2021 (6) TMI 299

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....tted by a bench of this Court on the following substantial questions of law: "(1) Whether on the facts and circumstances of the case the Tribunal is right in law in setting aside the disallowance made by the assessing authority relating to expenditure claimed by assessee to an extent of Rs. 11.11 Crores even when the assessee had failed to prove that the said expenditure has been incurred by assessee and not in the hands of M/s. VGPL?   (2) Whether on the facts and circumstances of the case the Tribunal is right in law in confirming the order of the Commissioner of Income Tax (Appeals) relating to disallowance of 0.5% of the average of the value of the investment, the income from which is exempt from tax even when the assessing aut....

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....d borrowed capital was also disallowed. Thus, in all, disallowance of Rs. 43,85,79,362/- was made.   3. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 29.06.2012 allowed the claim with regard to interest paid but not treated as revenue expenditure. Similarly, the disallowance under Section 14A read with Rule 8D(2)(i) of the Rules was restricted to Rs. 1,10,967/- and disallowance of interest on the diverted borrowed capital was directed to be deleted and it was held that there was no justification for making disallowance under the aforesaid head to the extent of Rs. 11.39 Crores. 4. Being aggrieved, the assessee as well as the revenue filed appeal before the Income Tax Appe....

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....l as the tribunal. It is further submitted that with reference to claim of disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules, the submission of the assessee has not been accepted and Assessing Officer has been directed to re work the disallowance and therefore, it is not necessary to answer the second substantial question of law. It is further submitted that third substantial question of law has rightly been answered in favour of the assessee by the Commissioner of Income Tax (Appeals) as well as the tribunal. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Interest of Rs. 11.11 Crores which was incurred was utilized for providing financial assistance to its who....