TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1068
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....me Tax(Appeals) grossly erred in deleting the addition on account of expenses not related to the business of the assessee of Rs. 26,31,67,414/- instead of confirming the same. 3. The learned Commissioner of Income-Tax (Appeals) grossly erred in appreciating the decision of Supreme Court in the case of Lashmirathan Cotton Mills Co. Ltd Vs. CIT (1969) 73 ITR 634(SC) wherein it was held that in order to claim that an nexus of that expenditure to its business what the assessee has failed to dispose off. 4. "Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in allowing the additional ground raised by the assessee in respect of reversal of disallowance u/s 14A of Rs.6,34,32,208/- made by the assessee itself in its return of income while computing its income thereby disregarding the judicial pronouncement of the Hon'ble Supreme Court in the case of Goetze(India) Ltd. ITR 323? 5. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was correct in holding that no disallowance u/s 14A is called for, thereby resulting in a situation where the assessed income of the assessee would now be less than the income returne....
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....on 43B of the Act. The Assessing Officer also brought to tax notional annual value of flats unsold of Rs.1,05,000/- under the head "Income from house property". 7. Being aggrieved by the order of assessment, an appeal was preferred before the ld. CIT(A), who vide impugned order allowed the issue relating to the disallowance of interest u/s 36(1)(iii) of the Act, considering the submissions made before him that interest free funds as well as surplus reserve funds far exceeds the loans and advances made to the sister concern, therefore held that no disallowance u/s 36(1)(iii) is called for placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Industries Ltd. 102 taxmann.com 52 (SC) and the decision of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. 313 ITR 340 (Bombay). B. As regards to the disallowance u/s 14A, the ld. CIT(A) on considering the submission made before him that no disallowance u/s 14A is warranted in the absence of any exempt income, directed the Assessing Officer to delete suo moto disallowance of expenditure of Rs.14A of Rs.6,34,32,208/-. 8. Being aggrieved by the decision of the ld. C....
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....l on record. The issue in ground of appeal no.2 and 3 relates to the disallowance of interest u/s 36(1)(iii) on the ground that the interest bearing funds had been diverted to sister concern, in the form of loans and advances for non-business purposes. There is no gainsaying that if the loans and advances are made for business purposes, the question of disallowance u/s 36(1)(iii) does not arise. The respondent-assessee had asserted before the lower authorities that the loans and advances were made to the sister concern for business purposes, without prejudice to this argument it is further asserted that no disallowance of interest u/s 36(1)(iii) was warranted, for reason that the interest free funds in the form of share capital and surplus reserve far exceeds the loans and advances made to the sister concern, where the mixed funds are utilized for the purpose of making the loans and advances to the sister concerns, the presumption should be drawn that loans and advances are made out of own funds, hence no disallowance of interest is warranted. Rejecting the above contention of the respondent-assessee, the Assessing Officer had proceeded with making disallowance of interest @ 14% on....
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....revious year relevant to the assessment year under consideration. All the loans and advances made to the sister concern were made in the earlier years, the additions made in the earlier assessment years by the disallowance of interest, came to be deleted by this Tribunal in assessee's own case for the assessment years 2008-09 to 2012-13 (supra). Therefore, even on the principle of consistency, no disallowance of interest u/s 36(1)(iii) is warranted. Accordingly, we do not find any illegality and perversity in the findings of the ld. CIT(A). Therefore, we do not find any merits in the ground of appeal no.2 and 3 filed by the Revenue. Hence, the ground of appeal no.2 and 3 filed by the Revenue stands dismissed. 15. Ground of appeal no.4 and 5 challenges the correctness of the findings of the ld. CIT(A) that in the absence of any exempt income, no disallowance u/s 14A can be made in spite of fact that the assessee had himself offered suo moto disallowance of Rs.6,34,32,208/- in the return of income. We find from the assessment record the assessee suo moto offered disallowance of Rs.6,34,32,208/- u/s 14A of the Act. However, during the course of proceedings before the ld. CIT(A), the ....
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.... is crystal clear that it pure question of law requiring no verification of facts. The issue which is purely question of law can always be admitted by the ld. CIT(A) as held by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC) and the decision of Hon'ble Bombay High Court in the case of Pruthvi Brokers & Shareholders (supra). Therefore, we do not find any illegality and perversity in admitting this additional ground of appeal by the ld. CIT(A) as it is in consonance with the settled position of law. Thus, the finding of the ld. CIT(A) that in the absence of any exempt income, resort to the provisions of section 14A cannot be made, cannot be faulted in view of the decisions referred (supra). The fact that the assessee company itself suo moto offered disallowance ipso facto cannot be reason for invoking the provisions of section 14A, as there cannot be estoppel against law. Therefore, we do not find any merits in the grounds of appeal no.4 and 5 raised by the Revenue. Accordingly, these ground of appeal no.4 and 5 raised by the Revenue stand dismissed. 18. In the result, the appeal filed by the Revenue in ITA No.20/PUN/2020 stands dism....
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....d u/s 143(3) of the Act at total income of Rs.3,74,89,490/-. While doing so, the Assessing Officer made disallowance of interest of Rs.3,73,84,490/- u/s 36(1)(iii) on the ground that interest bearing funds have been diverted to the sister concern in the form of loans and advances without charging any interest. The Assessing Officer also made addition on account of notional rent on completed flats of Rs.1,05,000/-. 22. Being aggrieved by the order of assessment, an appeal was preferred before the ld. CIT(A) who vide impugned order directed the Assessing Officer to delete the addition of interest u/s 36(1)(iii) by holding that not disallowance is warranted u/s 36(1)(iii) for the reason that the interest free own funds far exceeds the loans and advances made to the sister concern following the decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Industries Ltd. 410 ITR 466 (SC) and the decision of this Tribunal in assessee's own case in the earlier assessment years (supra). Similarly, the ld. CIT(A) also directed the Assessing Officer not to make any addition on account of notional rent of unsold flats. The ld. CIT(A) also allowed the additional ground of appeal chal....
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....le 8D(2)(iii) of the Rules, we restore the matter to the file of the Assessing Officer for the purpose of computing the disallowance under Rule 8D(2)(iii) of the Rules with direction that the amount of disallowance should be computed by considering the value of those investments, which yielded the exempt income alone for the purpose of arriving at average value of investments, in view of the decision of the Hon'ble Delhi High Court in the case of in the case of Joint Investments Pvt. Ltd. vs. CIT, 374 ITR 694 (Delhi), the decisions of Hon'ble Madras High Court in the cases of ACB India Ltd. Vs. Assistant Commissioner of Income Tax, Marg Ltd. Vs. CIT, 318 CTR (Mad.) 148 and CIT Vs. Shriram Ownership Trust 318 CTR (Mad.) 233 and also by the Hon'ble Karnataka High Court in the case of Pragathi Krishna Gramin Bank Vs. Jt.CIT, 95 Taxman.com 41 (Kar.). Thus, the ground of appeal no.4 and 5 filed by the Revenue stands partly allowed. 27. In the result, the appeal filed by the Revenue in ITA No.21/PUN/2020 for A.Y. 2014-15 stands partly allowed. 28. Now, we take up the last appeal of the Revenue in ITA No.22/PUN/2020 for assessment year 2014-15 for adjudication. ITA No.22/PUN/2020, A.Y.....
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....account of disallowance of interest of Rs.2,70,11,676/-. 33. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the correctness of the decision of the ld. CIT(A) deleting the addition of proportionate interest of Rs.2,89,21,612/-. During the course of assessment proceedings, the Assessing Officer observed that the respondentassessee company diverted the interest bearing loans to the sister concern to Kumar Builders and Kumar Housing and Land Development, hence, the Assessing Officer was of the opinion that the interest proportionate to such land should be disallowed. Accordingly, the Assessing Officer made disallowance of Rs.2,70,11,676/-. On appeal before the ld. CIT(A), the ld. CIT(A) considering the position that own funds and interest free funds are far exceeds the loans and advances given to the sister concern directed the Assessing Officer to delete the addition placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Industries Ltd. 410 ITR 466 (SC) and the decision of this Tribunal in assessee's own case in the earlier assessment years (supra). The correctness of this finding of....
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....019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466 (SC), where a Division Bench of this Court expressly held that where there is finding of fact that interest free funds available to assessee were sufficient to meet its investment it will be presumed that investments were made from such interest free funds. 19. In HDFC Bank Ltd. v. Dy. CIT [2016] 67 taxmann.com 42/383 ITR 529 (Bom.), the assessee was a Scheduled Bank and the issue therein also pertained to disallowance under section 14A. In this case, the Bombay High Court even while remanding the case back to Tribunal for adjudicating afresh observed (relying on its own previous judgment in same assessee's case for a different Assessment Year) that, if assessee possesses sufficient interest free funds as against investment in tax-free securities then, there is a presumption that investment which has been made in tax-free securities, has come out of interest free funds available with assessee. In such situation section 14A of the Act would not be applicable. Similar views have been expressed by other High Courts in CIT v. Suzlon Energy Ltd. [2013] 33 taxmann.com 157/215 Taxman 272/354 ITR 630 (Guj.), CIT v. Microlabs Ltd. [20....