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2015 (11) TMI 1305 - AT - Income TaxExemption of interest income under section 10 (23G) - whether CIT(A) ought to have held that if the exemption u/s 10(23G) of the Act was to be granted at net of interest income, then, the deduction for interest cost incurred was to be taken only in relation to earmarked borrowings utilized by the assessee for the purpose of granting loans to the enterprises, interest income whereof is exempt under section 10(23G) - Held that:- From the perusal of these working sheets, with the assistance of Ld counsel, it is seen that the own funds of the assessee are to the tune of ₹ 2512.49/- crores whereas total of all the amounts of loans in INR granted and investment in shares and securities out of mixed funds are to the tune of ₹ 236.02 crores only, which happens to be merely 9.39 % of the aggregate amount of the own funds of the Assessee. Under these circumstances, investments in shares and loans can be presumed to have been made out of own funds. This view has also been supported by another judgment of Hon'ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd.,[2014 (8) TMI 119 - BOMBAY HIGH COURT]. Thus, respectfully following above we hold that deduction for the interest cost incurred was to be taken only in relation to earmarked borrowings utilized by the assessee for the purpose of granting loans to the enterprises, interest income whereof is exempt u/s 10(23G) of the Act for the purpose of computing net interest income eligible for deduction u/s 10(23G) of the Act. Decided in favour of assessee. Exemption u/s 10(34) granted on the amount of gross dividend income - Held that:- assessee's own funds exceed the investment made and therefore no disallowance could have been made by the assessing officer in the given facts and circumstances of the case and therefore, respectfully following judgments of Hon'ble Tribunal in assessee's own case and jurisdictional High Court, we decide these grounds in favour of the assessee Taxability of penal interest and interest received during the year on non performing assets - selection of year of assessment - Held that:- It has been held by the Tribunal in assessee's own case for A.Y. 1999-2000 that income of the assessee earned upto 31.03.1999 is clearly exempt because of section 37 of Export-Import Bank of India Act, 1981. It was further held that omission of section 37 shall take place w.e.f. 01.04.1999. income of the assessee for, the period upto 31.03.1999, was exempt. Hon'ble Bench has also taken into consideration, the effect of provisions of section 43D, while holding that income of the assessee pertains to the period upto 31.03.1999, and even if it was received by the assessee subsequent to that date, would not be liable to tax. It is seen by us that there is no change in the facts in this year as compared to the facts of A.Ys. 2000-01, 2001-02 & 2002- 03. The Ld DR also could not point out anything wrong in submissions of the Ld Counsel or the material placed before us, to make a distinction from the facts of earlier years. Ld DR could not bring out anything to distinguish the orders of the Hon'ble Tribunal in Assessee's own case. Therefore, keeping in view all these facts and circumstances of the case, we decide these grounds in favour of the assessee and hold that penal interest and interest received during the year on non performing assets aggregating pertaining to F.Y. ended upto 31.03.1998/31.03.1999 is not taxable in the hands of the assessee in the year under consideration. - Decided in favour of assessee. Depreciation adopting WDV of assessment year 1999-00 - Held that:- Ld DR has not been able to point out anything wrong in the findings of Ld CIT(A). It has been informed that decision of the Ld. CIT(A) on this issue, in earlier years, has attained finality, as it remained uncontested by the Revenue. Thus, as a matter of consistency and harmony, no different view can be taken in this year. Keeping in view, these facts and circumstances of the case, we find no reason to intervene in the findings recorded by Ld CIT(A), as per law. Action of the AO in reducing the amount of WDV on notional basis for the amount of depreciation which was neither claimed nor actually allowed, should not have been deducted from the original cost of the assets. Therefore, we hold that the claim of the assessee was justified and Ld CIT(A) has rightly reversed the action of AO in rejecting this claim. - Decided in favour of assessee.
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