TaxTMI 
TaxTMI 
2020 (8) TMI 69
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....unds in its appeal however, the cruxes of the issues are as follows: - "(i) the Ld. CIT (A) has erred in confirming the order of the ld. AO who had fallibly invoked the provisions of section 14A of the Act and thereby made an addition of Rs. 1,28,31,825/-. (ii) the Ld. CIT (A) has erred in confirming the order of the Ld. AO who had wrongly invoked the provisions of section 40(a)(ia) of the Act towards payment made on account of interest without deducting tax at source." 3. The brief facts of the case are that the assessee is a Private Limited Company engaged in construction business, filed its return of income for the relevant AY 2013-14 on 30/09/2013 declaring loss of Rs. 1,60,46,557/- under normal provisions and loss ....
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....t for Rs. 55,35,534/- from the investment in shares 4.1 However, the Ld. AO relying on the decision in the case of Godrej Boyce Mfg. Co. Ltd vs. DCIT reported in 328 ITR 81 and Board Circular No. 5/2014 dated 11/2/2014 invoked Rule 8D of the IT Rules r.w.s 14A of the Act and thereby computed the disallowance of expenditure as Rs. 1,28,31,825/-. On appeal, the Ld. CIT (A) confirmed the order of the Ld. AO by agreeing with his views and by further observing as follows: - "(i) From the balance sheet it was apparent that the assessee company has obtained huge unsecured loans from banks and individuals. During the relevant previous year there is also an increase in unsecured loans. Further, during the appellate proceedings the assess....
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....d therefore the provisions of section 14A cannot be invoked. We do not find this submission of the assessee to be appropriate. Provisions of section 10 of the Act mandates that any income falling in any of the clauses mentioned U/s 10 of the Act shall not be included in computing the total income of a previous year of any person. Therefore, the assessee cannot insist for including such income while computing the total income when the Act itself provides otherwise. It is pertinent to mention that tax cannot be imposed or collected from the assessee unless it is charged or specified by the provisions of the Act. Therefore, the assessee cannot claim any relief based on the aforesaid argument that provisions of section 14A cannot be invoked bec....
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.... the assessee company towards such investment other than the apprehension of interest expenditure incurred, from the statement of accounts and the books of accounts produced by the assessee before them. Since, the assessee company has claimed that it had invested in its 100% subsidiary company out of its non-interest bearing funds and has not incurred any expenditure towards such investment earning exempt income, We are of the considered view that these factual aspects must be examined by the Ld. AO and if the submission of the assessee company is found to be correct, then delete the addition made by invoking the provisions of section 14A r.w. Rule 8D of the Rules, and if found otherwise pass appropriate order in accordance with law and mer....