2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT

Disallowance of proportionate interest under section 36(i)(iii) - existence of commercial expediency - ITAT deleted the disallowance - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal found as a matter of fact that the company had interest-free advances from its directors/shareholders and the members of their families amounting to ₹ 315.11 lakhs as against the interest-free advances made by the company aggregating to ₹ 219.72 lakhs as on March 31, 2008, In view thereof, it was rightly inferred that the respondent/assessee had enough interest- free funds which would cover the advances also made interest-free. - Decided in favour of assessee.

Disallowance on account of investments in shops and pent-houses - assessee could not give any proof that such immovable assets would be used for business purpose - ITAT deleted the disallowance - Held that:- The respondent-assessee is in the business inter alia of making investments in shares and property. We are entirely in agreement that merely because the assessee has given out some of its properties on rent, it does not lead to the inference that investments in other properties are not for business purposes. We are unable to see why such a view has been taken. The assessee can always give out its properties on rent and acquire further properties towards investment.- Decided in favour of assessee.

Disallowance u/s 14A - ITAT deleted the disallowance - Held that:- Assessing Officer had not recorded any reasons in the assessment order to hold that any expenditure had been incurred on earning the exempt income and that the Assessing Officer had rejected the claim of the appellant without giving any reasons for the same. Section 14A requires the Assessing Officer to record satisfaction that the interest bearing funds have been used to earn tax-free income and that the satisfaction must be based upon credible and relevant evidence. It was further held that the onus to prove that interest bearing funds were used lies squarely on the Revenue. The issue, therefore, in this regard was based only on the facts. The least that must be said in favour of the respondents is that the findings of fact recorded by the Commissioner of Income-tax (Appeals) and by the Tribunal are not perverse and that the view taken by them is certainly a possible view.- Decided in favour of assessee.