2018 (6) TMI 1320

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....wherein he has confirmed the disallowance of interest u/s 14A of the Act. Therefore, the assessee is aggrieved by this two additions and have preferred appeal before us. The revenue is also aggrieved by the direction of the ld CIT(A) in computing the disallowance u/s 14A of reduced amount of interest. 2. The revenue has raised the following ground of appeal:- "1. The ld CIT(A) has erred in law and on facts in directing the AO to calculate disallowance of interest on account of Rs. 26008650/- as the sum which was advanced by the assessee out of loan fund as against of Rs. 111416000/- adopted by the AO in the assessment order." 3. The assessee has raised the following grounds of appeal: "1. That having regard to the fa....

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.... in this regard is bad in law and against the facts and 5. That in any case and any view of the matter, action of Ld. CIT(A) in not deleting the various disallowances made in the impugned assessment order and enhancing the disallowance u/s 14A r.w.r. 8D(2)(ii) and (iii) is contrary to law and facts, void ab initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961. 7. That the appel....

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.... Shourya Towers Pvt. Ltd. which is loans and advances. Therefore, the ld AO found that the assessee has obtained loans of Rs. 122.78 crores on which interest deduction of Rs. 67668153/- has been claimed. The assessee has not charged any interest of loan of Rs. 11.14 cores given to Sourya Promoters Pvt. Ltd therefore, the ld AO asked the assessee that why proportionate disallowance should not be made. The assessee did not file any reply and therefore, the ld AO disallowed interest proportionately as on the basis to loan given to loan obtained of Rs. 6140312/- u/s 36(1)(iii) of the Act. The assessee preferred an appeal before the ld CIT(A), who noted that the wrong classification by the assessee of the loan amount as share capital cannot be a....

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....advance on basis of „Memorandum of understanding‟ between the assessee and the borrower which is placed at page No. 38 and 40 of the Paper Book. He therefore, submitted with the above funds the borrower was supposed to purchase various land as mentioned in MOU dated 15.05.2006. On above land was to be developed and the assessee was to get the developed portion of the real estate for sale. He therefore, submitted that there is commercial consideration for not charging interest on the above loans. In view of this he submitted that disallowance confirmed by the ld CIT(A) deserved to be deleted. 8. The ld DR vehemently contested that when the assessee has given above loan amount out of overdraft loan amount interest disallowance ....

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.... MOU with the borrower and provided funds to the company for purchase of land. It was stated by the ld AR that the beneficial ownership of as such land was with the assessee company, whereas the borrower was only legal owner. It is further stated that the amount of Rs. 11.14 cores was given not in the Assessment Year 2010-11 but in earlier years. It is stated that Rs. 8.53 crores was given in Assessment Year 2006-07, Rs. 2.60 crores in Assessment Year 2007-08. Therefore, that sum were given not in this year but in earlier years. It was further stated that no disallowance has been made in Assessment Year 2008-09 and 2009-10, but only in Assessment Year 2010-11. Hon'ble Delhi High Court in CIT Vs. Givo Ltd in order dated 27th July 2017 in....

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....ct. 13. The ld AR has drawn out attention to page No. 8 of the balance sheet of the company wherein, the profit and loss account of the assessee is placed Vide Schedule no 12, he stated that there is no exempt income earned by the assessee. He submitted that the assessee has only earned the interest income on FDRs, which is chargeable to tax. The other miscellaneous income of Rs. 18833/- is not exempt. He therefore, submitted that in absence of any exempt income no disallowance can be made. He relied on the decision of the Hon'ble Delhi High Court in Cheminvest Ltd Vs. CIT 322 ITR 33. 14. The ld DR relied upon the order of the ld AO. 15. We have carefully considered the rival contentions and also found substantial force in the ....