income, then the disallowance under section 14A should be restricted to the lower amount so computed. 12. Accordingly, the impugned order in respect of deletion of disallowance under section 14A read with Rule 8D(2)(ii) of the Rules is upheld. While in respect of disallowance made under section 14A read with Rule 8D(2)(iii) of the Rules, the impugned order is modified, and the AO is directed to compute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of directions as rendered in the foregoing paragraph. As a result, the grounds raised by the Revenue pertaining to deletion of disallowance under section 14A of the Act are partly allowed for statistical purposes. 13. The next issue that arises for our consideration pertains to deletion of disallowance under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of Rs. 39,33,672/- is made from interest free advances received from relatives which was at perusal with the assessee as evident from above balance-sheet. 3. Secondly, the assessee has taken interest free loans aggregating to Rs. 24,05,23,708 as against which the assessee has given interest free loans or advances aggregating to Rs. 17,38,68,756. Accordingly, further utilizing an amount of Rs. 39,33,672, the assessee still had interest free funds available of Rs. 6,27,21,280. 4. Thirdly, the assessee has taken interest bearing loans aggregation to Rs. 61,85,61,946. As against the same, the assessee has given interest bearing loans of Rs. 58,01,29,305 and investment in projects on which interest is not earned of Rs. 8,23,10,565. Therefore, the interest bearing funds aggregating to Rs. 61,85,61,946 and interest free loans taken remaining with the assessee (AS PER POINT 3 ABOVE) of Rs. 6,27,21,280 totalling to Rs. 68,12,83,226 in total have been utilized in giving interest bearing loans as well as investment in projects aggregating to Rs. 66,24,39,870. 5. Thus the interest bearing loans as well as interest bearing overdrawn capital from the firm taken by the assessee are mainly use ..... X X X X Extracts X X X X X X X X Extracts X X X X
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