TaxTMI 
TaxTMI 
2015 (1) TMI 1118
X X X X Extracts X X X X
X X X X Extracts X X X X
....nue's appeals are only arguments in support of ground no. 1. 4. Ground no. 1 of the assessee's appeal is of general nature and needs no adjudication. 5. Ground no. 2 of the assessee's appeal reads as under: "That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) has erred in sustaining the disallowance of Rs. 1,36,234/- out of the total disallowance of Rs. 26,78,282/- made by the Assessing Officer out of interest paid as relatable to interest free loan advanced to M/s Hivac Wares Pvt. Ltd. In F.Y. 2007-08 out of own funds available with the appellant. He ought to have held that no amount of interest paid is relatable to the above loan since the same were advanced out of the own funds available with the appellant in that year, as has been held by his predecessor in A.Y. 2008-09 and accepted by the department." 6. Since ground no. 1 of the revenue's appeal and ground no. 2 of the assessee's appeal are inter-related, they are being adjudicated upon together. 7. The facts of the case are that during the assessment proceedings the AO noticed that there was interest free advance as per assessee's balance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce was received in the year under appeal. He further submitted that the revenue, having accepted the order of the CIT(A) in the immediately preceding year, cannot agitate the same finding in the subsequent year. In support of this contention, he relied upon the decision of Hon'ble Apex Court in the case of CIT Vs. M/s Excel Industries Ltd. vide civil appeal no. 125 of 2013. 11. The ld. DR, on the other hand, relied upon the order of the AO and stated that the AO has examined the facts of the case and has also discussed various judicial pronouncements and thereafter has arrived at the correct conclusion. He, therefore submitted that the disallowance made by the AO u/s 36(1)(iii) should be sustained in toto. 12. We have carefully considered the arguments of both the sides and perused the material placed on record. We find that similar issue came up before the CIT(A) in the immediately preceding year i.e. for A.Y. 2008-09, wherein the AO had disallowed the interest amounting to Rs. 16,75,588/- in respect of interest free advance of Rs. 125.36 lacs. The CIT(A) has deleted the addition with the following findings: "I have gone through the above submissions of the appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the finding of the CIT(A) with regard to the deletion of disallowance u/s 36(1)(iii) was accepted by the revenue in that year. During the year under consideration the CIT(A) has given complete break up and details of the interest free advance amounting to Rs. 1,17,38,186/-, which reads as under: - Inter-corporate Loans 1,60,385 - Receivable from Excise Department 1,260 - Advances Recoverable in cash or in kind 1,15,76,541 1,17,38,186 The details of these were as under, which were filed before the Assessing Officer vide letter dated November 9,2011:- Inter-Corporate Loans: Name of Party Op. Bal. Given during the year Recd. Back during the year Rate of Intt. Intt. For the year TDS Cl. Bal. Divine Investments Pvt. Ltd. 519010 0 519010 12% 13973 2878 11095 Gentech Chemicals Pvt. Ltd. 518510 0 518510 12% 13973 2878 11095 Meridian Meridian Pvt. Ltd. 207664 0 207664 12% 16241 3346 12895 Quick Lithographers Pvt. Ltd. 517010 0 517010 12% 24526 5052 19474 Bantam Enterprises Pvt. Ltd. 821503 200000 1021503 12& ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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. ++ It appears from the record that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it." 16. In view of the above observation of the Hon'ble Apex Court, we hold that the revenue was not justified in agitating the reduction in the disallowance of interest in the year under consideration on the same facts, which was accepted by them in the immedi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9;ble Jurisdictional High Court has considered the issue of disallowance u/s 14A in the case of Holcim India Ltd. (supra) and Their Lordships expressed their concurrence to the decisions of Hon'ble Punjab & Haryana High Court; Gujarat High Court; and Allahabad High Court, wherein a view has been taken that if no exempt income is earned by the assessee, no disallowance u/s 14A can be made. The relevant observation of Their Lordships of Jurisdictional High Court reads as under: 14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant-Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009] 319 ITR 204 to hold that ....