TaxTMI 
TaxTMI 
2015 (11) TMI 1369
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....08-09 & 2009-10 respectively. Since identical grounds are involved in both the appeals, these were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First, we take up the Assessee's appeal in ITA No.2358/Ahd/2011 for AY 2008-09. The Assessee has raised the following grounds of appeal:- Your appellant being aggrieved by the order passed dated 14/07/2011 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the "Act") by the learned Commissioner of Income-tax (Appeals)-XIV, Ahmedabad (hereinafter referred to as the "CIT(A)") presents this appeal against the same on the following grounds which are without prejudice to each other:. 1. The order passed by the le....
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....opos to Ground Nos.2 & 3, the briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 26/11/2010, thereby the Assessing Officer (AO in short) made disallowance by invoking the provisions of section 14A of the Act of Rs. 1,91,188/-, disallowance of interest expenses of Rs. 10,37,260/- and disallowance u/s.41(1) of the Act of Rs. 3,71,897/-. The AO also made addition on account of GP rate of Rs. 24,92,246/-. The assessee being aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee partly allowed the appeal; th....
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....y company keeping in mind long term interest of the assessee-company. 3.1. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that there is no illegality in the order of the ld.CIT(A). He submitted that there is no dispute with regard to fact that the assessee has earned exempt income. Therefore, the expenditure related to such exempt income deserves to be diallowed on the basis of provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The argument of the assessee is that the authorities below were not justified in invoking the provision....
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....f the expenditure is related to investment wherefrom the exempt income is earned. In the present case, the ld.CIT(A) has not considered the submissions of the assessee that investments have been out of interestfree fund, for commercial expediency and the dividend income has been offered for tax. Therefore, we are unable to confirm the finding of ld.CIT(A). In the light of above discussion, we hereby direct the AO to delete the addition of Rs. 84,304/-. Accordingly, this ground assessee's appeal is allowed. 5. Ground No.3 is against confirming the disallowance of Rs. 7,50,000/-. The ld.counsel for the assessee submitted that the authorities below failed to appreciate the fact that the assessee was having sufficient interest-free funds to ....
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....owance made in respect of advance given to Shreenidhi Textiles. The contention of the assessee is that the advance was given out of interest-free funds. It is also contended that similar advances were made during the AY 2007-08, in that year no such disallowance was made. This contention was not made before the ld.CIT(A). Therefore, in our considered view, the contention of the ld.counsel for the assessee that had it sufficient interest-free funds and the advance was given out of interest-free funds requires verification at the end of the AO and, accordingly, we hereby set aside the order of the authorities below and restore this issue to the file of AO to verify whether the advance was out of interest-free funds available with the assessee....
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.... having sufficient interest free funds, no amount of interest should have been disallowed u/s 14A invoking Rule 8D. 3. The learned CIT (A) has erred in law and facts in confirming the disallowance of 14% interest on Rs. 7,50,000/- [i.e. Rs. 1,05,000/-] being amount advance to Shreenidhi Textiles by holding that there is difference between commercial expediency and humanitarian consideration and that there was no apparent business expediency in giving such advance. It is submitted that it be so held now. 4. The learned CIT(A) ought to have considered that no interest-bearing funds have been utilized for such advances made. Therefore, no interest amount should be disallowed. It is submitted that it be so held now. 5....