2016 (2) TMI 338

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....ance made by the A.O. U/s 14A of the IT Act, 1961. 2. Whether on the facts and in the circumstances of the case and in law the ld CIT(A) was justified in deleting the addition of Rs. 4,52,338/- made by the A.O. on account of disallowance of interest expenses on OD facilities. 3. Whether on the facts and in the circumstances of the case and in law the ld CIT(A) was justified in deleting the aforesaid additions by admitting the additional evidences without giving proper opportunity of verification to the Assessing Officer, violating the provisions of Section 46A(3) of the I.T. Rules, 1961." 2. The assessee company is in development of Special Economic Zome (SEZ) and Domestic Tariff area (DTA) in collaboration with Rajasth....

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....laimed by the assessee at Rs. 29,74,52,335/- U/s 36(1)(iii) of the Act. 2.2 The ld al alternatively also examined Section 14A of the Act alongwith Rule 8D of the Income Tax Rules, 1961 (in short the Rules) and found that the assessee derived dividend income (exempt) of Rs. 16,51,186/-. He gave show cause notice on this issue, which has been reproduced by the Assessing Officer on page 4 and 5 of the assessment order. The ld Assessing Officer reproduced Section 14A on page 5-6 of the assessment order. After analysis made by the Assessing Officer, it has been held that source of amount invested in mutual fund units was issuance of capital and that the expenditure related to issuance of share such as stamp duty etc. had already been disallow....

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....he ld Assessing Officer disallowed the interest U/s 36(1)(iii) of the Act at Rs. 4,52,338/- and disallowance U/s 14A at Rs. 2,76,51,752/-. 3. Being aggrieved by the order of the Assessing Officer, the assessee the matter before the ld CIT(A), who had deleted the addition made U/s 36(1)(iii) at Rs. 4,52,338/- by observing that the Assessing Officer was not correct in the detail working submitted by the appellant, had been accepted by the ld CIT(A). He found interest debited only Rs. 49,197/- and interest bearing OD fund were not utilized for getting tax free income. Similarly, the disallowance U/s 14A also deleted by considering the assessee's fund analysis reproduced on page 6 to 9 of the CIT(A)'s order. He also considered the ca....

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....e nexus with the overdraft that the assessee had paid the interest @ 10% on what basis the ld AR gave the figure of interest payment only Rs. 49,197/-. It is not clear whether it is a net or gross interest debited. Further whatever availability of fund explained before the ld CIT(A) by the assessee, was not given to the Assessing Officer to judge the interest free fund available with the assessee to invest in the exempted income. Therefore, he prayed to confirm the order of the ld Assessing Officer or at least set aside to the Assessing Officer for reconsideration of the evidence submitted by the assessee before the ld CIT(A), which has not been remanded back to the Assessing Officer. 5. At the outset, the ld AR of the assessee has reite....