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2022 (9) TMI 90 - DELHI HIGH COURTDisallowance of interest expenditure u/s 36(l)(iii) - borrowed funds were not utilized for the purposes of the business of Assessee but diverted to Group Companies without charging any interest thereon - HELD THAT:- Disallowance of interest expenditure made under Section 36(l)(iii) of the Act observed that the loans and advances included the – investment in the immovable property and was part of the business activity, investment in the partnership firm was made wholly and exclusively for the purpose of the business, the advances recoverable and forward cover receivable included in the advances were business advances and the same were given to the suppliers with whom regular business transactions had been carried out, the advance to the DLF Ltd. given for the purpose of business and the other advances on which interest had been charged by the Assessee had been shown in the Schedule 17 forming part of the financial accounts. CIT (A) further noted that the loans and advances had been given on account of the "Commercial Expediency" and no notional interest could be charged on such advances given for the purposes of business. Addition u/s 14A read with Rule 8D - suo moto disallowance made by assessee - ITAT observed that the Appellant had own funds which were far more than the investments and the plain reading of Sections 14A(2) and 14A(3) showed that when the Assessee offered disallowance under Section 14A of the Act, the provisions of Section 14A(2) read with Rule 8D could not be invoked unless the Assessing Officer was dissatisfied about the correctness of disallowance so offered. Both the appellate authorities below, relying on the decision of this Court in Maxopp Investment Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT] affirmed by Supreme Court in Maxopp Investment Ltd. v. Commissioner of Income-tax [2018 (3) TMI 805 - SUPREME COURT] deleted the addition made by the Assessing Officer under Section 14A of the Act observing that the Assessee had made a suo moto disallowance . Revenue appeal dismissed.
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