2021 (12) TMI 928

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.... the Income Tax Act, 1961 (hereinafter referred to as Act) by the ld. Dy. Commissioner of Income Tax - 7(3)(2) (hereinafter referred to as ld. AO). 2. The only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in substituting the disallowance of interest u/s. 36(1)(iii) of the Act as against disallowance made u/s.14A r.w.Rule 8D(2)(ii) of the Income Tax Rules by the ld. AO while framing the assessment. 3. None appeared on behalf of the assessee. We have heard ld. DR and perused the materials available on record. We find that assessee company is engaged in the business of providing HR consulting services, training and development and staffing services as well as in financial activities. The retu....

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.... into operation. Accordingly, the disallowance of administrative expenditure made under Rule 8D(2)(iii) of the Rules was deleted. However, the ld. CIT(A) applied the provisions of Section 36(1)(iii) of the Act and held that since investments were made out of borrowed funds by the assessee company, the interest paid on borrowings would be disallowed u/s.36(1)(iii) of the Act. Aggrieved by this order, only the assessee is in appeal before us. 4. We find that assessee had made investments in Neotric Infomatique company which is a group company of the assessee company as a measure of strategic investment. It is not in dispute that the borrowed funds were used by the assessee company for making such strategic investment. The assessee has also....