2018 (4) TMI 1880

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....ues are that:- (i) The Ld.CIT(A) has erred in confirming the order of the Ld.AO who had disallowed an amount of Rs. 9,42,885/- by invoking the provisions of Section 14A r.w.s.8D of the Rules without appreciating the fact that investment yielding exempt income alone should be taken for calculating the disallowance U/s.14A of the Act. (ii) The Ld.CIT(A) has erred in confirming the order of the Ld.AO who had disallowed interest expenditure of Rs. 13,92,463/- U/s.36(1)(iii) of the Act being the interest calculated at 16% towards the interest free advances extended by the assessee. 3. The brief facts of the case are that the assessee is a private limited company engaged in the business of export of pharmaceuticals formulations, filed its re....

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....nt yielding exempt income alone should be considered for calculating disallowance U/s.14A of the Act. It was therefore pleaded that directions may be given to assess the income of the assessee accordingly. The Ld.DR relied on the orders of the Ld. Revenue Authorities. 4.2 We have heard the rival submissions and carefully perused the materials available on record. Section 14A of the Act only specifies that no deduction shall be allowable in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It does not specify with respect to expenditure incurred on taxable income. Therefore in the case where assessee incurs revenue expenditure towards Investments, the incom....

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.... interest of Rs. 13,92,463/- adopting the rate at 16% on the aggregate amount of Rs. 87,02,892/- being the interest attributable to the interest free loan extended to M/s. DK Securities and M/s.Artec Products Pvt. Ltd.. On appeal, the Ld.CIT(A) relying in the decision of the Hon'ble High Court of Delhi in the case Punjab Stainless Steel Indus vs. CIT reported in 324 ITR 396, the decision of the Hon'ble Jurisdictional Madras High Court in the case K. Somasundaram & Bros. vs. CIT reported in 238 ITR 939, the decision of the Hon'ble High Court of Kerala in the case CIT vs. Popular Vehicles and Services Ltd., reported in 325 ITR 523 and the decision of the Hon'ble Jurisdictional Madras High Court in the case CIT vs. P. Ganu Rao & Sons repo....