2013 (10) TMI 772

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.... relates to the disallowance of Rs. 3,58,021/ made by the A.O. and confirmed by the ld. CIT(A) on account of interest on the ground that the borrowed funds were utilized by the assessee for payment of advance tax liability. 3. The assessee in the present case is a company which is engaged in the business of manufacturing of offset printing plates, chemicals, film products etc. The return of income for the year under consideration was filed by it on 30th October, 2001 declaring total income of Rs. 6,97,92,520/-. In the assessment originally completed u/s 143(3) of the Income Tax Act on 31-3- 2004, the A.O. disallowed interest expenditure claimed by the assessee to the extent of Rs. 3,58,021/- on the ground that the interest to that extent....

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....ments completed during the set aside proceedings u/s 143(3) r.w.s. 254 of the Act, the A.O. has not made any disallowance on account of interest. He has also invited our attention to the copy of relevant balance sheet of the assessee as on 31st March, 2001 placed at page 97 of the assessee's paper book which clearly shows that sufficient own funds in the form of share capital amounting to Rs. 193.98 lacs and in the form of reserves and surplus amounting to Rs. 1,795.65 lacs were available with the assessee at the relevant time to make the payment of advance tax liability. He has also pointed out that the profit of the assessee for the year under consideration before tax was Rs. 891.57 lacs which itself was sufficient to cover the advance ta....

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....ecision of Special Bench of ITAT in the case of Daga Capital Management Pvt. Ltd. reported in 119 TTJ 328. In the assessment completed u/s 143(3) r.w.s. 254 of the Act, the A.O. applied Rule 8-D of the Income Tax Rules, 1962 following the decision of Special Bench of ITAT in the case of Daga Capital Management Pvt. Ltd. (supra) and made a disallowance of Rs. 19.04 lacs u/s 14A of the Act. The assessee again preferred an appeal before the ld. CIT(A) who restricted the disallowance made by the A.O. u/s 14A of the Act to 5% of the amount of exempt dividend income following the decision of Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT reported in 328 ITR 81 (Bom) and the decision of the Tribunal in assessee's own ....