TaxTMI 
TaxTMI 
2015 (1) TMI 731
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....ff and advance licence I DFIA obligation aggregating to Rs. 28,36,888, thereby resulting in double taxation of an amount aggregating to Rs. 28,36,888. 3.On the facts and in the circumstances of the case and in law, the Commissioner of -tax in disallowing a sum of Rs. 2226,000 out of interest paid attributable to Income-tax (Appeals) erred in confirming the action of the Deputy Commissioner of Income loan to a subsidiary. 4. Without prejudice to the ground of appeal no. 3, the Commissioner of Income-tax (Appeals) erred in confirming the action of the Deputy Commissioner of Income-tax in considering the rate of interest on borrowings (c) 14% for making the aforesaid disallowance out of interest paid. 3. Ground no.1 regarded disallowance u/s.14A, the assessee received dividend of Rs. 80,45,298/- from the domestic companies and Rs. 13,85,100/- from tax free US 64 Bonds of UTI. Thus total amount of Rs. 94,30,398/- was claimed as exempt u/s.10(34) and u/s.10(15) of the I.T. Act. The AO noted that assessee has paid interest on borrowed funds and also made investment in shares/units. The AO issued a show cause notice to the assessee to explain as to why disallowance u/s.14A not be made.....
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....urther disallowance is called for in the case of the assessee. On the other hand, Ld. DR has relied upon the order of the Assessing Officer as well as CIT(A) and submitted that when the assessee has claimed exempt income amounting to Rs. 94,30,398/- then the provisions of section 14A are applicable and the disallowance has to be worked out as per rule 8D of the Income tax Rules. 5. We have considered the rival submissions as well as relevant material on record. The assessee claimed to have used its own fund and not borrowed fund for investment made in the shares and bonds. It was also contended by the assessee that the investment are very old and no expenditure was incurred for earning dividend income. Further most of investments are in group concern for strategic investment and not for earning the dividend income. It is pertinent to note that since beginning there has been a disallowance u/s.14A as it is evident from the order of this tribunal in the earlier assessment year. Prior to this year ruled 8D was not applicable therefore, the disallowance was based on reasonable estimates. For the assessment year under consideration rule 8D is applicable and the working of disallowance ....
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....well as Garware Wall Ropes Limited (supra) has taken a view that section 14A would not be applicable on such investment in subsidiary for holding controlling stack. Therefore, the said view is applicable only in the case of subsidiary and not in the group concern. As regards the investment in Excel Crop Care Limited the same was as a result of demerger of the Excel Industries Limited and therefore, it would not fall under the category of acquiring the shares by payment of any consideration. Accordingly, for the purpose of computing disallowance as per rule 8D the investment in subsidiaries including Excel Crop Care Limited as well as the investment which does not yield tax free income as in the case of Saraswat Co-op. Bank shall be excluded from the average investment. 7. The assessee has vehemently contended that assessee has not used borrowed fund for the purpose of investment. It is pertinent to note that neither the assessee furnished proper relevant details to show availability of its own fund nor the authorities below have examined the said factum of availability fund. Therefore, availability of own fund in respect of the investment requires proper verification and examinati....
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....eceding assessment year. This ground raised by the assessee is accordingly allowed for statistical purpose. 5.1 After hearing both the sides we find this is an alternative ground to grounds of appeal no.3&4 by the assessee. We find the assessee had taken similar ground in the preceding assessment year and the Tribunal held that this ground is consequential and accordingly set aside the issue to the file of the A.O. in view of the fact that grounds of appeal no.2 & 3 has already been restored to the file of the A.O. for fresh adjudication. Respectfully following the decision of the Tribunal in assessee's own case in the immediately preceding assessment year this ground is set aside to the file of the A.O. this ground by the assessee is accordingly allowed for statistical purpose. Accordingly, the following earlier order of this tribunal we set aside the issue of disallowance interest as well as rate of interest to the record of the assessing officer on similar terms and directions. 11. Revenue has raise following grounds: "1.Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Rs. 36,63,053/- made by the A.O. o....
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....ization of the benefits by the assessee considered from the realistic and practical point of view( the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic. 28. Secondly as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 31. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive....