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2019 (1) TMI 300
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....bunal") dated 29.05.2018 in ITA.No.3328/CHNY/2016 for the assessment year 2012-13. 2.The appeal has been filed by the appellant by raising the following substantial questions of law:- "1.Whether under facts and circumstances of the case, the Tribunal was right in upholding the disallowance of interests on debentures under Section 14A of the Act, particularly when the interest expenditure was incurred on debentures issued in the financial year 2008-09 for the specific purpose of acquiring a company in the past and not for investing in mutual funds? 2.Is the finding of the tribunal that the interest incurred by the assessee is not specifically towards acquisition of shares in M/s.Glamouroom Taps Pvt Ltd. not perverse?" ....
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....Act r/w. Rule 8D of the Rules. The Tribunal did not agree with the assessee and dismissed the appeal by an order dated 15.03.2017 which is impugned before us. 4.We have heard Mr.N.V.Balaji, learned counsel for the appellant and M/s.R.Hemalatha, learned Senior Standing Counsel for the respondent/revenue. 5.Before the DRP, while filing objections the following contentions were raised by the assessee against the draft assessment order relating to addition proposed by the Assessing Officer. The objections are contained in paragraph 3.10 and the objections are under two heads, namely, (A) Non-applicability of Section 14A of the Act; and (B) No nexus between the borrowed capital and investment made by the Company. 6.M/s.R.Hemalatha, lear....
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....re the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely:- Where A - amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year; B - the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; C - the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous ye....
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....unt: Table 11: Interest expense debited in Profit & Loss Account Nature of Interest Amount (Rs. in Crores) Debenture Interest 3.35 Interest on others 0.13 Total 3.48 With regard to the above, the assessee wishes to submit the following: (i) Interest Paid on CCDs During the FY 2008-09, Roca India issued CCDs to Keramik Holdings AG, Switzerland amounting to Rs. 35.24 Crores. The issue proceeds had been utilized for the purchase of shares in M/s.Glamourrom Taps Private Limited (which was amalgamated with the company w.e.f. 01.04.2008). As per the terms of the CCD Agreement entered into in July 2008, Roca India paid interest at the rate of 9.5% per annum which amounts to Rs. 3.35 Crore....
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....s, the assessee's argument before the DRP was that there is no nexus between the investment and borrowed capital and the assessee has utilized only non-interest bearing funds in making the said investments and therefore, disallowance under Section 14A of the Act cannot be made. 10.The DRP took note of the objections filed and the discussion starts from paragraph 4 of its order dated 31.08.2016. In this appeal we are not concerned about the discussion which has been made from paragraph 4.1 to 4.4 as the assessee is not on appeal against those findings, but what would be relevant will be from paragraph 4.7 to 4.10. The DRP has stated that the Assessing Officer has recorded his satisfaction and the matter has become final, thereafter....
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....hat the assessee has enough accumulated reserves and surplus from the previous years and also enough cash flow from operation during the year of their investment. This objection has been raised in paragraph 3.10 in the objections filed before the DRP. However, the Tribunal has not adverted to these contentions and in fact it appears to have committed factual error by stating that the income has gone up by Rs. 4.17 Crores. 12.We have perused the financials for the year ended 31.03.2012, more particularly, the note to financial statement for the year ended 31.03.2012 and in column 14, it deals with the current investments and we find that the investment is Rs. 45.27 Crores as against the investment of Rs. 38.24 Crores for the year ending 3....