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2014 (12) TMI 178 - GUJARAT HIGH COURTClaim of retention money disallowed – Held that:- In Director of Income-tax ( International Taxation) Versus Ballast Nedam International [2013 (7) TMI 421 - GUJARAT HIGH COURT] it has been held that unless and until a debt is created in favour of the assessee, which is due by somebody, it cannot be said that the assessee has acquired a right to receive the income or that the income has accrued to him - A debt must have come into existence and the assessee must have acquired a right to receive the payment - assessee did not get any right to receive the sum which could have been retained in pursuance of the contract - One has to look at the contract and not at the entries made in the books of account - the Tribunal rightly upheld the order of the CIT(A) wherein it has been held that the retention of 10% money of total sales was due to specific terms and conditions for final payment mentioned in the customer purchase order - the assessee - company had been following this system of accounting for the last several years and was accepted by the department – the order of the Tribunal is upheld – Decided against revenue. Disallowance on interest and administrative expenses u/s 14A - onus to prove the nexus of interest free funds utilized for the purpose of making investments earning exempt income discharged or not – Held that:- The Tribunal has taken note of the fact that the matter had initially been restored to the file of the CIT(A) with a specific direction to bring out clearly as to whether the borrowed fund had indeed been utilized in investment in shares/mutual funds for earning exempt income - the Tribunal observed that no disallowance u/s 14A of the Act can be made of interest expenses until there is finding of AO that borrowed funds were utilized by assessee to earn exempt income - the assessee had sufficient surplus funds at its disposal for making any investment in share and for business purpose and therefore, there was no nexus that could be established with the expenditure incurred by the assessee for earning the exempt income – thus, the order of the Tribunal is upheld – Decided against revenue.
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