Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2646 - AT - Income TaxAddition u/s 14A - Held that:- From the perusal of Profit & Loss Account, it appears that no interest to bank or otherwise was paid in the earlier year, which goes to prove that the investments having been made in earlier year were made out of owned funds of the assessee and no borrowed funds were used for such investments. As regards interest of ₹ 66,91,327/- being paid this year, it is seen from the perusal of Annexure-3 of the balance sheet that ICICI working capital limit amounting to ₹ 49,99,98,560/- was raised during the year, which was not there in the preceding year, which further goes to prove that the interest paid during the year does not have any nexus to the investments and thus not to the tax-free income from these investments having earned. Therefore, any disallowance of interest expenditure being related to earning tax-free income cannot be made in this case. There is no need to go further on the issue of disallowance of interest part of the expenses related to earning tax-free income, as from the explanation and evidences brought on record by the assessee, as stated hereinabove, it is proved beyond doubt that the interest expenditure incurred by the assessee during the year does not have any nexus to earning of tax-free income. As regards the administrative expenses part of the disallowance under section 14A the assessee has all along been contending before the lower authorities that there was no need for it to incur any such expenditure and it has in fact incurred no such expenditure, the Assessing Officer straightaway, without commenting on such claim of the assessee, embarked upon computation under Rule 8D of the Income Tax Rules for the purpose of section 14A of the Act. She has nowhere recorded her satisfaction that how such claim of the assessee is not acceptable to her. From the perusal of the whole order of the Assessing Officer, no such satisfaction can be inferred directly or indirectly. In such circumstances, the recording of satisfaction of the Assessing Officer is a must, as held in the case of CIT Vs. Deepak Mittal. (2013 (9) TMI 764 - PUNJAB & HARYANA HIGH COURT ). Therefore, in the circumstances, no disallowance on account of expenses under section 14A of the Act can be made. - Decided in favour of assessee.
|