TaxTMI 
TaxTMI 
2012 (6) TMI 323
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....unds taken by the assessee concerns direction of the CIT(Appeals) to the A.O. for re-working the disallowance under Section 14A of Income-tax Act, 1961 (in short 'the Act'). Since this issue is common in both the appeals, it is dealt with first. 3. Short facts apropos are that assessee had claimed exemption under Section 10(34) of the Act on an amount of Rs. 1,55,58,725/- received as dividend. Though such dividend income was claimed as exempt, assessee had considered only a sum of Rs. 82,57,520/- as pro rata interest on investments made to earn such an exempt income. As per the A.O., the total interest payment for impugned assessment year was Rs. 3,39,39,120/-. A.O. also noted that out of the above amount, a sum of Rs. 82,57,520/- was co....
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....) was of the opinion that borrowed money was invested in various companies and though shares were not allotted in some of such companies, the purpose for investment was only to earn dividend income. According to him, nature of borrowed fund would not change just because shares were not allotted. Nevertheless, he held that Rule 8D was not applicable for the impugned assessment year in view of the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (supra). Ld. CIT (Appeals) directed the A.O. to re-work the disallowance after excluding Rs. 82,57,520/- suo motu admitted by the assessee for the impugned assessment year. 5. Now before us, Revenue is aggrieved regarding the direction of ld. CIT(Appeals) for exclud....
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....plication money, no dividend can be earned thereon. However, the question here is whether investment as share application money is with the intention of earning dividend, since shares will eventually get allotted against it. In our opinion, this question of intention of the assessee for earning dividend will be relevant only if there is a definite date for allotment of shares declared by the concerned company. Admittedly, here the amount was lying as share application money and no shares were allotted. Revenue has not examined as to whether any date for allotment of shares was declared by M/s North Chennai Power Company Limited nor has it examined as to whether assessee was aware of the possible date of allotment, at the point of time when ....
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....looked into afresh. We, therefore, set aside the orders of authorities below and remit the issue back to the Assessing Officer for fresh consideration in accordance with law. 9. Coming to the other ground taken by the assessee, which is regarding disallowance made by A.O. to the tune of Rs. 5,61,200/-, the said disallowance was made for a reason that assessee had not deducted tax at source on loan processing fees paid to one M/s Cholamandalam DBS Finance Limited. Explanation of the assessee was that payment of loan processing fees did not fall under the category of professional, consultancy, technical fees or contractual payments prescribed under Section 194J or 194C of the Act and therefore, these were not subject to TDS. However, Asses....
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....e disallowance. 11. Now before us, learned A.R. reiterated the arguments put forth before ld. CIT(Appeals). 12. Per contra, learned D.R. strongly supported the order of ld. CIT(Appeals). 13. We have perused the orders and heard the rival submissions. The question is whether the processing fees against the loan taken from M/s Cholamandalam DBS Finance Limited has to be considered as interest or not and if it is to be considered as "interest", whether it is covered under Section 194A of the Act. "Interest" as defined under Section 2(28A) of the Act, is reproduced hereunder:- "Interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or oblig....