2016 (8) TMI 1371

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to the extent of Rs. 5,21,464/-. (2) The ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming disallowance of Rs. 51,077/- being 10% of business promotion expenses on estimation basis without appreciating the fact that these expenses were incurred wholly and exclusively for the purpose of business. 2. The brief facts of the case are that during the year under consideration, the assessee has shown investment of Rs. 3,40,26,925 as on 31.03.2009 and Rs. 3,37,16,325 as on 30.09.2009. The Assessing officer has held that, Accordingly, an amount of Rs. 7,89,006 was disallowed u/s 14A of the Act. The ld. CIT(A) stated that the AO while computing the disallowance under rule 8D of IT Rules 1962 has ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ontrolling stake (refer page 3 of CIT(A) order). Hence no disallowance u/s 14A can be made, if primary object of investment is to hold controlling stake in group concern and not to earn tax free income. Also reliance was placed on the following decisions: (i) Garware Wall Ropes Ltd. vs. Addl.CIT (Mum Trib)(2014) 46 Taxmann.com 18. (ii) Piem Hotels Limited vs. DCIT (TS-162-ITAT-2015)(Mum) (iii) Interglobe Enterprises Ltd. vs. DCIT (ITA No.1362 & 1032/Del/2013 (iv) EIH Associated Hotels Ltd. vs. DCIT (2009)126 TTJ 246 (Kol) 2.4 The ld AR further submitted that the appellant has incurred 8.05 crore interest and the said interest is paid for borrowing facility used in foreign currency loan i.e Packin....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....de by the assessee in the earlier years and not in the year under consideration. Even if one were to consider the availability of interest free funds during the year, it is noted that partner's capital account is worth Rs. 115.70 crores. Further, the secured loans availed by the assessee in form of Packing Credit Limit (PCL) and Post Shipment Export Finance (PSEF) from various bank are exclusively for the purpose of purchase of raw material, payment of labour charges and other direct expenses and which thus have a end-use restriction and monitoring by the banks towards the manufacturing and export activity of the appellant. In light of above, we agree with the contention of the assessee that giving the availability of interest free funds ov....