TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 80
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....r. Since the facts are similar, issues common, they are being disposed of vide this consolidated order. 2. At the time of hearing, the Ld. AR of the assessee apprised the Bench that for both the assessment years i.e. 2012-13 and 2013-14, he is not pressing the ground Nos.1, 1.1 and 1.2 which relates to natural justice. Therefore, in view of the submissions of Ld. AR of the assessee, ground Nos. 1, 1.1 and 1.2 for both the assessment years are dismissed as "Not pressed‟. 3. Ground Nos.2, 2.1, 2.2, 2.3 and 2.4 for both the assessment years are similar in nature. In order to adjudicate the issues, we refer to the facts as appearing in ITA No.1539/PUN/2016 for assessment year 2012-13. ITA No.1539/PUN/2019 A.Y.2012-13 4. The facts....
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....einafter referred to as "the Act‟) and added to the total income of assessee. 5. That thereafter, the matter travelled before the Ld. Commissioner of Income Tax (Appeals) and he analyzed as per his reasoning as appearing in his order that the rigours of Section 36(1)(iii) of the Act is attracted since the assessee has not borrowed the funds for any business purpose. The assessee has also not explained how this investment in shares in associate company is going to serve its business interest. The argument of the assessee also did not find favour with the Ld. Commissioner of Income Tax (Appeal) that when shares are sold it will be taxable as capital gain. However, this was not backed up by any evidence. In the totality of facts and ci....
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....ssioner of Income Tax (Appeal) grossly erred in interpreting the same as "for the purpose of earning profits‟. An expenditure in the form of interest is allowable so long as it is for the purpose of business and it is not relevant that the said expenditure should actually result in income or increase in profits. With regard to this contention, the Ld. AR of the assessee has placed reliance on the following decisions: i) CIT Vs. Malayalam Plantations Ltd. (1964) 53 ITR 140 (SC) ii) Sree Meenakshi Mills Ltd. Vs. CIT (1967) 63 ITR 207 (SC) 6.2 That further, the Ld. AR of the assessee has placed reliance on the decision of the Hon‟ble Bombay High Court in the case of CIT Vs. Reliance Communications Infrastructure Ltd. (2013)....
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....out earning of profits or income. When we read the order of the Ld. Commissioner of Income Tax(Appeal), we find that the observation of the Ld. Commissioner of Income Tax(Appeal) for disallowing is that no evidences were placed in front of him in order to highlight how these investments in an associate company from funds borrowed will serve business interest of the assessee which basically means that the Ld. Commissioner of Income Tax(Appeal) is harping upon providing evidences as to how the assessee will generate income from this transaction. 9. In our considered view, when all the details of investments of shares and working of interest paid has been provided to the Department, asking for any other evidences relating to what income will....
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....sociate concerns. This is evident from page 9 and 14 of the paper book. We further observe that all the judgments relied on by the Ld. Commissioner of Income Tax (Appeals) in his order are not on interpretation of Section 36(1)(iii) of the Act but on the interpretation of Section 57(iii) of the Act which evidently is different in language to that used in Section 36(1)(iii) of the Act. 12. In view of the above examination of facts and legal propositions, we hold that the investments made by the assessee in M/s. Kimplas Piping Systems Ltd. were wholly and exclusively for the purpose of business and therefore, no disallowance u/s.36(1)(iii) of the Act could be made in the present case. Hence, we set aside the order of the Ld. Commissioner of....
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...., delete and modify all or any of the above grounds of appeal." The additional ground relates to the disallowance made by the Assessing Officer u/s.14A of the Act of Rs. 12,37,413/-. 16. When the matter travelled before the Ld. Commissioner of Income Tax(Appeal), he gave part relief and confirmed part of the disallowance to the extent of Rs. 1,92,844.28/-. 17. The Ld. AR of the assessee reiterated the submissions as made before the Sub-ordinate Authorities and contended that they have not earned any exempt income and therefore, disallowance u/s.14A is not warranted. The Ld. AR further submitted that in the order of the Ld. Commissioner of Income Tax(Appeal), he has accepted that no exempt income was earned. However, disall....