2016 (4) TMI 808

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....re, these grounds are dismissed as not pressed. 2.1. The only grounds agitated by the ld. counsel for the assessee are grounds no. 1 and 2, which pertains to upholding the disallowance of interest amounting to Rs. 9,93,457/- made u/s 36(1)(iii) of the Act without appreciating the facts that own funds were utilized for acquisition of capital asset and not the borrowed funds. Reliance was placed by the assessee upon the decision from Hon'ble jurisdictional High Court in CIT vs HDFC Bank Ltd. (2014) 366 ITR 505 (Bom.) order dated 23/07/2014 and also writ petition in HDFC Bank Ltd. vs DCIT (W.P. no.1753 of 2016) order dated 25/02/2016. 2.2. On the other hand, the ld. DR, Shri M. Murli, merely relied upon the decision of the Assessing Officer....

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.... Assessing Officer was of the view that when the assessee was having own funds then why the interest to the tune of Rs. 19,48,21,282/- was paid to banks and since the accounts are mixed and no nexus was proved by the assessee, therefore, he made disallowance of the claimed interest of Rs. 9,93,475/-. On appeal, the ld. Commissioner of Income Tax (Appeals) affirmed the stand of the Assessing Officer. The assessee is in further appeal before this Tribunal. 2.4. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that the ratio laid down....

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....7 (1)SCC 203).Therefore it is only the ratio decidendi i.e. the principle of law that decides the dispute which can be relied upon as precedent and not any obiter dictum or casual observations. (Girnar Tea vs. State of Maharashtra 2007(7) SCC 555 and Shin Estu Chemical Co. Ltd v. Aksh opticfibre Ltd. 2005 (7) SCC 234). Keeping the aforesaid position of law in mind, we shall now examine the impugned order of the Tribunal. The issue before the Tribunal as raised by the petitioner was that Section 14A would have no application to disallow interest expenditure on fund borrowed in respect of the tax free returns on the securities for the following two reasons: The petitioner possessed of sufficient interest free funds of Rs. 2153 crores....

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....cisions are in conflict. We find that no such exercise has been done in current case. It is clear that for the first time in the case of HDFC Bank Ltd., this court took a view that the presumption which has been laid down in Reliance Utilities and Power Ltd. with regard to investment in tax free securities coming out of assessee's own funds in case the same are in excess of the investment made in the securities applies, when applying sec.14A. Thus decision of this court in HDFC Bank Ltd. for the first time on 23rd July,2014 has settled the issue by holding that the test or presumption as held by the court in Reliance Utilities and Power Ltd. would apply while considering the application of sec.14A. The above decision has also been ....