TaxTMI 
TaxTMI 
2022 (4) TMI 173
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....fficer has disallowed a sum of Rs..2,70,77,009/- under section 14A of the Income Tax Act, 1961 ["Act" in short] for the assessment year 2010-11. Similarly, an amount of Rs..4,84,20,412/- was disallowed under section 14A of the Act and 2011-12. The disallowances for both the assessment years have been computed by taking proportionate interest paid on borrowed loans and loan processing charges and allocating pro-rata on all the investments. 2.2 On appeal, the ld. CIT(A) restricted the disallowance under section 14A of the Act to the extent of dividend income earned and partly allowed the ground of the appeal for both the assessment years. 2.3 We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the disallowances made under section 14A of the Act, the ld. CIT(A) has rightly restricted the disallowance to the extent of exempt income earned by the assessee in view of the decision of the Hon'ble Delhi High Court in the case of Joint Investments P. Ltd. v. CIT 372 ITR 694. We find no infirmity in the order of the ld. CIT(A) and accordingly, the ground raised by the Revenue is dismissed for both the assessme....
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....engaged in the business of investment and finance and has obtained loan from Industrial Finance Corporation of India (IFCI) and was utilized fully to fund M/s. Aban Offshore Ltd. by way of loan and the interest income earned was fully offered to tax. Moreover, the Assessing Officer has not disputed the total interest expenditure incurred by the assessee. However, the Assessing Officer has no justification by reducing the same from earning of except income by reckoning the direct interest expenditure for the purposes of section 14A of the Act. Therefore, the ld. CIT(A) has held that the disallowance does not have any merit and accordingly directed the Assessing Officer to delete the addition. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for all the assessment year under appeal. 4. The next common ground raised in the appeals of the Revenue for the assessment years 2011-12 and 2012-13 relates to disallowance of deemed dividend income. 4.1 In the assessment year 2012-13, while examining the issue relating to deemed dividend the Assessing....
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....er case possesses accumulated profits. The issue of deemed dividend is to be examined in relation to the advances received by the appellant company from its sister concerns Aban Infrastructure P Ltd and Aban Hotels & Resorts P Ltd. 14. The appellant's argument is directed against the order of the AD is on two basic grounds. First, that the appellant was not a shareholder of Aban Infrastructure P Ltd or Aban Hotels & Resorts P Ltd from whom it had received the loans. Therefore, the provisions of s. 2(22)(e) would not be applicable in its case and the loans cannot be treated as deemed dividend in its hands. Second, the loan received were in the nature of inter corporate deposits advanced in the course of business and interest has been charged by both the companies. Such deposits therefore would not constitute loans & advances contemplated u/s 2(22)(e). 15. From the shareholding pattern given in the table by the AO it is seen that individuals being shareholders viz., Saley Abraham, Deepa Reji Abraham, Shema Renny Abraham hold more than 10% shares in one of the three concerns or some of the concerns (as in the table). The issue of deemed dividend would therefore a....
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.... would not apply. While in the case at hand the IT AT noted that the assessee was not a shareholder at all and hence the provisions of sec.2(22)(e) would not apply. 19. On the second plea that they constituted inter corporate deposits it has to be examined from the balance-sheets of the two entities making such deposits viz., M/s. Aban Hotels & Resorts P Ltd and M/s. Aban Infrastructure P Ltd as to whether such deposits were made in the ordinary course of its business. 20. Taking the sum totality of facts before me into account, as discussed in the foregoing I am of the considered view that the view taken by the AO cannot be upheld. This ground of appeal is allowed." 4.4 We have heard the rival contentions. In this case, the Assessing Officer has noted that a sum of Rs..8,84,00,060/- was received as loans by the assessee from two of its group concerns viz., M/s. Aban Infrastructure Pvt. Ltd. and M/s. Aban Hotel & Resorts P Ltd of Rs..8,41,00,060/- and Rs..43,00,000/- respectively. Since the assessee company and the two entities from whom loans were received have common shareholders holding more than 10% of shareholding, the Assessing Officer treated it as deeme....