TaxTMI 
TaxTMI 
2021 (8) TMI 1097
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....r in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in not upholding the disallowance of Rs. 32,78,941/- u/s 14 A of the Act by ignoring legislative intend of section 14 A of the Act that disallowance u/s 14 A of the Act is not dependent upon earning of exempt income as explained vide CBDT Circular No. 5/2014 dated 10.02.2014? 3. Whether in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs. 32,78,941/- u/s 14 A of the Act without considering legal principles that allowability or disallowability of expenditure under the Act is not conditional upon the earning of the income as upheld by Hon'ble Supreme court in case of CIT Vs Rajendra Prasad Moody (1978) 115 ITR 519? 4. Whether in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowance of interest expenditure of Rs. 54,339/- relatable to interest free advances u/s 36(1)(iii) of the Act even when the assessee was making huge payment of interest on loan and the assessee had not proved test of commercial expediency with regard to interest free advance? 5. Whether in facts and o....
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....ed 10% of the expenses on ad-hoc basis claimed under the head 'telephone expenses', 'travelling expenses' and 'staff welfare expenses' on the ground that element of personal use cannot be overruled as no logbook was maintained for Vehicles, details of phone calls was not maintained in respect of telephones and proper vouchers of tour and travel expenses were not maintained. The assessee made a detailed submission before the Ld. CIT(A) in respect of the expenses claimed. The Ld. CIT(A) following his predecessor, deleted the disallowance made by the Assessing Officer. The Tribunal (supra) in assessment year 2010-11 has observed as under: "12. Having gone through the aforesaid findings and order of the Assessing Officer, we find that the Ld. CIT(A) has done good reasoned order which does not require any interference. The ld. CIT(A) has discussed the entire issues in detail after considering the detailed submissions made before him and relying on various case laws. No contrary material is brought on record on behalf of the Revenue to discard the conclusions arrived at in the impugned order. Therefore, finding no infirmity in the impugned order, the appeal of the Revenue is fou....
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....urred in relation to exempted income, against the taxable income. In the present case, assessee had not claimed any income as exempt. Expenditure incurred and claimed by the assessee is wholly and exclusively for the purposes of business, income of which has been shown as profit of the business and has offered for taxation. Therefore, expenditure incurred for earning such income has to be allowed as deduction. Diminution in value of investment is a capital loss, it has no effect on the Profit & Loss A/c of the assessee and therefore, no expenditure can be disallowed invoking the provisions of section 14A of the Income Tax Act. Hence, disallowance of Rs. 26,12,024/- made by the Assessing Officer is hereby deleted." On perusal of the facts of the facts and the audited financial statements, it is seen that the appellant has not earned any exempt income during the year. The controversy in this case is that the appellant had not earned or received any dividend in the year under consideration and, therefore, no disallowance can be made by invoking the provisions of Section 14A of the Act. The similar controversy has been addressed by the Hon'ble High Court of Delhi in the ca....
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..... 83,57,260/- in its preoperative expenses account pending allocation. Thus total interest of Rs. 3,32,44,566/- (Rs. 2,48,87,306 + Rs. 83,57,260) has been transferred by the assessee to preoperative expenses and total preoperative expenses of Rs. 14,79,23,076/- has been allocated to fixed assets. Accordingly amount of Rs. 7,44,64,117/- has been allocated to building account out of preoperative expenses of Rs. 14,79,23,076/-. Assessing Officer has ignored the facts produced by the appellant and has disallowed interest of Rs. 1,38,24,367/- out of total interest, invoking provisions of section 36(1)(3) of the Act, which amounts to double disallowance. Once when the assessee has transferred interest to preoperative expenses and again when the Assessing Officer has made disallowance which is not sustainable in law. It is true that as per the proviso to section 36(l)(iii) of the Act, any amount of interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of accounts or not) for any period beginning from the date on which the capital was borrowed till the date on which such....