TaxTMI 
TaxTMI 
2015 (2) TMI 355
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....ssets, lending of money, discounting of bills of exchange and rendering financial services, advisory services to various company constituents seeking further capital or loans. It filed its return of income on 29.9.2009 declaring NIL income after claiming set off of brought forward losses. 3. The grounds of appeal raised by the assessee are as follows :- 1. "The lower authorities have erred in invoking the provisions of Section 14A of the Income-tax Act, 1961 (hereinafter referred to as the Act) read with Rule 8D of the Income-tax Rules, 1962 (hereinafter referred to as the Rules) 2. The disallowance of a sum of Rs. 72,105/- u/s 14A of the Act read with Rule 8D is wrong and is opposed to evidences on ....
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....ration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below we hold as follows:- 6.1. We first take up the assessee's appeal. Ground No. 1 and 2 are on disallowance made u/s 14A. The main contentions of the assessee are that there is no finding by the AO that the assessee has incurred interest expenditure relatable to earning of exempt income. He argued that in the absence of such a finding, the question of disallowance does not arise. He demonstrated that the assessee has not made any fresh investments during the year to prove his contention that the disallowance is bad in law. Relied on the decision of the Delhi Bench of the Tribunal in the case of Raj Shipping Agencies ....
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....ters Developers (P.) Ltd. [2006] 281 ITR 346 (Del) 7. Ld. DR on the other hand relied on page 8 para 8.4 of the assessment order and submitted that the disallowance u/s 14A was rightly confirmed by the CIT(A). He also relied on the finding of the first appellate authority and submitted that the burden was on the assessee to prove that the expenditure is incurred for earning tax free income. 8. On the 2nd issue, he is submitted that res judicata does not apply to tax proceedings and that it is not clear whether the earlier years the interest in question was earned from FDRs or not. He relied on page 15 of the CIT order and supported the same. He argued that investment in FDRs is not the business of the assessee and hence the interest there....
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....d under Rule 8D (2)(iii) on account of administrative charges, the Ld. CIT(A) has upheld the computation made by the AO. The argument of the assessee that the AO has not recorded his satisfaction while invoking rule 8D is not correct. In para 8 at page 3 of the assessment order the satisfaction is discernable. Thus the disallowance to the extent of Rs. 72,000/- is upheld. In the result this ground is allowed in part. 12. The next issue is whether the interest income is to be assessed under the head "other sources" or under the head "Business Income". Assessee's case is that it is a NBFC and during the year 2004 it ran into financial crunch and consequently could not meet its financial obligations towards its creditors, lenders, Banks etc. ....
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....s without the permission of the court, the moneys were transferred to fixed deposits for the temporary period as a measure of prudence and best business practices. The interest in question was earned on this fixed deposit. 13. The interest is not earned out of surplus money. The assessee had an obligation to repay its debentures holders etc. and was acting under the directions of the Hon'ble Delhi High Court and Hon'ble Mumbai High Court in the process of fulfilling its financial obligations certain interest is earned. On this factual matrix in our view the interest is assessable only under the head "income from business" but not under the head "income from other sources". The assessee is a NBFC and money in its stock in trade. Interest in....
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....ing any reason for doing so. The first appellate authority has corrected this mistake. We do not see any reason to interfere in this finding of the first appellate authority. Thus he uphold the same and dismiss ground No.1 of the revenue. 17. Ground No. 2 is on the issue of computation of income. The first appellate authority at para 10.2 held as follows :- 10.2 "I have considered the submission of the appellant and observation of the assessing officer. It is seen that Assessing Officer has taken profit on sale of investment at Rs. 1,44,84,868/- and expenditure at Rs. 1,77,85,048/- while computing the income. It is seen from the balance sheet that there are no such figures available in the balance shee....