TaxTMI 
TaxTMI 
2024 (6) TMI 1534
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....A) erred in holding that disallowance u/s. 14A of the Act is called for in the appellant's case and erred in directing the Assessing Officer to make a disallowance of Rs. 1,22,85,858/- u/s. 14A of the Act to the extent of dividend income. (b) The Ld. CIT(A) erred ought to have appreciated that the Assessing Officer has not made any disallowance u/s 14A of the Act, in the assessment under consideration. (c) The Ld. CIT(A) ought to have appreciated that the disallowance of Rs. 1,22,85,858/- made u/s. 14A of the Act is a fresh disallowance which tantamount to enhancement of assessment which requires opportunity of being heard to the appellant. (d) The Ld. CIT(A) erred in not giving any enhancement notice to the appellant before directing the Assessing Officer to make the disallowance of Rs. 1,22,85,858/- u/s. 14A of the Act. (e) The Ld. CIT(A) ought to have appreciated that the direction given to the Assessing Officer to make the disallowance of Rs. 1,22,85,858/- u/s 14A of the Act is void ab initio since no notice of enhancement of assessment has been given to the appellant. 3. (a) Without prejudice to other grounds, the Ld. CIT(A) oug....
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....ure u/ s 35D of the Act and to allow 1/5th of the total fee paid for increase in Technical Ground authorized share capital. 5. (a) The CIT (A) has erred in not deleting the disallowance on Depreciation of Rs. 13,38,390/- on commercial Trucks. (b) The CIT (A) ought to have appreciated the fact that admissible depreciation rate on commercial vehicles is 40% where as the assessee has claimed depreciation at the rate of 30% which is well within the limit. (c) The CIT(A) ought to have appreciated the fact that the trucks fall under the category of Part III-3(iii) of table of rates at which depreciation @ 40% is admissible in respect of tangible assets as laid down u/s 32 of the Act. 6. The CIT (A) has erred in directing the case back to AO instead of directly allowing the amount of Losses and Unabsorbed Depreciation where the assessee have a valid claim of brought forward business losses of Rs.3,27,55,324/- and Unabsorbed Depreciation of Rs. 7,18,04,971/ -. 7. The appellant may, add or alter or amend or modify or substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appea....
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....securities of companies is for joint venture with Tata Group of companies for strategic business purposes. The assessee further submitted that it is in the business of dealership of passengers' cars, manufactured by Tata Motors. As a business strategy, wherever Tata Groups comes up with a new venture either in the field of manufacturing of automobiles or related activities, the assessee has invested in shares of the said venture, which resulted in various business advantages, therefore, submitted that investments in equity instruments of various companies cannot be treated in isolation with business of the assessee for the purpose of provisions of section 36(1)(iii) of the Act. 6. The AO after considering relevant submissions of the assessee and also taken note of the financial statements for the impugned assessment year, opined that the assessee is in the business of sale of Tata Motor Vehicles and also providing services through its workshops. Therefore, investment in equity instruments cannot be treated as business activity of the assessee. Since the assessee has diverted interest bearing funds for non-business purpose being investment in equity instruments, interest paid....
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....he assessee, observed that the AO has not brought on record any materials to show that the investment made in equity instruments is out of loan taken by the appellant during the year. The AO has not made out a case of diversion of funds to invoke provisions of section 36(1)(iii) of the Act. Therefore, opined that the AO is erred in disallowing of interest expenditure u/s. 36(1)(iii) of the Act. However, invoked the provisions of section 14A r.w. Rule 8D of the Rules, 1962 and directed the AO to disallow the interest expenditure or restrict the disallowance of interest expenditure to the extent of exempt income earned by the appellant for the relevant assessment year. Insofar as disallowance of ROC paid for increase in share capital, Ld. CIT(A) by following the decision of the Hon'ble Supreme Court in the case of Brook band India Ltd. 91 Taxman 26 (SC), sustained the additions made by the AO on the ground that ROC paid for increase in authorised capital is capital in nature and cannot be allowed in terms of Section 35D of the Act. Ld. CIT(A) had also directed the AO to delete the adhoc disallowance made towards un-proved sundry creditors on the ground that when the AO has not do....
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....here is an increase in investments with corresponding increase in borrowed capital for the impugned assessment year. The AO after considering relevant explanation furnished by the assessee opined that the assessee could not adduce any reasons for diverting interest bearing funds for non-business purpose. However, the Ld. CIT(A) without appreciating the relevant facts, simply restricted the interest disallowance to the extent of exempt income. 12. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. We have also carefully considered various evidence filed by the assessee in light of relevant reasons given by the Ld. AO and the Ld. CIT(A) to deal with the issue of disallowance of interest u/s. 36(1)(iii) of the Act. The provisions of section 36(1)(iii) of the Act deals with deduction towards interest paid on borrowed capital. In case loans borrowed for the purpose of business are not utilized or in case a diversion of interest bearing funds for non-business purpose, interest relatable to the portion of loans, which has been used for non-business purpose cannot be allowed as deduction. In the present case, t....
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....td., and M/s. Indicor Steel Pvt. Ltd. All these companies are directly or indirectly connected with business carried on by the assessee. If the amounts so invested is purely a strategic investment and for the purpose of commercial expediency, then the AO cannot held that the said investments are for non-business purpose. Further, by investing in various companies linked with Tata Group concern, the company got several advantages in its automobile dealership business, since the appellant is only a sole and exclusive authorised dealer of Tata Motors for the entire state of Telangana and in the three districts of Andhra Pradesh for commercial vehicles. Further, the said investment has given various business advantages to the assessee. Therefore, we are of the considered opinion that the AO is erred in treating the investment in equity instruments is not for the purpose of business of the assessee. Ld. CIT(A) after considering the relevant submissions, has rightly held that the AO failed to make out a case of diversion of interest bearing funds for non-business purpose and consequently, provisions of section 36(1)(iii) of the Act, cannot be invoked. Thus, we are inclined to uphold t....
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.... adhoc disallowance of sundry creditors. The assessee has filed confirmation letters to the extent of 90% of sundry creditors shown in the books of account of assessee for the relevant assessment year. For some cases although the assessee has requested the parties to file confirmations, but for various reasons, few parties have not responded. The AO disallowed 20% of remaining creditors, where there was no confirmation from the parties. However, the AO has not given any plausible reasons for making adhoc disallowance of un-proved sundry creditors. In our considered view, there cannot be any adhoc disallowance, without giving proper reasons for such disallowance. Ld. CIT(A) after considering the relevant facts has rightly deleted the addition made by the AO. Thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground raised by the Revenue. 14. The next issue that came up for our consideration from Ground No. 4 of assessee's appeal is with regard to disallowance of ROC fees for increase in authorised share capital. Ld. Counsel for the assessee at the time of arguments submitted that the assessee does not want to press the said ground, since the same ha....