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2014 (2) TMI 227 - AT - Income TaxDisallowance of interest expenditure on unsecured loans – Held that:- The condition for s. 57(iii), as income would arise only where the borrowing is at a lower rate, and which fact is known in advance - not only is the interest on the loan/s given lower, but also the entire borrowed capital has not been utilized for interest bearing loans - The claim of interest to the extent of the income earned and confirming the disallowance for the balance t be allowed - the same would take care of both the differential in the interest rates as also the shortfall in the utilization of borrowed capital for interest bearing loans. The wide variation between the interest received as well as paid would itself show that the funds invested are much higher than that borrowed, for which the interest is paid, so that the difference would only be on account of investment of own capital - no hard and fast rule in this respect could be prescribed, and it is well open for the assessee to claim that all the borrowed funds have been invested for business purposes – Relying upon CIT vs. Reliance Utilities & Powers Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - the assessee would be liable for deduction of the entire amount of interest paid against the total interest income. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules – Held that:- The decision in High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. vs. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - There is no reason to interfere in the findings of CIT(A) - the onus to support its case with facts and figures would be on the assessee - The assessing authority, on his part, is bound by law by the directions of a higher appellate authority and, thus, no case for apprehension exists - the A.O.'s working for the year would be guided by the said rule - Decided partly in favour of Assessee.
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