2020 (2) TMI 577

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....1-12. 2 The Revenue has proposed the following questions of law as substantial questions of law: "2[A] Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) directing the Assessing Officer to make proportionate disallowance out of total disallowance of Rs. 47,83,671/- by the Assessing Officer under Section 36(1)(iii) of the Act though the assessee could not prove nexus of interest of interest free loans given to others with interest free fund? [B] Whether the Appellate Tribunal has erred in law and on facts by upholding the decision of the CIT(A) deleting the disallowance of Rs. 42,90,471/- made by the Assessing Officer under Section 14A r.w. Rule 8D? [C] Whether the Appellate Tribunal ....

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....nd the respondent assessee was paying interest on various term loan which had been granted for specific project and thus interest cost is having direct nexus with such projects. The Assessing Officer however disallowed the aforesaid amount under section 36(1)(iii) of the Act, 1961 by rejecting the explanation offered by the assessee. 5 Being aggrieved and dissatisfied with the assessment order, the assessee preferred an appeal before the CIT(Appeals). The CIT(Appeals) relied upon the assessee's own case for A.Y. 2010-11 and directed the Assessing Officer to compute the disallowance after excluding the interest having direct nexus with the purpose for which the money has been borrowed. CIT(Appeals) held as under : "3.3 I have carefu....

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....rowing amounting to Rs. 9,86,301/- , interest on Over Draft and other miscellaneous interest pertaining to head office amounting to Rs. 1,60,000/- and Rs. 7,399/- for Mata's Madh are general purpose interest expenditure which cannot be attributed for a specific purpose. The total of these expenditure comes to Rs. 11,53,706/-. Following the findings given by me in para - 6.3 of the appellate order for A.Y.2010-11, the AO is directed to recompute the proportionate disallowance by taking the total interest expenditure at Rs. 11,53,706/-. The ground of appeal is accordingly partly allowed." 6 The appellant Revenue therefore, being aggrieved by the order passed by CIT(Appeals) preferred appeal before the Tribunal. The Tribunal relying u....

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....o Rs. 1,60,000/- v and Rs. 7,399/- for Mata's Madh which are general purpose interest expenditure the learned CIT(A) came to a conclusion that the same cannot be attributed for specific purpose. The learned CIT(A) worked out the interest expenditure to the tune of Rs. 11,53,706/- following the earlier decision taken by him in assessee's own case as for A.Y. 2010-11. The learned CIT(A) further directed the learned AO to recompute the proportionate disallowance by taking the total interest expenditure at Rs. 1,53,706/- which in our considered view is without any ambiguity. Hence, we find no infirmity in the order passed by the first appellate authority so far as to warrant interference. The question is accordingly answered in the affirmat....