TaxTMI 
TaxTMI 
2013 (10) TMI 382
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....12.2010. 2.1 Opening the arguments for and on behalf of the assessee-appellant, it was submitted by the ld. Authorized Representative (AR), its counsel, that though the assessee impugns the entire disallowance of Rs.19,06,722/- effected u/s.14A of the Act, since confirmed by the ld. CIT(A), it has no grievance and, rather, concedes to the validity to the said disallowance in-so-far as it relates to indirect expenditure, computed with reference to Rule 8D(2)(iii) at Rs.8,32,149/-. The assessee's grievance and arguments would, thus, be confined to the balance amount of Rs.10,74,572/-, and which is in respect of interest on the investments held by the assessee during the previous year. The same is not valid in-as-much as the assessee has, a....
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....s explained by him that the same are for business purposes, i.e., toward financing its working capital, viz. stocks, debtors, etc. There could be under the circumstances no inference of borrowed capital having been deployed for investment in shares and securities yielding tax exempt income by way of dividend as also long term capital gain (LTCG). 2.2 The ld. Departmental Representative (DR) would, on the other hand, submit that the onus to exhibit the nexus between the borrowings and the avenue/s of their investment/application is only on the assessee, failing which the prescription of the rule, which is based on the common pool of funds hypothesis, would apply. The assessee has nowhere been able to exhibit the purpose for which the borr....
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.... case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom). Coming to the facts of the instant case, the assessee pleads of sufficient capital being available with it, so that the investments under reference stand financed there-from. Following the same logic, therefore, even the advance/s to sister concern/s, on which it has received interest at Rs.202.70 lacs for the year, has also been financed from own capital, and there is no basis to claim that the borrowed funds from the bank/s have been lent to the sister concern/s, so as to set off the interest suffered against the interest received on loans to the said concern/s. The said argument, i.e., of set off of the interest received against that paid, it would be noted, als....
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....elevant agreements, with the assessee exhibiting maintenance of appropriate levels of the relevant assets (computed in the manner provided) during the year, there is no occasion to infer that the secured loans have not been applied for the stated purposes, i.e., for which they have been granted. The unsecured loans, which are though meager in the instant case, stand on a different footing inasmuch as the assessee is free to deploy the same in any manner it deems fit. Under the circumstances, we only consider it fit and proper that the matter is restored back to the file of the A.O. for a proper examination of the assessee's case, even as the onus to establish its claim/s would only be on the assessee, and decide the same in accordance wi....