TaxTMI 
TaxTMI 
2019 (6) TMI 697
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....erest made u/s 14A r.w.s. 36 of the Income Tax Act, 1961 (in short 'Act'). During the assessment proceedings, the Assessing Officer (AO) found that the assessee has made the investments of Rs. 29,47,66,972/- in shares of sister concerns as well as other business concerns. The assessee also had borrowed the funds of Rs. 38,70,27,806/- and paid the interest of Rs. 5,62,15,618/- for the assessment year under consideration. The AO has called for explanation from the assessee as to why the interest relating to the investments made should not be disallowed u/s 14A r.w.s. 36 of the Act and in response to the show cause notice, the assessee has furnished the explanation stating that he had the opening capital of Rs. 7,82,95,736/- and received the a....
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....ard to the disallowance made by the AO u/s 36, the Ld.AR contended that there is no case for disallowance u/s 36 since the entire investments were made for purchase of shares in the sister concerns or other business concerns out of own funds. The Ld.AR submitted that the assessee had own funds to the extent of Rs. 28.33 crores including advances and opening balance. Therefore, there is no question for disallowance u/s 36(iii), since, the own funds are utilized for the purpose of making investments. Accordingly, the Ld.AR argued that the orders of the lower authorities are to be set aside and allow the appeal of the assessee. 6. On the other hand, the Ld.DR supported the orders of the lower authorities. 7. We have heard both the parties an....
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..../s 14A of the Act. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal, which reads as under : "11. We have heard both the parties and perused the material placed on record. The assessee has made the investments in the company towards share capital and the AU has disallowed the expenditure relating to the investment made in the shares since the shares yield exempt income u/s 14A. However, the Ld.AR submitted that there was no exempt income earned by the assessee during the impugned assessment year. Thus, there is no case for disallowance under Rule 8D of IT Rules. The fact that there was no dividend income earned by the assessee is not in dispute. On the similar facts, this Tribunal in the case ....
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....peal No.4 is allowed" Similar view was taken by this Tribunal in the case of M/s Rashtriya Ispat Nigam Ltd., Visakhapatnam for the assessment year 2004-05 in ITA No.13/Viz/2013 in para No.36 of the cited order. Since the facts are identical, respectfully following the view taken by Coordinate Bench, we hold that no disallowance is called for u/s 14A in the absence of exempt income. Accordingly, we confirm the order of the Ld.CIT(A) and dismiss the appeal of the revenue." Since the facts are identical, respectfully following the view taken by the coordinate bench, we hold that in the absence of the exempt income, there is no case for making the disallowance u/s 14A of the Act Accordingly, we set aside the order of the Ld.CIT(A) and all....