TaxTMI 
TaxTMI 
2019 (4) TMI 512
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.... were heard together and are being disposed of by way of this common order for the sake of convenience. 2. The grounds raised by the assessee for Assessment Year 2013-14 in ITA No. 979/Bang/2018 are as under. "1) That the order passed by the Ld. C.I.T.(A) to the extent it is prejudicial to the interests of the appellant is arbitrary, erroneous, without proper reasons, invalid and bad in law. 2a) That the Ld. C.I.T.(A) on the facts and circumstances of the case erred in law in having upheld the disallowance of Rs. 1,05,65,349/- made u/s. I 4A r.w.r. 8D of the Rules in spite of the fact that alleged satisfaction was derived purely on suspicion that the assessee must have incurred administrative and other expenses without est....
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.... 4) That the Ld. C.I.T.(A) erred in having upheld the disallowance of legal fees Rs. 10,00,000/- on the alleged ground that the said expenditure was in relation to the purchase of the property in spite of the fact that the said expenditure was incurred for running of the business and hence allowable as revenue expenditure. 5) That, therefore, as the order of Ld. C.I.T.(A) on the above issues suffers from illegality and is devoid of any merit, the same should be quashed and your appellant be given such relief(s) as prayed for. 6) That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds." 3. Similarly, the grounds raised by the assessee for....
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....h was against the decision of Hon. ITAT, Kolkata in REI Agro Ltd. vs. DCIT (244 ITD 141), duly affirmed by the Hon. Calcutta High Court vide its order dated 19.04.2014 in ITAT No.220 of 2013 holding that the disallowance u/s. 14A should be restricted only to the investment which yielded dividend income. 3) That, therefore, as the order of Ld. C.I.T.(A) on the above issues suffers from illegality and is devoid of any merit, the same should be quashed and your appellant be given such relief(s) as prayed for. 4) That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds." 4. At the very outset, it was submitted by ld. Counsel of the assessee that ass....
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....r book, an amount of Rs. 8,20,01,121/- has been debited as finance costs, the details of which are available in Schedule 23 available on page no. 22 of the paper book and from the same, it can be seen that the interest payment is on account of interest on term loans Rs. 1,38,82,126/-, loan processing charges of Rs. 6,80,23,363/- and bank charges Rs. 95,632/- total Rs. 8,20,01,121/-. Hence, this is admitted position that no interest is paid on Compulsory Convertible Debentures. He placed reliance on the judgment of Hon'ble Karnataka High Court rendered in the case of CIT and Another Vs. Microlabs Ltd. as reported in [2016] 383 ITR 490 (Kar) and submitted that this was held by Hon'ble Karnataka High Court in this case that when invest....
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.... and Another Vs. Microlabs Ltd. (Supra), we examine the amount of interest free funds available with the assessee and compare it with investment in tax free securities. We find that assessee was having interest free own funds of Rs. 31,46,00,987/- in the form of share capital and reserves and surplus. In addition to that, the assessee is also having fund of Rs. 49,99,90,000/- in the form of CCDs on which no interest is being paid by the assessee. If we add up these two amounts, it is seen that total interest free funds available with the assessee is of Rs. 81,45,90,987/- as against the investment in tax free securities of Rs. 51,76,46,752/-. Hence interest free funds available with the assessee is more than investment in tax free securities....
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....sessee. It was held by Hon'ble apex court that this is pure question of fact and since Hon'ble High Court in that case has decided the issue in favour of the assessee on the basis of finding of fact recorded by the tribunal, no interference is called for in the judgment of High court on this issue. Hence, it is seen that this judgment of Hon'ble apex court rendered in the case of CIT vs. Reliance industries limited (Supra) is on the same line as the judgment of Hon'ble Karnataka High Court rendered in the case of CIT and Another Vs. Microlabs Ltd. (supra). 11. Therefore, respectfully following this judgment of Hon'ble Karnataka High Court, we decide this issue in favour of the assessee and accordingly the disallowance of Rs. 92,7....