TaxTMI 
TaxTMI 
2011 (11) TMI 816
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....ate authority erred in confirming the disallowance u/s 14A for interest expenses (which is worked out to be at ₹ 12,32,967/-) in respect of investment in shares of ₹ 2.22 crores out of aggregate investment in shares of ₹ 187.22 crores. On the other hand, the Revenue is aggrieved by the impugned order wherein the disallowance made u/s 14A read with rule 8D on account of investment of ₹ 1,87,22,05,690/- in shares of M.P. Power Generating Company. 2. During hearing of this appeal, we have heard Shri H.P. Verma along with Shri Ashish Goyal, learned counsel for the assessee and Shri Keshave Saxena, learned CIT/DR. The crux of arguments on behalf of the Revenue (ITA No.460/Ind/2010) is that the Assessing Officer is justif....
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....hat the investment in M.P. Power Generating Ltd. was made by MPFC as per the directions of the state Govt. Further, it was clarified that no dividend income (exempt income) was earned, therefore, no disallowance u/s 14A is called for, for which, reliance was placed upon in the case of CIT vs. Vinson Textiles (319 ITR 204) (P & H). 3.1 If the assertion made by the ld. respective counsel and the facts available on record are analysed, we find that the main shareholders are the state Govt. of M.P. and SIDBI. On examination of balance-sheet, it was noted by the ld. Assessing Officer that there is investment of ₹ 1,87,22,05,690/- in shares. The Assessing Officer disallowed proportionate interest claimed u/s 14A of the Act. During assessme....
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....8377; 185 crores by way of contribution share capital of the assessee undertaking, therefore, there is a direct nexus between the investment, so made, out of share capital contributed by the state Govt., consequently, provisions of Section. 14A are not applicable with reference to the investment made in share capital. The ratio laid down in Winsome Textiles (319 ITR 204) (P & H), CIT vs. Hero Cycles (189 Taxman 50) (P & H) and Voltas Ltd. (125 TTJ 601) (Mum) supports our view as it was from share capital, therefore, we find no infirmity on this part of the conclusion drawn by the ld. CIT(A). The same is affirmed. 4. The assessee in its cross-appeal (ITA No.430/Ind/2010) is aggrieved by the direction of the ld. CIT(A) for the remaining inve....