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 1007 - ITAT HYDERABADRevision u/s 263 - non-disallowance of an alleged amount under the provisions of Section 14A - Held that:- Issue of disallowance u/s. 36(1)(iii) and also 14A was examined by the AO in detail in the scrutiny assessment. As briefly stated above, AO disallowed part of the interest claim on the reason that assessee has invested funds in the mutual funds diverting from business purposes. He quantified the disallowance at ₹ 7,85,32,019/- based on the period of investment during the year. Therefore, as far as quantification of interest on diversion of funds for investment in mutual funds are concerned, we cannot subscribe to the Ld. Pr.CIT's opinion of quantifying the amount on a formula under Rule 8D(2)(ii). This issue was already examined and adjudicated by the ITAT in earlier assessment year AY 2009-10 wherein, ITAT was of the opinion (in para 6) that, 'However, for making any disallowance it has to be established on record how much borrowed fund has been invested in the mutual funds and for what period. AO certainly cannot charge interest for the entire year when the investment is made by assessee for a month or few days. Further, the link is required to be established between the actual amount of investment made out of borrowed funds'. In view of the above, the Pr.CIT's action in concluding that amount to be disallowed under Rule 8D(2)(ii) at ₹ 13,40,73,873/- is without any basis. To that extent, the basic presumption for invoking the jurisdiction being wrong, we cannot uphold the action of Pr.CIT in coming to the conclusion that AO's order is erroneous. Apart from the above, it is also to be seen that the very issue of disallowance of interest on borrowed funds, whether u/s. 36(1)(iii) or under Rule 8D(2)(ii) has been examined by the AO and is subject matter of appeal before the CIT(A). Further, CIT(A)'s order deleting the disallowance per se was prior to the proceedings u/s. 263. As stated, Ld.CIT(A) passed the order as early as on 24-10-2014, whereas Pr.CIT initiated the proceedings by the show cause letter dt. 03-03-2015. Thus, the issue having been adjudicated by the CIT(A) both u/s. 36(1)(iii) as well as u/s. 14A r.w. Rule 8D, the Pr.CIT can no longer exercise jurisdiction to consider the same issue u/s. 263 - Decided in favour of assessee.
|