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2013 (2) TMI 479 - HC - Income TaxApplicability of section 14A - Expenditure earning exempted income - Assessee company had invested Rs.1 crore from borrowed funds in equity of one M/s.Pankaj Extrusion Ltd. which was for the purpose of earning dividend income - Neither investment was made in the assessment year under consideration nor dividend received in the earlier year on such investment – Held that:- assessee had not received any dividend income in the previous year as also the fact that there was no investment made by the assessee during the year under consideration - Investment had been made prior to the impugned assessment year as well as the fact that interest bearing fund invested in the shares yielded no dividend income - As decided in Shree Shyamkamal Finance & Leasing Co. (P) Ltd v. ITO[2007 (10) TMI 446 - ITAT MUMBAI ], when interest bearing funds are invested in shares which yielded no dividend income, interest paid on such loan cannot be disallowed by invoking section 14A. Disallowance towards interest expenses applying the provisions of section 36(1)(iii) - Assessee had established a new unit where it invested a sum of Rs.11.09 lacs – Disallowed by CIT on the ground that the same should have been capitalized as per the amendment by the Finance Act 2003 holding that the said amendment was retrospective – Held that:- Interest on the borrowed fund was allowable deduction if the same was for the purpose of business. It is immaterial whether the assessee had utilized the money for capital or revenue purpose - Issue is covered by the decision in the case of Core Healthcare Ltd [2008 (2) TMI 8 - SUPREME COURT OF INDIA], wherein it was held that there is no difference between money borrowed to acquire capital asset or revenue asset - Amended provisions were applicable from the assessment year 2003-04 and they were not retrospective in operation.
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