Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (5) TMI 612 - HC - Income TaxDisallowance u/s 14A - ITAT allowed the claim - Held that:- There is substantial strength in the argument of assessee that out of the total investment of ₹ 109,32,88,180/-, major part was of shares in M/s. Magma Shrachi Finance Ltd. It is not disputed by the Revenue that these shares came to the assessee by virtue of a merger of one M/s. Stratus Developers (P) Ltd. with assessee. Such shares were thus not a direct acquisition done by assessee. Therefore, for making such investment and for holding such shares, it cannot be said that assessee would have incurred substantial expenditure. Assessee had not purchased or sold any of the shares of M/s. Magma Shrachi Finance Ltd. during the relevant previous year. We also find that Assessing Officer had not made any disallownace for interest. While applying Rule 8D(2) Assessing Officer had only made a disallowance under Clause [iii] thereof. Thus, he has accepted that no loan funds were used by assessee for the purpose of making the investments. Investments made by assessee during the relevant previous year was ₹ 1,96,69,793/- only. When viewed from this angle, we cannot say that the suo motu disallowance of ₹ 88,390/- made by assessee was incorrect or unbelievable - Decided in favour of assessee Disallowance of interest as non allowable expenditure - ITAT deleted the addition - Held that:- claim of interest on capital borrowed for the purpose of business can be disallowed only where the borrowing is for acquisition of an asset intended for extension of an existing business. In the case of the assessee here, we cannot say that the loan raised by assessee from ICICI Bank, which was utilized for paying advances for acquiring built up spaces, was in relation to extension of an existing business. Business of assessee was real estate and the assessee’s intention was to trade in constructed spaces. It never contemplated to use such constructed spaces for its own use. As long as the payment of advance was not for acquisition of fixed assets but only for acquiring stock-in-trade, assessee was entitled for deduction under Section 36(1)[iii] of the Act. - Decided in favour of assessee Disallowance of processing fees for loan - ITAT deleted the addition - Held that:- . Since loan raised from State Bank of India was used by the assessee for financing its stock, we are of the opinion that processing charges incurred for raising such loan was an allowable expenditure - Decided in favour of assessee
|