Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (2) TMI 893 - AT - Income TaxRestriction u/s 14A of the Act Held that:- Where the assessee had own interest free funds many times over the investment made in Indian subsidiaries and further there was no direct nexus between interest bearing borrowed funds and such investment, no disallowance of interest expenditure could be made u/s 14A of the Act - where the Revenue failed to establish that the assessee had incurred any expenses for earning dividend income from amount borrowed, no addition could be made by invoking the provisions of Section 14A of the Act - The assessee had substantial interest free fund in the form of share capital and reserves - the AO has brought no material on record to show that any interest bearing borrowed funds were utilized by the assessee for making investment in shares in any of the years under consideration The decision in CIT Vs. Suzlon Energy Limited [2013 (7) TMI 697 - GUJARAT HIGH COURT] followed - the assessee has substantial interest free fund to meet his tax free investments yielding exempt income, it can be presumed that such investments were made from interest free funds and not loan funds - the order of the CIT(A) confirmed Decided against Revenue. Deletion of interest expenditure made u/s 36 of the Act Held that:- The decision in The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] followed - a global position of the availability of funds has to be examined and after sufficiency of non-interest bearing funds is established then only claim can be allowed and directed the AO to take this decision also in consideration - none of the lower authorities have found that on global examination of availability of interest free funds with the assessee was not sufficient for advancing interest free advance to the subsidiaries - the disallowance of interest again was not warranted thus, the disallowance of interest expenditure of both the years is set aside Decided against Revenue.
|