Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1880 - ITAT CHENNAIDisallowance U/s.14A r.w.r.8D - HELD THAT:- Section 14A of the Act only specifies that no deduction shall be allowable in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It does not specify with respect to expenditure incurred on taxable income. Therefore in the case where assessee incurs revenue expenditure towards Investments, the income from which is taxable, the provisions of Section 14A of the Acted does not apply. Hence the Investments made by the assessee, wherein the income derived is taxable provisions of Section 14A of the Act are not applicable. The decision rendered by the Delhi Benches of the Tribunal in the case ACIT & ANR v/s. Vireet Investment PVT.LTD. & ANR [2017 (6) TMI 1124 - ITAT DELHI] also fortify our view wherein it was held that “As per Rule 8D(2)(iii), only those investments were to be considered for computing average value of investment which yielded exempt income during year under consideration.” Accordingly we hereby direct the Ld.AO to compute the disallowance U/s.14A r.w.r., 8D(2)(iii) of the Rules only on the investment which yield exempt income. Disallowance of interest expenditure u/s.36(1)(iii) - HELD THAT:- When the assessee has own interest free funds such as share capital and reserves & surplus, it should be presumed that the interest free loan was extended from such funds. The decision relied by the Ld.AR is applicable to the facts of the case present before us. The decisions relied by the Ld.DR are not identical to the facts of the case because all those cases was related to diversion of interest bearing funds. Therefore following the ratio of the decision relied by the Ld.AR, we hereby direct the Ld.AO to delete the addition made by the Ld.AO by holding that the assessee had advanced interest free loan from non-interest bearing funds.Appeal of the assessee is allowed.
|