TaxTMI 
TaxTMI 
2021 (10) TMI 1093
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....l no. 10517CIT(A)-2/17-18 which is arising out of the assessment order framed u/s 143(3) of the Income Tax Act (in short the "Act") dated 14.12.2017 by ACIT, Circle-6(2), Kolkata. 2. Brief facts of the case as confirmed from the records are that the assessee is a Private Limited Company engaged in real estate development and has e-filed its return of income for the Financial Year 2014-15 relevant to the AY 2015-16 on 28.09.2015 declaring loss of Rs. 4,56,48,945/-. Case was selected for scrutiny under CASS followed by serving notices u/s 143(2) and 142(1) of the Act. Various information, as called by the ld. Assessing Officer (in short ld. "AO"), were submitted. Ld. AO on perusal of the details, came to a conclusion that expenses incurred....
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....vidence was produced". 2. For that on the facts and in the circumstances of the case Ld. CIT(Appeal) was wrong in confirming the disallowance the following amounts out of interest paid:- a) Rs. 2,61,29,653/- b) Rs. 1,06,00,823/- He was wrong in not properly appreciating the submission and details made before him during the course of appeal. He was wrong in stating that "no cogent material evidence was produced". 3. For that on the facts and in the circumstances of the case Ld. CIT(Appeal) was wrong in confirming disallowance u/s.14A read with rule 8D(2](ii) of Rs. 6735915/- and under rule 8D(2)(iii) of Rs. 46190/- totaling to Rs. 6782105/-. He was wrong in not properly appreciating the submission....
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.... to P/L a/c of Rs. 4,38,08,248/-is on page no. 5 & 6 of the Paper Book. Interest paid for Shrachi Green Projects of Rs. 2,88,98,502/- was not capitalized due to suspension of the Project beyond expected time line as mandated by AS16 para 17 & 18 and on the advice of the auditors (copy of relevant portion of AS16 is enclosed on page no. 9 & 10 of the Paper Book). Interest incurred for EK Tower Project was not capitalized because loan availed was not utilized for the construction activities of the Projects, rather the same was given to Bengal Shrachi Housing Development Ltd. as an interest bearing loan and interest income was shown in P/L a/c. Rs. 1,06,00,823/- Calculation of disallowance of Rs. 1,06,00,823/- ....
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.... b) Rs. 1,06,00,823/- c) Rs. 2,61,29,653/- d) Disallowance U/s 14A (vide para 6, page 5, 6 & page 7 of the assessment order) Rs. 67,82,105/- The aforesaid disallowance consists of following:- Disallowance under Rule 8D(2)(ii) Rs. 67,35,915/- Disallowance under Rule 8D(2)(iii) Rs. 46,190/- Rs. 67,82,105/- While disallowing the above sum of Rs. 67,82,105/- the Id. Assessing Officer has stated that probability of use of unsecured loan in the non-current investment could not be ignored (para 6.3 page-5 of the assessment order). It was submitted before the Assessing Officer and the Ld.CIT(A) ....
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.... 24,13,204/- for disallowance of certain expenses specifically incurred for the project and also interest disallowance of Rs. 2,61,29,653/- & Rs. 1,06,00,823/-, we find that in the written submissions filed by the ld. Counsel for the assessee and also during the course of hearing, it was stated that on account of following the Accounting Standard 2 (AS2), the alleged expenses were not capitalized. It was also admitted that legal and other expenses of Rs. 23,13,204/- relates to Shrachi Green Projects carried out at Jamshedpur which could not be completed in due time. It is also an admitted fact that the assessee took loan from Allahabad Bank for two projects namely Shrachi Green Projects and EK Tower Project which are under construction duri....
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....62, we find that the alleged disallowance is made out of the interest expenditure. It is a settled judicial precedence that disallowance of interest expenditure u/s 14A of the Act is not called for if the assessee has sufficient capital and reserve and surplus that interest free funds available are in excess of the investments held during the year. For this proposition, we draw support from the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd. reported in [2009] 313 ITR 340 (Bombay). 7.1. On examining the facts of the above judgment, we find that as on 31.03.2015, the assessee had share capital of Rs. 50,39,000/- and reserve and surplus of Rs. 49,33,11,396/-. Against these interest free fund....