TMI Blog2014 (7) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of balance interest and administrative expenses – Held that:- There is no mention of Special Purpose Vehicle in the assessment order nor the AO has given any findings on the net worth vis-à- vis investments of the assessee- the fact relating to the Special Purpose Vehicle was not before the AO, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - ITA No.5746/Mum/2012 & ITA No.5162/Mum/2012 - - - Dated:- 23-7-2014 - N K Billaiya And S T M Pavalan, JJ. For the Appellant : Shri Dilip V Lakhani For the Respondent : Shri Sanjeev Jain ORDER :- PER : N K Billaiya These cross appeals by the assessee and the Revenue are directed against the very same order of the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income was earned during the previous year relevant to A.Y.2008-09 no disallowance should be made u/s l4A and the interest expenditure amounting to ₹ 1.83 crores should be excluded from computing section l4A disallowance r.w. Rule 8D. 5.On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (A) has erred in confirming the disallowance of the administrative expenses of ₹ 1,77,63,830/-. The appellant prays that the conclusion reached by Learned Commissioner is erroneous and the said addition may be deleted. 6. On the facts and circumstances of the case the Learned Commissioner of Income Tax (A) has erred in rejecting the claim of the appellant that provisions of Section 14A(2) can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit u/s. 115JB of the Act. 4. The assessee is engaged in the business of surface transport business and trading in construction materials. The return for the year was filed on 29.9.2008 declaring total income at ₹ 129,07,66,413/-. The return was selected for scrutiny assessment and statutory notices were issued and served upon the assessee accordingly. 4.1. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has not earned any dividend income. However, the AO found that the assessee company holds investments which can earn exempt income. The assessee was asked to furnish details of expenses incurred in relation to the said exempt income. The assessee was also asked to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A), interest amounting to ₹ 16.22 crores for loan taken during the year under consideration was not required to be considered in the working of Rule 8D. According to the Ld. CIT(A), as per sub-clause (ii) of Rule 8D(2), only such expenditure is required to be considered which is not directly attributable to any particular income or receipt. The Ld. CIT(A) observed that the assessee has satisfactorily explained that the interest expenditure incurred during the year at ₹ 16.22 crores on the interest bearing funds borrowed during the year at ₹ 355 crores was directly attributable to specific activities/purposes and not for investment activities. Accordingly, the Ld. CIT(A) directed the AO to rework out the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g investments into the shares of the companies from which there is any possibilities of earning exempt income. The Ld. Counsel further submitted that since the amount borrowed during the year under consideration have not been utilized for the purpose of making investments, no disallowance of interest is required and the Ld. CIT(A) has rightly deleted the interest on the amount borrowed during the year under consideration. 9. Per contra, the Ld. Departmental Representative strongly supported the findings of the AO. 10. We have carefully perused the orders of the authorities below and the relevant material evidences brought before us in the form of Paper Book. We find that similar chart was submitted before the Ld. CIT(A) who has consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the assessee is such that it has to create Special Purpose Vehicle (SPV) for bidding successfully contracts given by National Highway Authority of India (NHAI). That being so, the Ld. Counsel strongly relied upon the decision of the Hon'ble Delhi High Court in the case of Oriental Structural Engineers Pvt. Ltd. in ITA No. 605/2012 placed at page-170 of the paper book containing decisions. 12. Per contra, the Ld. DR submitted that from the year under consideration Rule 8D is very much applicable and therefore there is no error in the findings of the AO. 13. Having heard the rival parties and after perusing the relevant details brought on record before us, in our considered view, the submissions made by the Ld. Counsel befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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