TaxTMI 
TaxTMI 
2017 (8) TMI 953
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....of Bongaigon Refinery & Petrochemicals Ltd." 3. "On the facts and circumstances of case and the law, the Ld. ClT(A) erred in giving relief to the assessee by relying upon decision of VGR Foundation of Chennai High Court which followed Bokaro Steel when the Ld CIT(A) ought to have followed the Apex Court decision of Tuticorin Alkali Chemicals which was followed in Bongaigon Refinery and also decision of Mumbai Tribunal in Whsitling Woods international Ltd.". 4. "On the facts and circumstances of case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 14A of the Act, on the wrong assumption that no revenue expenditure has been claimed for the expenditure, as ClT(A) failed to appreciate that amount not disallowed and capitalized would result in deduction albeit on gradual basis in the form of depreciation in the following years when the business commences". 5. "On the facts and circumstances of case the Ld. CIT(A) erred in deleting the disallowance u/s 14A of the Act, failing to appreciate that this disallowance u/s 14A is required to be made by the A.O. (and it is not optional on the part of the A.O.) r if the assessee had earned exempt incom....
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....227ITR172(SC). Aggrieved by the order of AO, the assessee preferred an appeal before the ld.CIT(A), who allowed the appeal of the assessee by observing and holding as under : "3.11 I have considered the facts of the case, the written submissions of the appellant as well as the order of the AO on this issue. As stated above, the appellant company is engaged in the business of hotel construction and hospitality services. At present, the appellant is developing a hotel project at Pune which has not started functioning yet. Hence, all the expenses incurred were capitalized as capital-work-in-progress and the appellant has not claimed any expenditure during the year. As on 31.03.2009 the total capital work in progress is Rs. 38,08,01,798/-. The appellant received share application money of Rs. 45, 13,60,0001- and Rs. 18,60,00,0001- on 12.12.2008 and 16.12.2008 from Fulda River Ltd. and from K2A Hospitality respectively. Out of this receipt of share application money, the appellant kept fixed deposits of RS.25 crores and Rs. 15,00,15,000/- on 22.12.2008 with M/s. Kotak Mahindra Bank Ltd. and M/s. Corporation Bank Ltd. temporarily, as the funds to that extent were not immediately....
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.... and therefore, acceptable". 3.14 With regard to the AOs contentions that the fixed deposits have been generated out of borrowed funds of Rs. 16,49,19,599/-, I find that the same is not correct. The appellant has sufficiently established that the borrowed funds have been received subsequent to the date of taking fixed deposits and receipt of share application money. Hence it is evident that the addition of Rs. 94,07,568/- is not sustainable. Accordingly, the same is hereby is deleted." 4. The ld. DR relied on the order of AO by submitting before the bench that the AO has rightly brought to tax the interest on FDRs as income by relying on the decision of Tuticorin Alkali Chemicals and Fertilizers Ltd V/s CIT (supra) and therefore the order of CIT(A) deserved to be reversed. 5. The ld. AR vehemently submitted before us that the assessee has rightly reduced the interest on fixed deposits which were sourced out of share application money received by the assessee for the purpose of its project. The said money was put in fixed deposits in Corporation Bank and Kotak Mahindra Bank on commercial expediency and prudent business considerations when the said funds were not requi....
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.... case are squarely covered by the decisions referred above and relied upon by the ld.AR, and therefore, we do not find any infirmity in the decision of the ld.CIT(A) and accordingly, we uphold the same by dismissing the grounds of appeal no.1 to 3. Ground no.1 to 3 are dismissed. 8. The issue raised in grounds of appeal no.4 to 6 is relating to deletion of disallowance by ld.CIT(A) of Rs. 7,14,404/- as made by the AO u/s 14A of the Act. 9. The facts of the case are that the assessee received an exempt income of dividend to the tune of Rs. 87,81,275/- which was reduced from capital work in progress as on 31.3.2009 and the AO after applying the provisions of section 14A r.w.r.8D(2)(iii) disallowed Rs. 7,14,404/- and added the same to the total income of the assessee. In the appellant proceedings, the ld. CIT(A) deleted the disallowance by observing and holding as under : "4.8 I have considered the facts of the case, the written submissions of the appellant as well as the order of the A.O. on this issue. The appellant is developing a hotel project at Pune. The appellant has capitalized all the expenditure in respect of the project and the same has been shown as capital ....