TaxTMI 
TaxTMI 
2020 (10) TMI 1168
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....tically becomes applicable? (ii) Whether the tribunal is correct in deleting the disallowance under Section 36(1)(iii) holding that the advances to its subsidiaries were in the normal course of business, for business purposes without appreciating that as the funds from the overdraft account were utilized to make interest - free advances for acquiring lands, property advances? (iii) Whether the tribunal was right in holding that the assessee is eligible for deduction under Section 10B without appreciating that the assessee have not satisfied the requirements as laid down in clause (a) to (d) of Section 80IB(10)? (iv) Whether the tribunal was correct in allowing proportionate deduction under Section 80IB(10) in respect of the individual units measuring 1500 sq.ft. or less without appreciating that the decision was contrary to the provision of Section 80IB(10) as the section contemplates fulfillment of condition of area of 1500 sq.ft. or less in respect of all units in a project are not in respect of individual units under the same project? (v) The tribunal committed an error in holding that the Assessing Officer has not satisfied himself in invokin....
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....rd to substantiate that overdraft account was utilized for making tax free investments and the investment proceeds are from public issue of shares. Therefore, it cannot be held that funds from overdraft account from which interest has been paid has been invested in mutual funds which yields income which is exempt from tax. Thus, deletion of disallowance under Section 14A read with Rule 8D(2)(ii) of the Rules to the tune of Rs. 15,27,310/- was upheld. The disallowance of interest expenditure under Section 36(1)(iii) was made on the ground that advances and deposits have been made from the bank overdraft facilities and the advances and deposits were non business advances and capital advances. Thus, it was held that disallowance of interest amounting to Rs. 76,638/- was rightly deleted by the Commissioner of Income Tax (Appeals). Accordingly, the appeal preferred by the revenue was dismissed and the cross objections filed by the assessee were partly allowed. In the aforesaid factual background, the revenue has filed this appeal. 5. Learned counsel for the revenue submitted that the tribunal grossly erred in holding that the Assessing Officer did not record satisfaction with regard ....
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....n the absence of recording the satisfaction and the Commissioner of Income Tax (Appeals) as well as the tribunal having found that assessee had sufficient funds as well as covering loans and advances made to its Directors and sister concerns rightly allowed deduction of interest on loan. It is also pointed out that the Assessing Officer has failed to establish the nexus of interest bearing funds with interest free advances. In support of aforesaid submissions, reliance has been placed on decisions in 'GOLDMAN SACHS SERVICES 409 ITR 268 KAR, 'MAXOPP INVESTMENT LTD. VS. CIT', (2018) 402 ITR 640 and 'CIT VS. BRINDAVAN BEVERAGES (P.) LTD (2017) 393 ITR 261 (KARNTAKA). 8. We have considered the submissions made by learned counsel for the parties and have perused the record. For the reasons assigned by us in the judgment dated 22.09.2020 in Commissioner of Income Tax. Vs. M/s Brigade Enterprises in I.T.A.No.54/2013 and 55/2013, the substantial question of law Nos.3 and 4 are answered against the revenue and in favour of the assessee. Now we may deal with the substantial question of law No.5. The Assessing Officer in his order dated 28.12.2011 while dealing with the cla....
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.... of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act : Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. Rule 8D(2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income which does not form part of the total income; (ii) in a case where the assessee has incurred expenditure by way of interest during the Previous Year which is not directly attributable to any particular income or receipt, an amoun....
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....x exempt investments have been reversed. The tribunal has affirmed the aforesaid finding in para 8.4.3 of its order. Thus, concurrent findings of fact have been recorded on the aforesaid issue, which could not be demonstrated to be perverse. Therefore, no interference is called with the aforesaid concurrent findings of fact in this appeal under Section 260A of the Act. [SEE: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. (2016)10 SCC 315 and PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE & ORS. VS. SOFTBRANDS INDIA P. LTD., (2018) 406 ITR 513]. 12. Thus, the first substantial question of law is also answered against the revenue and in favour of the assessee. 13. This takes us to the second substantial question of law. The Supreme Court in MUNJAL SALES Corpn. VS. COMMISSIONER OF INCOME-TAX, LUDHIANA, has held that where the assessee had sufficient funds and has given loan to sister concern out of its own funds, the assessee is entitled to deduction of interest on loan. Similar view has been taken by this court in BRINDAVAN BEVERAGES PVT. LTD. supra. The Commissioner of Income Tax (Appeals) in para 5.6 has held that the subsidiaries of the assessee are special purpose vehicl....