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2017 (11) TMI 208

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....evenue's appeal in ITA No.728/Kol/2017 for A.Y 12-13. 3. The ground as raised by the Revenue reads as under:- "1. That on the facts and circumstances of the case the Ld. CIT(A)-9, Kolkata erred in deleting the addition of Rs. 35,098/- in relation of disallowance made u/s 2(24)(x) r.w.s. 36(1)(va) for delayed deposit of Employees PF since the addition was made for violations of the specific provisions of Income Tax Act. 2. That on the facts and circumstances of the case the Ld. CIT(A)-9, Kolkata erred in deleting the addition of Rs. 49,30,943/- in relation of payment of interest since the Loan found to have invested in non-income generating purpose an assessee failed to substantiate the commercial expediency. 3. That on the facts and circumstances of the case the Ld. CIT(A)-9, Kolkata erred in deleting the addition of Rs. 1,21,442/- in respect of disallowance made u/s. 14A read with Rule 8D as the assessee firm made substantial investment in shares which were capable of yielding exempt income. 4. That the Appellant craves leave to put forward additional ground at the time of hearing." 4. First issue raised by Revenue in ground No.1 is that Ld. CIT(A) erred in deleting ....

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....gainst the Revenue by the jurisdictional High Court in the case of M/s Vijay Shree Limited (supra). As the issue is already covered, hence, we dismissed Revenue's ground of appeal. 9. Next issue raised by Revenue in ground No.2 is that Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 49,30,943/- on account of diversion of interest bearing loan to non-income generating activity. 10. The AO during the course of assessment proceedings observed that the assessee has made investment in unquoted shares as well as in share application money for Rs. 2,42,88,338/- and Rs. 1.45 crores respectively. At the same time, it was also observed by AO that assessee is having borrowed fund of Rs. 358.97 lakh on which an amount of interest for Rs. 49,30,943/- was paid. Thus, in view of the above, AO was of the view that the borrowed fund has been utilized by making investment in unquoted shares as well as in share application money. Accordingly, AO opined that the interest expenses claimed by assessee cannot be allowed as deduction. Therefore, AO called upon assessee to explain why interest expense should not be disallowed. In compliance thereto, assessee submitted that no borrowed fu....

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....dustries Ltd. reported in 280 its 525 (Cal) therefore same cannot be followed in the instant case. 12.1 Assessee further submitted that the Hon'ble Punjab & Haryana High Court in its subsequent judgment has relied on the judgment of Hon'ble jurisdictional High Court in the case of Britannia Industries Ltd. (supra) in the case of CIT vs. Hero Cycles reported in 323 ITR 518 (Cal) where the impugned issue was allowed in favour of assessee. 12.2 The assessee further submitted that its own fund is exceeding impugned investment therefore an assumption can be drawn that no borrowed fund has been used in the impugned investment. The Ld. CIT(A) after considering the submission of the assessee and after having reliance in assessee's own case for A.Y 2010-11 in ITA No.2166/Kol/2014 (supra) has decided the issue in favour of assessee. The Revenue, being aggrieved, is in appeal before us. 13. Before us both parties relied on the order of Authorities Below as favourable to them. 14. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we find that Ld. DR has not brought on record any change in the facts of the present ca....

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....lied on the order of Authorities Below as favourable to them. 19. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we find that there was no dividend income earned by assessee in the year under consideration. Therefore, the question of making disallowance u/s. 14A of the Act does not arise. In holding do we find support and guidance from the order of this Tribunal in assessee own case in ITA No.2166/Kol/2014 (supra). The relevant extract of this order is reproduced below:- "19. I have heard the arguments of both the sides and also perused the relevant material available on record. As rightly held by the ld. CIT(Appeals), the disallowance under section 14A cannot be made where there is no exempt income earned by the assessee during the relevant year and this position is duly supported by the various judicial pronouncements discussed by the ld. CIT(Appeals) in his impugned order. I, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, I dismiss Ground No. 5 of the revs appeal." Respectfully following the same, we uphold the....

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....n the basis of documentary evidence. Thus, the commission expense was disallowed by AO and added to t the total income of assessee. 28. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the payment of commission was made in pursuance to agreement with M/s Rex Agro (P) Ltd. for the purpose of business. The AO has disallowed the same without conducting necessary enquiry. However, Ld. CIT(A) disregarded the contention of assessee and confirmed the order of AO by observing that no documentary evidence has been placed on record. Aggrieved by this, the assessee has come up in CO before us. 29. Before us, the Ld. AR reiterated the arguments that were made before the Ld. CIT(A). Ld. DR supported the order of Authorities Below. 30. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, it was observed that Ld. AR for the assessee failed to bring any evidence to justifying the payment of commission expense. Therefore we are not inclined to interfere in the order of Ld. CIT(A). We uphold the same. Hence, this ground of assessee's CO is dismissed. 31. Next issue raised by as....