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TMI Blog2024 (6) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has produced all the relevant books of account, explained the nature of expenses debited and has explained that none of the expenditure can be said to be attributable to earning of exempt income, then onus shifts upon the Assessing Officer to examine the books of account and nature of expenditure debited and after recording his 'satisfaction' as per the mandatory requirement given in Section 14A(2) and (3) r.w.s. Rule 8D(1), then only he can proceed to make disallowance under Rule 8D, Accordingly, disallowance made by the AO is hereby directed to be deleted. Thus in the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly disallowance made u/s. 14A by Assessing Officer is hereby deleted Computation of book profit under Section 115JB - This matter has also been decided in favour of the assessee by the Tribunal and this issue is also covered by the judgment of Sobha Developers [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT] Accordingly we hold that no disallowance u/s. 14A is made while computing the book profit. The ground no 2 is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from industrial undertaking and accordingly reducing the deduction under section 80IB of the Income Tax Act. Ground No.5 : It is contended that the Ld. Commissioner of Income Tax (Appeal) has erred in law and on facts in confirming the reduction of certain other income while computing deduction under section 80IB and 80IC of the Income Tax Act, 1961. 3. Whereas in the Revenue s appeal, following grounds have raised :- 1. The Ld. CIT(A) has erred in law and in facts in not appreciating the fact that the assessee company was having own funds as well as interest bearing funds and interest expenditure was incurred by the assessee during the FY 2013-14, therefore, provisions of Rule 8D(2)(ii) of the I.T. Rules gets attracted. 2. The Ld. CIT(A) has erred in law and facts in not appreciating the fact that the assessee has failed to explain the source of cash seized from his premise. 3. That the grounds of appeal are without prejudice to each other. 4. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time hearing of the appeal. 4. Brief facts of the case are that the assessee company is engaged in the business of manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessor in the appellate order passed for the AY 2011-12 in the appellant's own case is followed in which it is held that:- 8. Since in the year under consideration also the same issues and facts are there as were existing in the AY 2009-10 and 2010-11, therefore, relying on my orders for said assessment years, I hold that application of section 14 read with Rule BD is correct and appellant's contention that section 14A is not applicable in the appellant's case is rejected. 8.1 With regard to the disallowance of interest component of Rs. 82,66,124/- as per Rule 8D's calculation, the appellant was asked to submit the dates as well as bank details on which the investment in share application were made and whether on those dates the balance as per bank was overdraft or not, so as to verify whether the own funds were used or borrowed funds were used. On going through the bank statement of those dates when the investments were made, it is seen that all the investments apparently were from own funds because on the respective dates when the investments were made there was credit balance as per bank statements i.e. no overdraft facility were availed. Therefore, in these cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s own case for the Assessment years 2009-10 to 2011-12 vide order dated 29-03-2018 have allowed the appeals after holding as under :- 22. Since, the issue involved in grounds no.1, 5 and 6 in assessee's appeal and grounds no.1 and 2 in the Revenue's appeal were exactly the same as were involved in Assessment Year 2008-09, therefore, finding given therein will apply mutatis mutandis in this year also. Accordingly, grounds no. 1. 5 and 6 of the assessee are allowed whereas the Revenue's grounds are dismissed. 23. Coming to the issue of disallowance u/s. 14A r.w. Rule SD of Rs. 35,78,530/-, the brief facts are that assessee has received a sum of Rs. 1,47,52,936/- as dividend which was claimed as exempt. In response to the show cause notice, the assessee submitted that these were old investments and all the investments were made out by own funds and all borrowed money were used for the purpose of business. However, the Assessing Officer without examining the books of account and the nature of expenditure debited in the books of account as well as identifying any expenditure which can be said to be attributable for earning of exempt income, has mechanically applied Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has been made by assessee's own fund. In view of such a clear cut finding, no disallowance of interest can be made. With regard to other disallowance on account of administrative cost, we find that assessee has given a categorical explanation that no expenditure can be said to be attributable especially when all the investments were made in much earlier years and there is only one dividend cheque received during the year. Once assessee has produced all the relevant books of account, explained the nature of expenses debited and has explained that none of the expenditure can be said to be attributable to earning of exempt income, then onus shifts upon the Assessing Officer to examine the books of account and nature of expenditure debited and after recording his 'satisfaction' as per the mandatory requirement given in Section 14A(2) and (3) r.w.s. Rule 8D(1), then only he can proceed to make disallowance under Rule 8D, This has been clearly stated by the Hon'ble Delhi High Court in the case of HT Media Ltd. Vs. Pr. CIT, reported in (2017) 399 ITR 576 (Del.) and Hon ble Apex Court in the case of Godrej Boyce Manufacturing Co. Ltd. Vs. Dy. CIT Anr. Reported in (2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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