TaxTMI 
TaxTMI 
2018 (6) TMI 1379
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....ommissioner of Income Tax (Appeals)-19, New Delhi, dated 18.03.2014. The assessee has raised effectively 4 grounds of appeal in ITA. No. 3863 (Del) of 2014 as under :- " 1) That the authorities below have erred in law and on facts in disallowing a sum of Rs. 23,28,196/- out of interest paid which was incurred wholly and exclusively for the purpose of business as was necessary for the commercial expediency. 2) That the learned Commissioner of Income Tax Appeals has erred in law and on facts in sustaining the order of the learned A.O. in invoking sec. 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 against the appellant without disposing of the objections raised by the appellant. 3) T....
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....Income Tax Act. Against such relief, Revenue is in appeal. 4. We first take up the appeal of the Revenue. During the year the learned Assessing Officer noted that assessee has investment of Rs. 40 crores in various shares, mutual funds, bonds etc. and, therefore, the disallowance under section 14A is required to be made. The assessee was asked about the disallowance wherein it was stated that no dividend income has been received during the year hence, this section 14A does not apply. The learned Assessing Officer rejected the contention of the assessee and applied Rule 8D of the Income Tax Act and worked out the disallowance of Rs. 1,12,80,040/-. 5. On appeal before the learned CIT (Appeals) assessee submitted that it has not received....
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....ned Departmental Representative could not controvert the submission of the assessee that it has not received any exempt income. In view of this, respectfully following the decision of Hon'ble Delhi High Court, we direct the learned Assessing Officer to delete the disallowance of Rs. 1,12,80,040/- made under section 14A of the Income Tax Act. Accordingly ground No. 1 of the appeal of the Revenue is dismissed and ground Nos. 2 and 3 of the appeal of the assessee are allowed. 10. Now we come to ground No. 1 of the appeal of the assessee where disallowance of Rs. 23,28,196/- out of interest expenditure has been upheld by the learned CIT (Appeals). 11. The brief facts of the issue shows that assessee has borrowed Rs. 5.20 crores from Kotak....
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....e provisions of section 36(1)(iii) any amount of interest paid in respect of capital borrowed for the purposes of the business or profession is allowable as deduction. Therefore, for allowability of such interest, the assessee must show that this interest is paid for the purpose of the business of the assessee. The end use of the facilities as per the sanctioned letter of the Kotak Mahindra Bank mentions that borrower has to undertake that the facility is granted by the bank is not used for any other purposes than specified. The Schedule I provided that loan of Rs. 5.20 crores was obtained for pre-payment of loan of Religare Enterprises. Therefore, it is apparent that assessee has though borrowed the money for re-payment of loan, but has ut....
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....of the appeal of the assessee. 18. Ground No. 4 is against initiation of penalty proceedings under section 271(1)(c) of the Act which is pre-mature and hence dismissed. 19. Ground No. 5 of the appeal is against disallowance of interest expenditure on VAT and Service Tax. 20. We do not find any such addition made by the learned Assessing Officer hence, this ground of appeal is dismissed. Even otherwise, the learned CIT (Appeals) has directed the Assessing Officer to examine the claim of the appellant. 21. In the result, appeal of the Revenue is dismissed and the appeal of the assessee is partly allowed. I.T.A. Nos. 6138 & 5777 (Del) of 2014 - [Assessment year 2011-12] : 22. We now come to the appeal of the assessee and the ....