TaxTMI 
TaxTMI 
2017 (4) TMI 808
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..../09/2011,declaring total income of Rs. 5.12 crores.The AO completed the assessment u/s.143(3)of the Act,on 11/02/2014, determining its income at Rs. 8.55 crores. 2.During the course of hearing before us,the Authorised Representative (AR) stated that assessee was not interested in pursuing the First ground of appeal. Hence, same stands dismissed,as not pressed. 2.1.Vide its application, dated 20/02/2017, the assessee has filed additional Ground of appeal stating that various judicial pronouncements have now laid down certain principles regarding disallowance to be made u/s.14A of the Act, that the issue raised by it is of legal nature and do not require investigation of facts.During the course of hearing before us, it was stated on behalf ....
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....ued that the AO had worked out the disallow -ance considering the assessee's balances alone as on 31/ 03/2010, that three companies, namely Nozaki Finance and Investment Private Ltd. (NFIPL),Aikone Marketing and Manage -ment Services Private Ltd.(AMMSPL)and Yuga Fininvest Private Ltd. (YFPL)merged into assessee,that it was necessary to consider the closing balances of these companies as on 31/03/2010 in working out the disallowance u/s.14A. After considering the submission of the assessee and the assessment order, the FAA held that the assessee had rightly considered the closing balances of investments and assets as on 31/ 03/2010 of three companies,that Rule 8D provided that for the purpose of the Rule,total assets would mean total assets....
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....rary to the finding of the AO. As we do not find any legal or factual infirmity in his order,so,confirming the same,we decide the first ground of appeal against the AO. 4.Second Ground of appeal is about deleting the disallowance of interest u/s.36(1) (iii) of the Act. During the assessment proceedings, the AO found that the assessee had claimed sundry balances written off, amounting to Rs. 6.56 crores, that the assessee itself had disallowed loan written off, that the assessee had given loan to ACT Finvest Ltd. (AFL) of Rs. 6.69 crores, during the year under consideration, that out of the said amount it had written off Rs. 6, 56, 21,308/-and had debited the same to its profit and loss account. He directed the assessee to furnish the basis....
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....ering the available material, he held that the AO had begun with the presumption that income accrued to the assessee and worked out the same at 8.5% for the loan advanced to AFL, that income cannot be levied on hypothetical income. He referred to the cases of Shoorji Vallabhdas & Company (46 ITR 144) and Morvi Industries Ltd. (82 ITR 835) and Godhra the Electricity Company Ltd. (225 ITR 746) that no real income had accrued to the assessee, that the AO had not given any finding of fact that the loan advanced was out of the interest-bearing funds, that he had also not given any finding as to whether the assessee had considered the loan in question while disallowing the interest on interest-free loans, that it had disallowed interest paid of R....
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....le of the AO for further verification. He is directed to afford a reasonable opportunity to the assessee. Second Ground is decided in favour of the AO, in part. ITA/7270/Mum/2014 : 5.First Ground of appeal, as stated earlier was not pressed before us. 6.Second Ground of appeal (Addl GOA No.1) raised by the assessee is about disallowance made by the AO u/s.14A of the Act. While deciding the appeal filed by AO we have narrated the facts of the case. 6.1.Before us, with regard to the additional Ground of appeal the assessee has argued that the FAA should have restricted the disallowance u/s. 14A of the Act to the extent of Rs. 1.21 crores, that the disallowance u/s. 14A could not exceed the exempted income received by it amounting to Rs. ....