TaxTMI 
TaxTMI 
2018 (5) TMI 496
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....udice to the above, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned A.O. in disallowing additional amount of Rs. 30,82,192 u/s 14A by applying Rule 8D(2)( i) on account of the interes t expendi ture at t r ibutable to earning the exempt income under the normal provisions of the Act. The appellant prays that the disallowance of Rs. 30,82,192 may kindly be deleted. Ground No. 3: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned A.O. in adding an additional amount of Rs. 30,82,192 u/s 14A of the Act under the MAT provisions of the Act. The appel lant prays that the addi tion of Rs. 30,82,192 may kindly be deleted. Ground No.4: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) er red in conf i rming the action of the learned A.O. in holding that the balance amount of interes t of Rs. 1,37,64,648/- was not al lowable as deduction u/s 36(1) ( i i i ) of the Income Tax Act. The appel lant prays that the disal lowance of Rs. 1,37,64,648 may kindly be deleted.....
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....ssion of the assessee added Rs. 30,82,192/- under section 14A read with rule 8D(2)(i) to the total income of the assessee. 5. In the appellate proceedings, the Ld. CIT(A) sustained the addition by observing and holding as under: "3.3 I have considered the findings of the Assessing Officer and rival submissions of the appellant, carefully. It is the fact that an amount of Rs. 5 crores taken from M/s . Jhalak Developers Pvt . Ltd. has been invested with M/s. Sharyans Resources Ltd. on which interest of Rs. 30,82,192/- has paid. Since investment has been made from interest bearing loan, such expenditure can be disallowed under ruIe 8D(2) ( i ) of the l .T. Rules. Appellant has not been able to refute factual finding of the Assessing Officer . When interest bearing funds has been utilized for investment capable of exempt income, such interest expenditure related to such fund has to be disallowed. Ld. Assessing Officer has correctly disal lowed the expenditure u/s.14A r .w. rule 8D. The decisions relied upon by the A.R. are not applicable to the fact s of this case. If ind no reason to interfere with factual finding of the Assessing Officer, hence disallowance so made of Rs.....
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....se Max Opp Investments Ltd Vs CIT Appeals Nos. 104-109 of 2015 order dated 12.02.2018 has held that the disallowance has to be made even in case of strategic investments in the associate company. Therefore, following the ratio laid down by the apex court we uphold the order of CIT(A) . The ground raised by the assessee is dismissed. 9. The issue raised in ground No.3 is against the confirmation of disallowance of Rs. 30,82,192/- under the MAT provision of the Act. The Ld. A.R., at the outset, brought to the notice of the Bench that issue is covered by the decision of the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment (P.) Ltd. (2017) 82 taxmann.com 415 (Delhi - Trib.)(SB) wherein it has been held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated under section14A read with rule 8D of the Income Tax Act, 1962 and submitted that the addition made of Rs. 30,82,192/- should not be made following the special bench decision. 10. The Ld. D.R. fairly agreed to the contention of the assessee. 11. We have heard the rival submissions of both the parties and perused the relevant....
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....sessee did not find favour with the AO and the AO, ultimately by giving a detailed justification as incorporated in para 7.1 of the assessments order, disallowed Rs. 1,37,64,648/- under section 36(1)(iii) as interest expenditure not incurred for the purpose of business. 14. In the appellate proceedings, the Ld. CIT(A) sustained the addition by dismissing the appeal of the assessee after taking into account the detailed submissions and contentions which have been incorporated in para 6.4 by holding that the funds were not advanced for the purpose of business and the Ld. CIT(A) further held that the interest bearing funds were advanced to the subsidiary company is not permissible under section 36(1)(iii) of the Act and also that interest is not deductable where funds were used for non business purposes by relying on various decisions as have been incorporated in para 6.6 of the appellate order. The Ld. A.R. vehemently submitted before us that the Ld. CIT(A) has completely ignored the facts on record that the assessee advanced/invested money out of business expediency in those entities which were either the subsidiary companies of the assessee or were subsequently merged with the a....
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.... in the case of "S.A. Builders vs. CIT" (supra) the order of Ld. CIT(A) be set aside on this issue and AO be directed to delete the addition. 15. The ld DR ,per contra, relied on the order of authorities below and submitted that interest bearing money has been transferred to the other business entities though the associate concerns free of interest resulting into claim of higher amount of interest. The Ld. D.R. prayed that the order of CIT(A) be upheld on this issue. 16. We have heard the rival submissions of both the parties and perused the relevant material on record. The undisputed facts are that the assessee paid some money to various entities out of borrowed funds during the year on which an interest of Rs. 1,37,64,648/- was paid which was disallowed by the AO under section 36(1)(iii) as being used for the non business purposes. During the course of hearing, the detailed utilisation chart of the borrowed funds was submitted by the Ld. A.R. which is reproduced as under: Sr. No . Name and Address of Party Op. Bal as on 01.04.10 Addition Repayment Cl. Bal as on 31.03.11 Remarks 1. Liz Investment Pvt. Ltd. - 39,09,753 - 39,09,753 Adv....