2023 (6) TMI 441

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....ference, the facts are being taken from ITA-192-2012. 2. The appellant-M/s Mascot Footcare has filed the above mentioned two appeals under Section 260-A of the Income Tax Act, 1961 (for short 'Act 1961') challenging order dated 27.05.2011 and order dated 20.04.2012 in M.A No. 292/Del/2011 arising out of ITA No. 998/DEL/2011 dated 27.05.2011, whereby the appeal filed by the revenue-department was partly allowed. 3. Brief facts of the case are that the assessee-company filed return of income declaring income of Rs. 81,63,354/- on 07.06.2007, which was processed under section 143(1) of the Act on 28.03.2008. The assessee firm is engaged in the business of manufacturing of Hawai Chappals. During the course of assessment proceed....

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....e capital amount could not be taken as business purpose or for the purpose of commercial expediency. Reference was made to judgment of Hon'ble Supreme Court in a case of S.A Builders Pvt. Ltd v. Commissioner of Income Tax (Appeals) Chd and another, 2007 (1) SCC 781, wherein it has been held that the personal purpose cannot be considered for commercial expediency. Reference had further been made to Abhishek Industries case (supra) wherein it was observed as under:- "We do not subscribe to the observation in the judgments to the effect that if the amount is advanced from a mixed account or share capital or sale proceeds or profits, etc., the same would not be termed as diversion of borrowed capital or that the Revenue had not been ab....

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....ore the CIT (A), Faridabad and the same was allowed, vide order dated 29.11.2010 (Annexure A-7). Against the order of CIT (A), the revenue-department filed the appeal before the Tribunal on the following grounds:- (i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 18,00,001/- made by the Assessing Officer on account of interest on investment in the shares of Lakhani India Limited under Section 14A of the Income Tax Act, 1961 particularly when the investment in shares which yield dividend income are not forming part of the total income by virtue of section 10(34) of the Income Tax Act, 1961 and hence, since dividend does not form the part of total incom....

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....es an implicit theory of apportionment of expenditure between taxable and non-taxable income and once a proximate cause for disallowance is established regarding the relationship of the expenditure with income, which does not form part of the total income, disallowance u/s 14A has to be effected. With respect to ground No. 2, the Tribunal found no fault in the order of the CIT (A) and dismissed this ground. The ground No. 3 was found to be general in nature. 7. The assessee then filed MA and the same was also dismissed on 20.04.2012. Hence the present appeals. 8. Bombay High Court in Godrej and Boyce case (supra) examined the provisions of Rule 8 (d) read with Section 14A(2) of the Act and held that Rule 8(d)is not retrospective and a....