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2015 (10) TMI 1270 - ITAT MUMBAIRevision u/s 263 - AO ought to have examined the allowability of interest expenditure u/s. 36(1 )(iii) when interest free funds were advanced by appellant - assessing officer ought to have considered the interest expenditure directly attributable to taxable business income for disallowance u/s. 14A of the Act read with rule 8D(2)(ii) - Held that:- It is seen by us that vide questionnaire dated 8th June 2011, the AO asked the assessee to furnish the details with regard to loans, rate of interest, their confirmation, their utilization, disallowance to be made u/s 14A etc. In response to the same, the assessee had filed detailed reply vide its letter dated 15th July 2011 in which the assessee submitted details with regard to disallowance u/s 14A and for allowability of interest expenses. The assessee also submitted copy of loans agreement with HDFC Bank and other exhaustive details were filed by the assessee before AO. After considering all these replies and evidences of the assessee, the AO had passed detailed order u/s 143(3). It is noted by us that in the assessment order passed u/s 143(3), the AO had made detailed discussion in the assessment order for making disallowance u/s14A for an appropriate amount. The AO has specifically mentioned in the table reproduced at page 4 of the assessment order that expenditure by way of interest was allowable. Thus, in our considered view, the AO has taken the view after considering all the factual submissions and replies and evidences filed by the assessee and after considering the judgment of Hon’ble Jurisdictional High Court in the case of Godrej Boyce Manufacturing Co. Ltd. vs. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] and judgment of Special Bench of ITAT Mumbai in the case of Cheminvest Ltd Vs. ITO [2009 (8) TMI 126 - ITAT DELHI-B ] AO made disallowance of an aggregate amount of ₹ 4,49,516/- u/s 14A r.w.r 8D. Ld CIT DR could not point out anything wrong in appreciation of the facts by the AO. Thus, in our considered opinion, view taken by the AO was one of the possible views as per law and facts and therefore, Ld. CIT could not have exercised jurisdiction u/s 263 to set aside the assessment order passed u/s 143(3). Also it has been shown by ld. Counsel, on the basis of material on record, that loan from HDFC Bank was specifically taken by the assessee for the purpose of procuring raw material i.e. Castor Seeds. This fact is cross verified with the help of sanction letter of the said bank enclosed at page 54 of the paper book. This vital fact has been accepted by the Ld. CIT at page 9 of the impugned order passed u/s 263 of the Act. Once this fact is on record and stands uncontroverted till date, then it can be safely said that the loan has been utilized for the purpose of the business of the assessee and consequently the deduction of interest will be allowable u/s 36(2)(iii) of the Act and therefore, question of applicability of section 14A would not arise - Decided in favour of assessee.
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