TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 700
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....led its return of income for the A.Y 2011-12 on 29.09.2011, admitting a total income of Rs. 1,01,412/- after claiming an exemption of Rs. 77,99,926/- u/s 10A of the IT Act. During the course of assessment proceedings u/s 143(3) of the IT Act, the assessee was required to file certain details. After verifying the books of accounts and the information filed by the assessee, the A.O proposed to make: (a) Disallowance of interest of Rs. 20,27,350/- u/s 14A from out of the expenditure claimed under the head "Interest to others" in view of its investment in preference shares of M/s. Suryajyoti Spinning Mills Ltd. (b) Disallowance of balance interest of Rs. 14,84,556/- from out of the expenditure claimed under the head "Interest to others" in ....
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....d in the confirming the disallowance of Rs. 2,56,893/- applying Sec. 14A r.w.r 8D(2)(iii) made by the A.O, when investment made by the Appellant is only in preference shares in its sister company which did not yield any income during the year and did also not incur any expenditure for making such investment as it is only a sister company. 3. CIT(A) is not justified in directing the A.O to cause necessary enquiries as to allowability of interest of Rs. 12,27,425/- disallowed while making assessment in view of the findings given in para 5.4 of the Appellate order that loans taken in earlier year on which interest was paid, was partly repaid. Hence CIT(A) erred in directing the A.O to cause necessary enquiries regarding use of funds and deci....
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....round in the Revenue's appeal, and the ground No. 2 in assessee appeal, is the disallowance of interest u/s 14A of the IT Act. In the assessment order, it is clearly brought out by the A.O, that the assessee has not earned any dividend income from the investments during the relevant assessment year. It is also observed that the entire interest expenditure claimed by the assessee is interest paid by the assessee towards the secured loan taken by it from SBI against the sundry debtors. The total interest paid was Rs. 35,11,906/- which consisted of interest of Rs. 32,89,412/- and the bank charges of Rs. 2,22,494/-. 7. As regards the applicability of Sec. 14A of the IT Act, where the assessee has not earned any dividend income which is exempt ....
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....s paid during the year and that this loan was secured by hypothecation of current assets of the company which included Rs. 4,48,10,873/- as on 31.03.2011 and thus the entire secured loan was covered by sundry debtors. Such being the case, the directions of the CIT(A) to the A.O to cause necessary enquiries and take action as per the directions of the Hon'ble Special Bench at Mumbai in the case of HP Shaw limited in ITA No. 3694/Mum/2006 dated 15.01.2009 is unwarranted. The assessee has given interest free loans to its sisters concerns but the advances are not out of interest bearing funds and the nexus between the loan taken from SBI on the hypothecation of sundry debtors is clearly proved. Therefore, we do not see any reason as to why the....
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....re the authorities below. Even if the same is acceptable and the said expenditure is allowable u/s 37 of the Act, the applicability of Sec. 40(a)(ia) of the IT Act requires the assessee to prove that the income of the recipient is not taxable in India. None of the authorities below have examined this issue and the assessee has also not filed any documents to disprove the finding of the Revenue. Therefore, accepting the assessee's plea that the assessee, may be given an opportunity to produce the relevant documents to prove that Mrs. Sandhya Prakash has rendered services to the assessee warranting the payment of commission, we deem it fit and proper to remand this issue to the file of the A.O with a direction to the assessee to produce all ....