2015 (8) TMI 1454

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.... Grounds of appeal:- "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred: 1. direction the AO to allow the assessee company to treat the interest cost of Rs. 1,17,10,935/- as Revenue Expenditure & also in ignoring the fact that the interest bearing borrowed funds were utilized for the purpose of investment in a Partnership Firm M/s. G.K. Developers. 2. allowing to claim the business loss of Rs. 14,14, 116/- derived at after allowing the claim of interest paid Rs. 1,17,10,935/- which was paid on borrowed funds utilized for Investment in a Partnership Firm M/s. G.K. Developers. 3. in not appreciating that the assessee company was liable for a disallowance as per section 14A of the Act which is mandatory....

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.... respondent assessee is a company incorporated under the provisions of Companies Act, 1956 and is, inter-alia, engaged in the business of making investments in real estate ventures. The Assessing Officer noticed that assessee had borrowed unsecured loans of Rs. 11,99,37,000/-, which were invested in M/s. GK Developers; a partnership firm, as partner's capital contribution. As per the Assessing Officer, assessee was entitled to the share of profits from the partnership firm as a partner, which was exempt in terms of section 10(2A) of the Act. Therefore, the Assessing Officer concluded that an amount of Rs. 1,17,43,420/- being expenditure incurred in relation to the exempt income was liable to be disallowed in terms of section 14A of the Act.....