TaxTMI 
TaxTMI 
2018 (4) TMI 869
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....and assessee has interest free funds and internal accruals far in excess of these investments. c) The Ld. CIT (A) erred in law and facts in upholding disallowance u/s 14A of the Act even though investment are made in subsidiary/associate where the assessee has deep business interests, without following the Supreme Court decision in the case of S. A. Builders Ltd. The reasons given by her for doing so are wrong, contrary to the facts of the case and against the provisions of law. d) The Ld. CIT (A) erred in law and facts in upholding notional allocation of expenses to tax free income and disallowance of Rs. 38,74,980/- out of expenses without proving nexus of expenses with tax free income and without recording reasons of rejecting assessee's claim that no expenditure incurred to earn exempt income. e) The Ld. CIT (A) followed Hon. ITAT's order on other grounds but deliberately not followed the order of Hon. ITAT for A.Y. 2007-2008 which deleted the disallowance u/s 14A of the Act and followed the order of the predecessor CIT (A) of asst. year 2008-09 and 2009-10 which was against the assessee. 2. Set-off of brought forward MTM loss - Rs. 8....
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....see had made a strategic investment in its subsidiary associate companies and hence interest and other expenses relating to such investment cannot be disallowed. However, the Assessing Officer was not convinced. He proceeded to make the disallowance as per Rule 8D u/s. 14A and made a disallowance of Rs. 1,91,28,205/-. 5. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) has held as under: It is seen that the CIT(A) for the A.Y.2008-09 has dismissed this claim of the appellant u/s.14A vide order No.CIT(A)-12/Addl.CIT 6(2)/32/2011-12 dt.22.2.2013. For the A.Y. 2009-10 the undersigned, as CIT(A)-12, has also dismissed similar claim of the appellant u/s.l4A vide order No.CIT(A)-12/IT 79/DCIT 6(2)/13-14 dt.4,8.2015. It is seen that for the Assessment Year under consideration here, ie. A.Y. 2010-11 claim u/s.l4A in Ground of Appeal No.l clause(i)-(iv) are on identical grounds and so the same are dismissed by following the earlier orders. However, in clause (v) of Ground of Appeal No.l the appellant has stated that the disallowance of Rs. 1,91,28,205/- U/S.14A of the Act(including the estimated expenses) by the A.O. by adding it to book profits u/s.115JB....
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.... the Balance Sheet as submitted by the assessee we noted that the assessee had made investments in foreign subsidiary companies and from those companies it got the dividend income. The assessee has not claimed the said dividend income as exempt. The dividend income has been shown as income from other sources and due tax has been computed by the assessee in the computation statement. Therefore no question arises on making disallowance in respect of investment made in foreign subsidiary company. The assessee has also made investments in Indian companies but did not earn any dividend income. In view of the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT 378ITR 33 no expenses can be disallowed under section 14A as the assessee has not earned any exempt income. Same view has been taken by the Hon'ble Bombay High Court in the case of Principal CIT vs. Ballarpur Industries Ltd. ITA No. 51 of 2016. No contrary decision was brought to our knowledge. We, therefore, delete the disallowance made by the AO and sustained by the CIT(A). Thus ground No. 1 taken by the assessee is allowed." 4. During the year under consideration also assessee has not....
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.... 115JB of the Act. Hence, this ground raised by the Revenue stands dismissed. Apropos ground no.2 12. On this issue, the Assessing Officer observed that the assessee has given loans and advances to subsidiary companies and joint venture companies. The Assessing Officer enquired as to whether any interest was collected from these parties. The Assessing Officer further enquired as to why the interest should not be disallowed u/s. 36(1)(iii) on these non interest bearing loans/advances made to subsidiary/joint venture companies. Being not convinced by the assessee's response, the Assessing Officer has held as under: "8.3. The assessee's submission has been carefuily considered. The assessee has borrowed interest-bearing funds and paid interest thereon. The company has given advances to its subsidiaries and Joint Venture Companies from such interestbearing funds whicn cannot constitute purposes of business of assessee company. Further, the assessee has not established by fund flow statement that the expenditure incurred on its subsidiary companies were from its surplus ftmds and not interest-bearing funds/ The onus is on the assessee to demonstrate that the funds adv....
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.... is allowed since the issue is the same for this assessment year also. 15. Against the above order, the Revenue is in appeal before us. 16. We have heard both the counsel and perused the records. The ld. Counsel of the assessee submitted that the identical issue was considered by this tribunal in assessee's own case for assessment year 2009-10. The tribunal has held as under: 8. With regard to disallowance of interest explained u/s.36(1)(iii), the CIT(A) has recorded the following findings:- 77.7 CFT(A)'s order for A.Y. 2008-09 vide order dt.22.2.2013, has deleted the addition of the A.O. since A.Y. 2003-04 onwards till A.Y. 2007-08 on identical issue: Such order of CIT(A) has also been accepted by the Department. Therefore, ground of appeal No.4 is allowed. Since the issue is the same for this assessment year. 9. It is clear from the findings recorded by CIT(A) that similar disallowance made by the AO was deleted by CIT(A) since A.Y.2003-04 to 2008-09 on identical issues, however, Department did not file any appeal and accepted assessee's contention. 10. We have considered rival contentions and found from record that the assesses h....