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Income Tax Appellate Tribunal, “A ”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the Revenue against the order of CIT(A)- 24, Mumbai dated 23/12/2016 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act. 2. The only ground taken by the Revenue relates to deletion of disallowance of interest expenditure u/s.14A r.w.R 8D(2)(ii) of the IT Act. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that the assessee is a company engaged in the business of Management of Container Freight Station, Transportation of containers and other related services. During the course of assessment proceedings, AO observed that the assessee had made investments M/s. Apollo Logisolutions Ltd., during the year under consideration and the AR of the assessee was asked to furnish applicability of section 14A of the Act and was also asked to explain as to why disallowance u/s 14A r.w. Rule 8D should not be made. Ld. AO considered the submissions made by the assessee and held that no activity could be said to be automatic and that there was application of interest bearing funds towards making investments for earning of exempt income. Accordingly, the AO computed the disallowance u/s 14A in respect of interest and other expenses at Rs.64.56 lakhs and added the same to the total income of the assessee.
By the impugned order, disallowance of interest was deleted by CIT(A) by observing that total non-interest bearing funds of the assessee as on 31/03/2012 was Rs.5966 Lakhs which includes share capital, reserves and debentures, was much more than the investments of Rs.1552.25 lakhs as on 31/03/2012. Hence, there is no interest expenditure incurred for earning the income which does not form part of the total income of the assessee-company. Therefore it has to be construed that the 2nd limb of rule 8D 2(ii) pertaining to disallowance of interest expenses should be considered as NIL.
However, CIT(A) has confirmed the disallowance made by AO under Rule 8D 2 (iii) against which assessee is not in further appeal before us.
Against the above order of CIT(A), revenue is in further appeal before us. Ld. DR relied on the order of AO. On the other hand, Learned AR invited our attention to the audited balance sheet of the assessee to