STANDARD FIBRECHEM P.LTD,MUMBAI vs. ACIT CIR 1(3), MUMBAI

The present appeal has been preferred by the assessee against the order dated 05.06.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2008-09.

The short issue raised in this appeal is relating to the disallowance of interest expenditure under section 14A read with rule 8D(2)(ii) of the Income Tax Rules incurred for earning the tax exempt income by the assessee. The stand of the assessee is that no interest expenditure has been incurred in relation to investments. The interest expenditure has been incurred by the assessee in relation to trading activity in shares and not in relation to the investments whereas the stand of the Revenue is that from the records it is not clear that the interest expenditure has been incurred in relation to trading activity only. 2 M/s. Standard Fibrechem Pvt. Ltd.

Both the Ld. Representatives of the parties submitted that the issue may be restored to the file of the Assessing Officer (hereinafter referred to as the AO) for verification of the facts as to whether the interest expenditure was incurred by the assessee in relation to the trading activity in shares only or in respect of investments also and also to verify the genuineness of the said expenditure. We, accordingly, restore this issue to the file of the AO in the terms as indicated above and direct the AO to examine the accounts of the assessee and give a definite finding whether the interest expenditure was incurred in relation to trading activity only or in respect of investments also and to decide the issue in accordance with law.

With the above observations, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 03.02.2016.