TMI Blog2015 (3) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interestfree funds were sufficient to meet the investments and therefore, interest was deductible. Further CIT(A) has also given a finding about availability of sufficient interest free funds. We further find that Revenue has not brought any material on record to controvert the findings of ld. CIT(A). In view of these facts, we find no reason to interfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed. - Decided in favour of assessee. - I.T.A. No. 206 /AHD/2013 - - - Dated:- 5-8-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Smt. Sonia Kumar, Sr. D.R. For the Respondent : Shri M.J. Shah, A.R. ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal is filed by the Revenue against the order of CIT(A)-VIII, Ahmedabad dated 10.10.2012 for A.Y. 2009-10. 2. The facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the facts of the case. The AO has disallowed an amount of ₹ 1,03,21,009/- as bad debts as AO has observed that if there is any bad debt of the joint venture KECL Jv Ellora on account of short recovery from the principal MSRDC, the same is to be written off in the account books of the said joint venture only and its partners have nothing to do with the said bad debt as far as taxability of their own income is concerned. The appellant has submitted that the Assessing Officer completely overlooked the fact that the assessee company is a sub-contractor and the invoices which are raised in the name of KECL J.V. Ellora, who in turn, raises the same amount of bill to MSRDC. The said amount is not received by the assessee company though it had already offered the full amount for tax and the Department has been pleased to tax the assessee company on the full amount offered by it as its accrued income. The assessee submits that it has fulfilled all the requirements u/s.36(1)(vii) for claiming the said amount of ₹ 1,03,21,009/- as bad debt and it cannot be disallowed on the basis that the contract is between KECL J.V. Ellora and MSRDC, overlooking the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 323 ITR 397 allowed the claim of Assessee. Before us Revenue has not brought any material on record to controvert the findings of ld. CIT(A). We further find that the decision relied upon by ld. D.R. are distinguishable on facts and do not apply to the present case. In view of these facts we find no reason to interfere with the order of ld. CIT(A) Thus this ground of Revenue is dismissed. 2nd ground is with respect to deletion of addition u/s 14A of the Act. 7. During the course of assessment proceedings A.O noticed that Assessee had made investment in shares. He also noticed that Assessee was in receipt of exempt income and no separate account has been maintained in regard to exempt income. He also noticed that no details were furnished by the Assessee to demonstrate that Assessee has maintained separate accounts of interest bearing and non interest bearing funds utilized for investment. He was of the view that the funds once put in business gets intermingled and is not possible to keep the funds segregated and thus in the absence of any specific details of source of investment in shares, he was of the view that it could be inferred that Assessee has invested interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary the appellant has demonstrated before the AO regarding the flow of funds invested with the sister concern. In the earlier year the C.I.T.(Appeals) had decided the issue of spare funds being available with the assessee, in favour of the assessee. The above facts point that appellant has sufficient interest free funds to invest in the shares of the sister concern. Therefore, interest expenses are not attributable to the investments. Therefore, the appellant case does not call for addition u/s 14A r. w. Rule 8D(2)(ii) of the Act. Therefore, the addition made u/s 14A r. w. Rule 8D(2)(ii) of the Act of ₹ 25,45,870/- is deleted. However, considering the fact that administrative expenses etc. would have been incurred for the above investments in the share of the sister concerns. In view of the above, the addition made by the AO u/r 8D(2)(ii) of ₹ 3,57,430/- is confirmed . Following the same ratio of earlier year as the facts for this year are identical, the addition made u/s 14A r. w. Rule 8D(2)(ii) of the Act of ₹ 15,52,448/- is deleted. However, considering the fact that administrative expenses etc. would have been incurred for the above investments in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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