2021 (1) TMI 1242

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....he facts of the case relied upon by Ld. CIT(A) in the case of Bharti Overseas Pvt. Ltd., are different as this case is related to the interest on borrowings taken for business purposes like cash credit and short term loans which is not in the case of M/s. IFFCO." 2. The brief facts qua the issue involved are that the assessee is a Multi-State Cooperative Society and had shown dividend income from various companies as well from joint venture with M/s. OMIFCO at Oman for sums amounting to Rs. 165,20,92,522/-. The Assessing Officer after detailed discussion computed the disallowance under Rule 8D at Rs. 20.49 crore. Since, the Revenue has challenged the disallowance of interest under Rule 8D(2)(ii) only, the relevant observation and the findi....

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....milar restrictions are also contained in the RBI's ECB Guidelines. A copy of such terms in Cash Credit and Short Term Loans was filed. It was further submitted that the Banks monitor compliance of these conditions through monthly submissions of Stock Statements and independent Statutory Auditor's Certificate as per RBI Guidelines. A copy of Statutory Auditor's certificate evidencing compliance was also filed. The Id. AR affirmed that during the Previous Year 2010-11, relevant to Assessment Year 2011-12, there has been no instance of levy of a penal Interest or recall of the loan for violation of the end use conditions. He, therefore, summed up his arguments pleading that in view of the above cited legal position and the facts, disal....

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....as relied upon the order of the Assessing Officer. 5. After considering the relevant facts and material on record, it is quite evident that, firstly, assessee had own substantial fund for making the investment; and secondly, the assessee had duly explained and demonstrated that the loan funds could not have been utilized for the purpose of investment. Under these circumstances, the disallowance of interest under Rule 8D (2)(ii) cannot be made and has been deleted by the ld. CIT(A). The Tribunal in assessee's own case for Assessment Year 2009-10 has observed and held as under: 12. We have perused the submissions advanced by both the sides in the light of records placed before us. On perusal of categorical observations by Ld. CIT(A) which ....