Computation of disallowance u/s 14A , Rule 8D-Bank Charges for Export Service not includible
ITAT Delhi in a recent judgment has held that bank charges pertaining to exports services have no relation with the investments made yielding exempt income and hence not includible for calculation of disallowance u/s 14A read with Rule 8D
Case Details:
ITA No.130/Del/2013 ; CO No.98/Del/2013 Assessment Year : 2009-10
DCIT vs. Desiccant Rotors International Pvt. Ltd
Date of order: 10/03/2016
Facts of the case:
The assessee was engaged in manufacturing of heat recovery and environment control systems such as Rotors, heat recovery wheels, energy recovery ventilators, etc. During the year under consideration, the assessee earned tax free income. The Assessing Officer noticed that the assessee made investment to the tune of Rs.33.72 crore and paid interest amounting to Rs.42.95 lac. Invoking the provisions of Rule 8D, the AO made disallowance of Rs.32,06,866/-. The CIT(A) upheld the disallowance to the extent of Rs.17.41 lac by, inter alia, reducing `Bank charges’ amounting to Rs.34.51 lac from ‘Interest’ under Rule 8D(2)(ii). He held that only `interest’ component was required to be considered. We have gone through the assessee’s Annual accounts from which it is discernible that the assessee also paid `Bank charges’ amounting to Rs.34.51 lac apart from `interest’ amounting to Rs.8.43 lac. The CIT(A) however ignored the amount of `bank charges’ from the purview of disallowance by noticing that this amount pertained to exports undertaken by company which has no bearing for the purpose of Rule 8D.
Revenue contested the CIT(A) order against restricting the disallowance u/s 14A to Rs.14,65,726/- as against Rs.32,06,866/- made by the AO.
Held:
“In our considered opinion, the ld.CIT(A) rightly appreciated the facts in excluding the amount of `bank charges’ from ‘Interest’ for the purposes of calculation of disallowance under Rule 8D(2)(ii) of the Act.”
Download Full Judgment Click Here >>
Addition u/s 68 for jewellery purportedly received on death of grandparent under Will upheld. In a recent judgment, ITAT upheld…
Supreme Court lays down tests to determine whether a debt is a financial debt or an operational debt under IBC…
Merely because directors of two companies were common not mean that deposits received was bogus and companies were shell companies…
Application though named as rectification but if tax imposed is not legitimate then it also touches upon the merit –…
Cost of acquisition as on 01.04.1981 taken as per valuer report by reverse indexing of current FMV to be further…
ITAT directed AO to serve notice of hearing both through electronic and physical mode upon the assessee In a recent…