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2015 (11) TMI 1067 - AT - Income TaxDisallowance of interest u/s 36(1)(iii) - Held that:- During the year under consideration the assessee has furnished the details of utilization of loans. A perusal of the same shows that the assessee has used major portion of the loans for purchasing shares and giving interest bearing advances. With regard to the interest free advances of ₹ 1.90 crores given by the assessee, we notice that the assessee is having funds as explained. In view of the availability of interest free funds, the disallowance of interest made by the tax authorities is liable to deleted in view of the decision of Hon’ble Bombay High Court in the case of Reliance Utilities & infrastructre Ltd (2009 (1) TMI 4 - HIGH COURT BOMBAY). Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the disallowance made out interest expenditure. Disallowance made u/s 14A - Held that:- We notice that the Hon’ble Karnataka High Court has clearly held in the case of CCI Ltd (2012 (4) TMI 282 - KARNATAKA HIGH COURT) that the shares held as stock in trade should be excluded for the purpose of computing disallowance u/s 14A of the Act, since they can not be said to be the “investment” made for the purpose of earning dividend income. In the case of India Advantage Securities Ltd (2015 (6) TMI 140 - BOMBAY HIGH COURT), the Hon’ble Bombay High Court has noticed that the CIT(A) took into account the words of the Rule and found that the figures as derived by the Assessing officer cannot be taken into consideration. The Ld CIT(A) had observed that, one can at best disallow the expenses which are incurred for earning dividend income and for that purpose, the figures under the head “Investment” could be taken and some charges apportioned for the purpose of computing expenses. Thus the disallowance of interest in relation to dividend received from shares held as stock-in-trade cannot be made.
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