2014 (5) TMI 592 - ALLAHABAD HIGH COURT

Allowability of interest – Held that:- Revenue contended that the liability of the assessee to pay interest had arisen under the agreement dated 30 March 2000 - the CIT(A) and the Tribunal have noted that initially an agreement was entered on 30 March 2000 under which the outstanding dues of the assessee to TML in the amount of Rs.4.80 crores was squared off by the grant of a loan from Niskalp to the assessee for that purpose – There was no reason to interfere with the order of the Tribunal - it was not a statutory liability of the assessee but a contractual dispute with the assessee under the agreement dated 30 March 2000 which eventually was resolved and the liability was crystallized only when the subsequent agreement dated 12 April 2007 was made – Decided against Revenue.

Disallowance u/s 14A of the Act – Difference of opinion – Held that:- Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act - what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction - the assessee had not earned any tax free income - in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance - The view of the CIT(A), which has been affirmed by the Tribunal, does not give rise to any substantial question of law – Decided against Revenue.