TaxTMI 
TaxTMI 
2024 (12) TMI 1328
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....correctly applied the provisions of Rule 8D of the I.T. Rules, 1962. 2. On the facts and in law the Ld. CIT(A) grossly erred in sustaining the addition u/s 36(1)(iii) of Rs. 13,36,481/- on account of disallowance of interest. 3. That the appellant craves leave to add, amend or alter any ground(s) of appeal either before or at the time of hearing of the appeal. 2.1 Grounds of Appeal for the Assessee for Assessment Year 2015-16 are as under: - "1. On the facts and in law the Ld. CIT(A) grossly erred in sustaining the addition/disallowance amounting to Rs. 4,06,646/- claimed under Section 36(1)(iii) of the I.T. Act, 1961. 2. On the facts and in law the Ld. CIT(A) grossly erred in sustaining the addition/disallowance amounting to Rs. 6,48,730/- under the head repair and Maintenance. 3. That the appellant craves leave to add, amend or alter any ground(s) of appeal either before or at the time of hearing of the appeal." 2.2 Grounds of Appeal for the Assessee for Assessment Year 2016-17 are as under: - "1. On the facts and in law the Ld. CIT(A) grossly erred in sustaining the addition u/s 36(1)(iii) to Rs. 9,86,716/- on account o....
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....e had mixed pool funds and the available funds, which were more than the investments made in mutual funds. That the investment is made out of mixed pool funds with the presumption that it has been made out of the tax free funds available. The Ld. Counsel for the Assessee relied on the following Judgments and sought for allowing the Grounds of the Assessee and prayed for dismissal of the Ground of the Revenue: - a) South Indian Bank Vs. CIT-(2001) 438 ITR 1(SC) b) CIT (LTU) Vs. Reliance Industries Ltd.-410 ITR 466(SC) 3.4. Per contra, the Department's Representative relying on the Assessment Orders sought for dismissal of the Grounds of the Assessee and prayed for allowing the Ground of the Revenue. 4. We have heard both the parties and perused the material available on record. It is not in dispute that the Assessee had mixed pool funds and the available funds were more than the investment made in mutual funds the investments were made out of mixed pool funds on the presumption that it has been made out of the tax free funds available. The Hon'ble Supreme Court in the case of South Indian Bank Vs. CIT-(2001) 438 ITR 1(SC) held as under:- "28.....
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....pplying Rule D8 of the IT Rules. Accordingly, we allow Grounds of Appeal No. 1(a) and 1(b) of the Assessee for Assessment Year 2013-14, 2014-15 and dismiss the Grounds of Appeal No. 1 of the Revenue for Assessment Year 2015-16. Disallowance of interest u/s 36(1) (iii) of the Act. 6. The Grounds of Appeal No. 2 of the Assessee for Assessment Year 2013-14 & 2014-15, the Grounds of Appeal No.1 of the Assessee for Assessment Year 2015-16 and 2016-17 are regarding disallowance made by the A.O. u/s 36(1) (iii) of the Act which has been confirmed by the Ld. CIT(A). 7. The Ld. CIT(A) while upholding the disallowance, gave finding in detail for Assessment Year 2016-17, therefore, the brief facts for Assessment Year 2016-17 are considered for the sake of convenience. 7.1During the assessment proceedings, the Ld. A.O. has issued show cause notice on the issue of disallowance of interest in following manners: - "From perusal of the balance sheet it is found that your long term borrowing as on 31/03/2016 is Rs. 4404.49. You have paid interest on long term borrowing at Rs. 498.17 lakh. The interest so paid is 11.01%. It is found that investment by your company in Venus Portf....
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....llowances have been made by the A.O. which can be corroborated by the Assessment Orders for Assessment Year 2010-11 to 2012-13 which were passed u/s 143(3) of the Act. By following the Rule of consistency as reiterated by Hon'ble Supreme Court in the case of M/s Excel Industries Ltd. reported at 358 ITR 295(SC) and M/s Radhasoami Satsang reported at 193 ITR 321 and finding merit in the contention of the Ld. Assessee's Representative, we allow the Grounds of Appeal No. 2 of the Assessee for Assessment Year 2013-14 & 2014-15, the Grounds of Appeal No. 1 for Assessment Year 2015-16 and 2016-17 and delete the disallowance made by the A.O. u/s 36(1) (iii) of the Act which has been confirmed by the Ld. CIT(A). Disallowance under the head of repair and Maintenance 11. The Grounds of Appeal No. 2 of the Assessee and Ground No. 2 of the Revenue's Appeal respectively for the Assessment Year 2015-16 are regarding disallowing/sustaining the expenditure claimed under the head of repair and Maintenance. The Assessee is aggrieved by disallowance of Rs. 6,48,690/- and the Department is aggrieved by the deletion of an amount of Rs. 6,11,552/- on account of expenditure for repair and m....