TaxTMI 
TaxTMI 
2024 (1) TMI 108
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....d not allowable u/s. 36(1)(iii) of the Act. The Ld. A.O. also made disallowance u/s. 14A r.w. Rule 8D of Rs. 29,85,830/- and assessed the total income as Rs. 2,38,16,658/-. 3. Aggrieved against the same, the assessee filed an appeal before Commissioner of Income Tax (Appeals). After considering various submissions and judicial precedents, the Ld. CIT(A) restricted the disallowance u/s. 36(1)(iii) to the extent of Rs. 16,05,213/- by observing as follows: "...After considering facts of the case and various judicial pronouncements as argued by A.R of the appellant(supra), the utilization of funds, interest free loans and advances given and availability of interest-free funds with the appellant it can be seen that the appellant has given total advances of Rs. 26,15,95,884/-. It is also seen that total interest free funds available comes to Rs. 28,40,84,158/- against which the interest free advances are Rs. 26,15,95,884/- only which is less than the amount of interest free funds available. The appellant has stated that amount given as advances (as above) to Jaihind Projects Ltd (JPL) are in the nature of share investment and not in the nature of loans and advances The appellant compa....
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....terest u/s. 36(1)(iii) is restricted to Rs. 16,05,213/- and the balance addition of Rs. 2,45,84,950/- is directed to be deleted. The ground of the appellant is partly allowed." 3.1. Regarding the 2nd issue namely disallowance u/s. 14A r.w. Rule 8D of Rs. 29,85,830/-, the Ld. CIT(A) deleted the entire addition since there is no exempt income earned by the assessee during the year by observing as follows: "5. I have carefully considered the assessment order and the submission filed by the appellant. It is noticed that Assessing Officer has made disallowance by invoking provisions of section 14A read with Rule 8D and same is worked out as under:- Particulars Amount (Rs.) Interest expenditure 49,106/- Administrative expenditure 29,36,724/- Total 29,85,830/- 5.1. The Assessing Officer has observed that appellant has made investment to the tune of Rs. 58,90,44,892/- as on 31/03/2014 hence, following the decision of Hon'ble Bombay High Court in case of Godrej & Boyce mfg. Co. Ltd., disallowance u/s 14A r.w. Rule 8D is required to be made. He has further observed that appellant must have incurred administrative expenditure which is attributable to investment portfolio.....
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....unjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under 7. We do not find any merit in this submission. The judgment of this court in Abhishek Industries Ltd (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context. In the present case, admittedly the assessee did not make any claim for exemption. In such a situation section 14A could have no application." 14. We do not find any question of law arising. Tax Appeal is therefore dismissed" 5.3. Further, Hon'ble Ahmedabad ITAT in case of Shah Alloys Ltd [2315/Ahd/2010], dated 27/03/2015 following the decision of Corrtech Energy Pvt. Ltd. (referred supra), held as under: "The Authorized Representative of the assessee has relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Corrtech Energy (P) Ltd, repor....
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.... it is held that disallowance u/s 14A r.w. Rule 8D cannot be made as appellant has not earned any exempt income. In the nutshell, disallowance u/s 14A made by Assessing Officer for Rs. 29,85,830/- is deleted. In the result, this ground of appeal is allowed." 4. Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal: (a) That the ld. CIT(A) has erred in law & facts in restricting the addition of Rs. 2,61,90,163/- to Rs. 16,05,213/- made by the Assessing Officer on account of disallowance of interest expenses. (b) That the ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 29,85,830/- made by the Assessing Officer u/s 14A rows. 8D of the 1.T. Act. 5. None appeared on behalf of the assessee in spite of service of notices. Today is the 42nd time of hearing of the above appeal. In earlier occasions, Ld. A.R. Mr. V.K. Parikh has withdrawn his Letter of Authority as he is unable to contact the assessee as well as the briefing Counsel. It is thereafter notices were served through Income Tax Department by affixture, however none appeared on behalf of the assessee. So with the materials available on record, we pro....