TaxTMI 
TaxTMI 
2019 (3) TMI 1857
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....4-15 dated 21.11.2016. 2. The Revenue has challenged the order passed by the Ld. CIT(A) in restricting the disallowance of Rs. 91,25,846/- to Rs. 19,311/- made u/s. 14A of the Act. The assessee company has filed his return of income on 26.09.2014 declaring total income at Rs. 49,69,50,500/- followed by revised return of income filed on 31.03.2016 declaring total income at Rs. 49,62,23,790/- which was processed u/s. 143(1) of the Act. Under scrutiny notice u/s. 143(2) of the Act was issued on 31.08.2015 followed by a further notice dated 10.06.2016 u/s. 143(2) r.w.s 129 of the Act due to change in incumbent. A further notice u/s. 143(1) of the Act dated 26.04.2016 and 07.07.2016 were issued and served upon the issue along with the questio....
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....ltiple of investment (6-5) 8.90 times 10.17 times 10.17 times 9.75 limes 8.50 times 4.98 times 6.91 times Sr. No. Assessment Year Total income offered for taxation Increase in Investments Excess of total income over increase in investments 1 2008-09 129940463 20000000 109940463 2 2009-10 105724893 69844692 35880201 3 2010-11 200946099 0 200946099 4 2011-12 266826770 0* 266826770 5 2012-13 252258200 17500000 234758200 6 2013-14 392183560 0 392183560 7 2014-15 496275794 0 496275794 4. However, the submissions that the assessee is in possession of ample interest free fund in the for....
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....ich the investments were made, the assessee had interest free funds and there was no diversion of interest bearing funds for non business purpose. The appellant could not prove by way of submitting fund flow statement that there was no diversion of interest bearing funds and subsequently he relied upon certain decisions / judgments. 3.5. It has been claimed by the appellant that it has interest free fund of Rs. 85,68,38,722/- in form of share capital and reserves and surplus against the investment of Rs. 10,83,31,128/-. Therefore, appellant had sufficient interest free fund to make investment. The appellant has further submitted that investment has been made in the subsidiary company MAS Rural Mortgage and Housing Finance Limited a....
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.... made by the ld. A.R that disallowance u/s. 14A cannot be more than tax free income. On the other hand, while dictating the order, we have come across the decision of Hon'ble Delhi High Court in the case of Joint Investment Pvt. Ltd. Vs. CIT ITA No. 117 of 201 5 decided on 25/02/2015, wherein the Hon'ble High Court has held as under:- "9. In the present case, the AO has not firstly disclosed why the appellant/assessee's claim for attributing Rs. 2,97,440/- as a disallowance under section 14A had to be rejected. Taikisha says that the jurisdiction to produced further and determine amounts is derived after examination of the accounts and rejection if any of the assessee's claim or explanation. The second aspect is the....
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....lant has sufficient interest free fund to make investment in the subsidiary company from which dividend has been received. Therefore, the interest disallowance under Rule 8D(2)(ii) is not called for. As regard to disallowance relating to administrative expenses of Rs. 5,41,65/7-computed under Rule 8D(2)(iii), it is noticed that appellant had only exempt income of Rs. 19,311/-. It has been held by Hon'ble ITAT, Ahmedabad in the case of Chudgar Racnhhodlal Jethalal Vs. DCIT in ITA No. 245/Ahd/2013 (supra), that the disallowance cannot exceed to the exempt income of dividend. 3.7. Reliance is also placed on the decisions of jurisdictional ITAT, Ahmedabad in the following cases;- (i) M/s. Shree Laxmi Bidi Trading Co. Vs. D....
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....ent in subsidiary companies. 3.10. In view of the aforesaid discussion, the disallowance made by the AO with regard to the administrative and expenditures being 0.5% of the average investments invoking the Rule 8D(2)(iii) is confirmed to the extent of dividend income which is Rs. 19,311/-. In other words, the disallowance under section 14A amounting to Rs. 91,25,846/- is restricted to Rs. 19,311/-. Relief is granted for the balance disallowance." 6. At the time of hearing of the instant appeal the Ld. Advocate appearing for the assessee submitted before us that the disallowance u/s. 14A cannot be made more than the tax free income. In this particular case since the appellant had only exempt income of Rs. 19,311/- such disallowan....