TaxTMI 
TaxTMI 
2016 (3) TMI 142
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....ppeal No. 81/2010-11/CIT(A)VIII. 2. The revenue has raised the following effective grounds of appeal in its appeal: "1. The order of the learned CIT(Appeals) is erroneous & contrary to facts & law. 2. On the facts and in the circumstances of the case, the Ld CIT (A) erred in deleting disallowance of interest paid to the tune of Rs. 48,49,411 relatable to fund advanced to sister concerns interest fee in the form of loan and interest fee coverable debentures. This is despite the fact that the auditors of the company reported that rate of interest and other terms u/s 301 of the Companies Act, 1956 amounting to a sum of Rs. 31.28 Crore is prima facie prejudicial to the interest of the company. 3. On the facts and t....
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.... Rs. 7,32,109/." 4. Ground No. 1 of the Revenue being general in nature needs no adjudication. Hence Ground No. 1 of the Revenue stands dismissed. 5. Ground Nos. 3 and 4 of the Revenue and Ground Nos. 1 to 3 of the assessee are taken up together for disposal since they involve similar issue in relation to exempted income. 6. Briefly stated, the facts giving rise to these grounds as enunciated by the assessee in its paper book at pages 2 and 3 are that the assessee has not received any exempted income during the year under consideration. The assessee, in its return of income did not compute any disallowance u/s 14A of the Act. The assessee disclosed total investment in securities at Rs. 6,53,50,000/- as on 31.3.2008 [Previous year R....
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....Del] and in the case of CIT Vs. Holcim India Pvt Ltd [2014] (9) TMI 434 [Del] wherein it has been held that no disallowance u/s 14A of the Act can be made in a year in which no exempt income has been earned or received by the assessee, we concur with the ld. AR submissions. We also agree with the contention of the ld. AR that without establishing any nexus between the expenditure incurred and investment, Rule 8D cannot be invoked. Accordingly, respectfully following the dicta laid down by the Hon'ble High Court in the above mentioned cases, we dismiss Ground Nos. 3 and 4 raised by the Revenue and allow all the grounds raised by the assessee in its cross objections. 9. The only other ground which remains for adjudication is Ground No.....
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....000/ Out of the aforesaid borrowing, Rs. 27,31,80,000/ was utilized for advancing loans to 3 group Cos on which interest @ 14% was charged amounting to Rs. 1,40,05,654/ and corresponding interest paid was Rs. 1,20,04846 (12% proportionate to interest charged of 14% of Rs. 1,40,05654). The balance funds were advanced to (i) Rockman Projects Ltd (ii) Kay Kay Buildtech Pvt Ltd . The interest pertaining to these advances was capitalized. Details of Interest including capitalization is as under : Interest (other than car Loans) Rs. 3,94,54,990/- Less Interest Capitalised Rs. 1,93.91,256/- Interest [other than car Loans] Rs. 2,00,63,734/- Add:-Interest on car loans Rs. 7.34.695/- Total Deduction claimed [P&L] Rs. ....