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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
O R D E R
PER C.N. PRASAD, JM:
This appeal is filed by the assessee against the order of the Ld. CIT(A)-13, Mumbai dated 04.12.2013 pertaining to assessment year 2010-11.
The only issue in the appeal of the assessee is that the Ld. CIT(A) erred in confirming the addition of Rs. 10,57,359/- made by the AO u/s. 14A r.w. Rule 8D of I.T. Rules.
The Assessing Officer while completing the assessment disallowed Rs. 2,83,56,246/- by invoking the provisions of Section 14A r.w. Rule 8D of I.T. Rules. On appeal, the Ld. CIT(A) held that the disallowance cannot exceed the expenses debited in the Profit & Loss account and the disallowance under rule 8D(iii) should be restricted to Rs. 2,59,467/- and interest as per Rule 8D(ii) at Rs. 7,97,892/- alongwith charges of Rs. 4,642/-.
The Ld. Counsel for the assessee submits that in the group concerns case when assessee has own surplus funds which are in far excess of investments made, no disallowance of interest should be made and this stands covered by the decision of the Hon’ble Bombay High Court in the case of HDFC Bank Ltd 36 ITR 505. The Ld. Counsel submits that in its case also the assessee has own surplus funds which are more than the investments and therefore no interest expenses should be disallowed. He pleads for similar direction which was given in the group concerns by the Co-ordinate Bench in the case of M/s. Welspun Steel Ltd Vs DCIT in and others by sorder dated 18.12.2015.
The Ld. Departmental Representative has no serious objection in following the order of the Co-ordinate Bench of the Tribunal.
We have perused the order of the Tribunal and we find that the Tribunal at page-17 on para 42 held as under:
“After considering the rival submissions and on perusal of the materials on record, we agree in principle with the Ld. Counsel that in case, assessee has own surplus fund which are in far excess of investment made, then no disallowance of interest should M/s Welspun Steel Ltd ITA : 8294/Mum/2011 ITAs : 6371 to 6376/Mum/2014 ITAs : 6304 to 6308/Mum/2014 18 be made and this view stands covered by the decision of Hon’ble Bombay High Court in the case of HDFC bank Ltd., reported in 366 ITR 505 (Bom). Accordingly, the AO is directed to verify this contention and grant relief so far as interest disallowance is concerned. Further, the AO is also directed to apply the principles laid down by Delhi High Court in the case Chem Invest inasmuch as if there is no exempt income then, no disallowance should be made. Accordingly, with this direction this ground raised by the assessee is treated as partly allowed for statistical purposes”. Respectfully following the said order, we direct the AO to examine the contention of the assessee that it has surplus funds more than the investments made and in which case, no interest is liable to be disallowed under Rule 8D(ii) of I.T. Rule. Thus we restore this matter to the file of the AO to examine in the light of the decision of the Hon’ble Bombay High Court in the case of HDFC Bank Bank Ltd. (supra) and decide the issue afresh after providing adequate opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is treated as allowed for statistical purpose.