TaxTMI 
TaxTMI 
2017 (10) TMI 1337
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...., the assessee has taken the following grounds of appeal: "1. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts and in the circumstances of the case in confirming disallowance under section 14A r.w.r. 8D to the extent of Rs. 2,08,456/-. 2. The learned Commissioner of Income-tax (Appeals) has erred in confirming the interest expenses as per rule 8D without appreciating the fact that the learned AO has not recorded his satisfaction having regards to accounts of the appellant. 3. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts and in the circumstances of the case in confirming disallowances Rs. 65,770/- being 10% of business promotion expenses on estimation basis without appreci....
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.... acquiring controlling stake and were part of strategic investments and they were not made with an intention of earning tax free income. Accordingly section 14A does not apply to such investment, in support, reliance was placed on decision of Hon'ble Delhi High Court in case of Cheminvest Ltd. v. CIT 378 ITR 33. It was further submitted that disallowance of interest expenditure would not be tenable where AO failed to establish a nexus between interest bearing funds and investment made. In support, reliance was placed on the decision of Hon'ble Karnataka High Court in case of Karnataka State Industrial & Infrastructure Development Corporation Ltd. 65 taxmann.com 295. It was further submitted that no defect has been pointed out by the ld. AO ....
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.... KGK Enterprises for AY 2010-11 (in ITA No. 797/JP/15 dated 11.08.2016), we have already taken a view that disallowance under the provisions of Section 14A are not warranted and the relevant findings are contained at para 2.4 of our order which is reproduced as under:- "2.4 We have heard the rival contentions and perused the material available on record. It is noted that the investment worth Rs. 3.37 crores have been made 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....
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....see in appeal against the sustain disallowance of Rs. 65,770/-. The ld. AR submitted that the said disallowance has been confirmed on estimated basis without pinpointing any specific defects in the books of account or vouchers maintained by the assessee company and hence, the same may be deleted. On perusal of orders of the lower authorities, we find that the disallowance has been made on a purely adhoc basis and such adhoc disallowance cannot be sustained in the eyes of law. In the result, disallowance of Rs. 65,770/- is hereby deleted. The ground no. 3 of the assessee's appeal is thus allowed. 9. In its appeal for AY 2011-12, the assessee has taken the following grounds of appeal:- "1. The learned Commissioner of Income-tax (Appeals) h....