2013 (8) TMI 341

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....he revenue is in appeal before us against the order of CIT(A) dated 13.01.2010 passed for assessment year 2004- 05. The solitary substantial grievance of the revenue is that learned CIT(A) has erred in deleting the disallowance of Rs. 32,05,767/-, which was disallowed u/s 14A of the Income tax Act, 1961 by the Assessing Officer. 2. The brief facts of the case are that assessee is engaged in the....

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....,57,036/- 3. According to the Assessing Officer, the assessee had paid interest of Rs. 32,05,767/-. He observed that if the assessee had not advanced the money to the sister concern and made investment in mutual funds, then for the purpose of business it would not require to raise loan from the banks and incur interest expenses. He disallowed the total interest expenses claimed by the assessee.....

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.... that there were enough funds with the assessee and even after making the said investments and providing interest free advances, it had a surplus cash of Rs. 6,75,49,238/-. Once it is clear that the assessee had surplus cash, any disallowance under section 36(1)(iii) cannot be made, notwithstanding the fact that in the questionnaires dated 24.07.2006 and 15.11.2006, this issue was never raised at ....

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....es and investment. In other words on the record Assessing Officer failed to establish that interest bearing funds were used either for making advances to the sister concern or for investment in the mutual funds. If that be so, then how disallowance can be made. The stand of the Assessing Officer is that assessee should have used its own fund instead of interest bearing borrowings for running the b....