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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)
The appeal filed by the Revenue is directed against the order passed by the learned CIT(A)-48, Mumbai and it relates to A.Y. 2013-14. The Revenue is aggrieved by the decision of the learned CIT(A) in granting relief to the assessee in respect of addition made u/s. 14A of the Act.
I heard the parties and perused the record. The assessee-company is a builder and developer. During the year under consideration, the assessee received dividend income of Rs. 6,97,000/- from mutual funds and claimed the same as exempt. The assessee disallowed a sum of Rs. 3.63 lakhs u/s. 14A of the Act. The Assessing Officer took the view that the disallowance should be computed as per provisions of Rule 8D of the I.T. Rules and accordingly disallowed a sum of Rs. 38.44 lakhs under Rule 8D(2)(ii) of the I.T. Rules out of interest expenditure and Rs.5.30 lakhs u/r. 8D(2)(iii) out of administrative expenses. After giving set off of disallowance made by the assessee, the Assessing Officer made the disallowance of Rs. 40.11 lakhs u/s. 14A of the Act. Before the learned CIT(A), the assessee submitted that own funds available with it is more than the value of investment and hence as per the 2 M/s. Acme Housing India Pvt. Limited decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (383 ITR 523), no disallowance is called for out of interest expenditure. The learned CIT(A) agreed with the contention of the assessee and accordingly, deleted the disallowance of Rs. 38.44 lakhs made out of interest expenditure. The Revenue is aggrieved by the same.
I noticed that the learned CIT(A) has recorded a finding that own funds available with the assessee as on 31.3.2013 was to the tune of Rs. 4914.36 lakhs, while investment held by the assessee as on that date was Rs. 1810.56 lakhs, thus showing that the own funds available with the assessee is more than the value of investments. Accordingly the learned CIT(A) has deleted the disallowance made u/r. 8D(2)(ii) out of interest expenditure by following the decision rendered by jurisdictional High Court in the case of HDFC Bank Ltd (supra), wherein it was held that the disallowance out of interest expenditure is not called for when the own funds available with the assessee is more than the value of investments. Since decision taken by the learned CIT(A) is supported by the decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra), we do not find any reason to interfere with the order passed by the learned CIT(A) on this issue.
In the result, appeal filed by the Revenue is dismissed. Order has been pronounced in the Court on 21.2.2018.