TaxTMI 
TaxTMI 
2015 (10) TMI 2499
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....ct, 1961 (in short 'the Act') 3. Briefly, the facts of the case are that during the year, the assessee had earned dividend income of Rs. 38,88,83,362/- and Long Term Capital Gain of Rs. 14,64,10,504/-, which were claimed as exempt. The assessee had investment of Rs. 3,84,34,37,861/- and Rs. 4,64,39,13,422/- as on 31.7.2007 and 31.3.2008 respectively and had incurred interest expenditure of Rs. 13,07,63,450/-. After considering the detailed submissions made by the assessee, the Assessing Officer held that the provisions of section 14A of the Act were applicable in assessee's case. Thereafter, he computed the disallowance under Rule 8D of the Income Tax Rules, which worked out at Rs. 6,90,42,168/-. Since the assessee had already disallowed ....
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....assessee and held that the provisions of section 14A of the Act are clearly applicable to the assessee and the Assessing Officer was fully justified in disallowing an amount of Rs. 4,17,28,341/- under section 14A of the Act read with Rule 8D of the Income Tax Rules. 5. Aggrieved by the said order of the learned CIT (Appeals), the assessee has come up in appeal before us. 6. During the course of hearing, the learned counsel for the assessee reiterated the submissions made before the learned CIT (Appeals). The main arguments of the learned counsel for the assessee was that for the purposes of computing the disallowance under section 14A of the Act, the Assessing Officer has taken total interest paid by all units at Rs. 13,07,63,....
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.... that the total investments in shares and mutual funds as on 31.3.2007 was Rs. 3,84,34,37,861/- which in the assessment year 2007-08 has been held to be out of own funds. The investment as on 31.3.2008 was Rs. 4,64,39,13,422/-. Thus, there was an increase of Rs. 80,04,75,561/- during the year. This was out of assessee's own funds, reserves and income of the year. Our attention was invited to page Nos. 42 and 45 of the Paper Book filed by the assessee to show that the reserves and own funds of the assessee company as on 31.3.2008 are Rs. 6,24,18,74,854/-. In this way, it was prayed that no disallowance of interest under section 14A of the Act can be made and as regards administrative expenses, it was submitted that the assessee having suo mo....
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....icient to cover the investment made during the year. In such a scenario, it can be very conveniently presumed that all the investment have been made out of own funds. For this purpose, reliance is placed on the judgment of Hon'ble Jurisdictional High Court in the case of Bright Enterprises Pvt. Ltd. Vs. CIT in ITA No.624 of 2013 (O&M) dated 24.7.2015, whereby it has been held as under : "16. As we noted earlier, the funds/reserves of the appellant were sufficient to cover the interest free advances made by it of Rs. 10.29 crores to its sister company. We are entirely in agreement with the judgment of the Bombay High Court in Commissioner of Income Tax vs. Reliance Utilities & Power Ltd., (2009) 313 ITR 340, para-10, that if there are ....
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....read Rule 8D of the Income Tax Rules is deleted. 11. The ground No.9 raised by the assessee relates to the capitalization of interest amounting to Rs. 20,24,929/- 12. The brief facts of the case are that the assessee installed a new paint shop at a cost of Rs. 7,29,70,438/- during the year. After considering the assessee's submission, referring to Explanation-8 to section 43 (1) of the Act, the Assessing Officer formed a view that the amount of interest pertaining to investment in paint shop was liable to be capitalized as per section 36(1)(iii) and Explanation-8 to section 43(1) of the Act. He noted that the assessee received the paint shop as on 31.10.2007 which was installed in the month of January, 2008. He accordingly, computed the....