2015 (10) TMI 1509

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....A) erred in deleting the addition of Rs. 7,13,542/- made u/s.14A r.w. Rule 8D(2)(ii) of the Act, holding that the AO has failed to establish that interest is paid on borrowed funds which were invested in funds from which income is exempt from tax, without appreciating the fact that as per the provisions of Rule 8D, there is no distinction between any type of assessee as to whether borrowings were used for share trading or not and further as per the provisions of Section 14A(2) once the AO is not satisfied with the correctness of the claim of the assessee in respect of expenditure claimed, he has no option but to disallow such expenditure in accordance with method prescribed under Rule 8D(2)(ii)". 2. "On the facts and in the circumstances ....

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.... challenged the order of Ld. CIT(A) in giving relief of Rs. 7,13,542/- whereas the assessee accepted the order of Ld. CIT(A). 6. We have heard both the parties. The assessee has submitted that the assessee has earned only Rs. 500 as dividend income from mutual fund. The assessee company is a sick company having credit facility and other loans since long time which remained unpaid. It has been further submitted by the assessee company that it has in its possession huge amount of own funds which are far in excess of amount of investment made in shares. It has been further submitted that investment in shares has not been made out of borrowed funds. It is observed by us that the Ld. CIT(A) has given findings after appreciating the facts and ci....

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.... the judgment of Coordinate Bench of ITAT Mumbai in the case of Daga Global Chemicals Pvt. Ltd. vs. ACIT in ITA No.5592/Mum/2012 dated 01.01.2015 for the proposition that disallowance u/s 14A r.w Rule 8D cannot exceed exempt income. Baroda 5 Rayon Co. Ltd.. 7. After carefully considering all the submissions of both the parties and facts and circumstances of the case and judgment of Hon'ble Bombay High Court in the case of Reliance Utilities & Power Ltd (supra), we find that the assessee had sufficient funds in the form of Share Capital amd Reserves & Surplus so as to enable it to make tax free investments. Further the exempt income is merely to the tune of Rs. 500/-, received in the form of dividend in the investments made in earlier years....

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.... heavy operational losses and therefore the entire key personnel had left the organization, the manufacturing unit was under lock out and therefore, under these circumstances it was not feasible to furnish the payment details for purchase of car. It was further submitted that the accounts of the assessee were audited by the statutory audit under the 'Companies Act' 1956 and tax audit was conducted u/s 44AB of Income Tax Act 1961. The Ld. CIT(A) observed that the assessee company made the claim of depreciation on WDV value of the imported car which was included in the block of assets of the assessee company from earlier years and it was not case of purchasing of any car during the impugned year. It was further observed that since the depreci....