TaxTMI 
TaxTMI 
2015 (7) TMI 1457
X X X X Extracts X X X X
X X X X Extracts X X X X
.... loan to the extent of Rs. 8,63,535 /- merely on the surmise that the appellant has shifted the profit from non-eligible unit to eligible unit under section 80IC. 2. On facts and in the circumstances of case and in law, the Ld. CIT(A) has erred in not commenting about double disallowance of interest expense as the same was disallowed under two sections i.e 80IA(10) and 40a(ia). Out of total interest of Rs. 14,13,335/-, the following disallowance was made; Disallowance u/s 801A(10) - Rs. 8,63,535/- Disallowance u/s 40a(ia) - Rs. 2,27,192/- 3. On facts and in the circumstances of case and in law, the Ld. CIT(A) has erred in retaining the ad-hoc disallowance of Telephone expenses to the tune of Rs. 14,173/- which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts thereby showing higher profits in eligible units. The assessee was asked to explain why interest pertaining to the borrowings of Rs. 82,24,134/- should not be allocated to the Haridwar unit. 3.2. The assessee filed a detailed reply explaining that the cash credit limit and the term loan has been taken for the unit at Navi Mumbai therefore the interest has been charged to Navi Mumbai unit. The assessee further contended that the funds have been used for the purpose of business therefore the claim is to be allowed. 3.3. The submission of the assessee did not find favour with the AO who was of the opinion that if the Haridwar unit was in need of fund, the assessee could have obtained the loan from bank in the name of said unit directl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unts to disallowance u/s. 14A of the Act. The Ld. Counsel concluded by taking an alternative plea that if at all disallowance on account of interest is to be paid, such disallowance should be computed as per the formula given under Rule 8D of the Act. 6. Per contra, the Ld. Departmental Representative strongly supported the assessment order. 7. We have carefully perused the orders of the authorities below. The undisputed fact is that the assessee has transferred Rs. 82,24,134/- from Navi Mumbai to Haridwar unit. It is also an undisputed fact that the entire interest on borrowed funds have been charged to the profit and loss account of Navi Mumbai unit. It is an admitted fact that Haridwar unit is eligible for deduction u/s. 80-IC of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee has not deducted tax as per the provisions of law, he therefore disallowed the interest u/s. 40(a)(ia) of the Act. 11. The assessee carried the matter before the Ld. CIT(A) and accepted the applicability of TDS provisions. 12. Before us, the Ld. Counsel for the assessee stated that the proportionate interest has already been disallowed by the AO while allocating the interest between eligible and non-eligible unit therefore further disallowance would amount to double addition. 13. We do not subscribe to this contention of the Ld. Counsel. Firstly, there is no disallowance of interest earlier. The AO has allocated the interest between eligible and non-eligible unit. However, in the present case, the AO has disallowed the intere....