2016 (2) TMI 996

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....see, submitted that the assessee, a State Government undertaking, received tax free income during the year under consideration. According to the Ld. counsel, the assessee invested Rs. 5 Crores in 5.45% Tax Free Bond 2005 issued by Chennai Metropolitan Water Supply and Sewerage Board. According to the Ld. counsel, the assessee has not incurred any expenditure. The Ld.counsel further submitted that the reserve available to the assessee to the extent of Rs. 54,54,90,000/- was, in fact, utilised for making investment of Rs. 5 Crores. However, the Assessing Officer disallowed the claim of the assessee under Section 14A of the Income-tax Act, 1961 (in short 'the Act') on the ground that the assessee could have incurred managerial, adminis....

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....made by the Assessing Officer. The Ld. D.R. placed his reliance on the order of this Tribunal in I.T.A. No.2083/Mds/2011 dated 02.03.2012 in M/s Lakshmi Ring Travellers v. ACIT. 4. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee-company is owned by State Government. The assesseecompany is in the business of finance and creating infrastructure facilities. Therefore, in the course of its regular business activity, the assessee would have all the information relating to market situation in the field of finance, investment, etc. It is not in dispute that the assessee utilised the reserves available to the extent of Rs. 54,54,90,000/- for making investment i....

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.... of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income which does not form part of total income ; (ii) in a case where the assessee has incurred expenditure by way of interest during the previous year is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely :- B A X--- C Where A =amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year ; B =the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balancesheet of the assessee, on the....