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2017 (6) TMI 1278 - AT - Income TaxDisallowance of interest paid on delayed payment of TDS by invoking provision of Section 40(a)(ii) - as submitted that interest on TDS is allowable u/s 37 of the Act and is not hit by provision of S. 40(a)(ii) - Held that:- In this case, AO has disallowed interest paid on delayed payment of TDS by invoking provision of Section 40(a)(ii). So far as nature of payment is concerned, we are in agreement with learned AR that this interest is not on the personal tax but is attributable to the tax which, the assessee has deducted in respect of payment made to others. Disallowance u/s.40(a)(ii) is in respect of any rate or tax levied on profit or gains of any business or profession. However, said payment of interest on the delayed deposit of TDS does not fall under the category of payment enumerated u/s. 40(a)(ii). Accordingly, we do not find any justification for disallowance of such interest u/s.40(a)(ii). Disallowance of interest on another corporate deposit - Held that:- Interest on inter corporate deposit has been taxed by the AO on accrual basis which is correct as per the method of account followed by the assessee. In so far as assessee has offered this interest income in the A.Y.2011-12 on the plea that it was actually received in the A.Y. 2011-12, we direct the AO to reduce the same in the A.Y.2011-12, otherwise it will amount to double taxation of the same income. We direct accordingly. Disallowance of interest u/s. 36(i)(iii) - investment in the shares of subsidiary companies - Held that:- As per the audited balance sheet placed on record the assessee was having own funds of ₹ 600.02 crores as on 31.3.2009, whereas the investments were to the tune of ₹ 44.95 crores. There was also increase in capital reserve and surplus from ₹ 496.30 crores to ₹ 600 crores as on 31.3.2009. Thus, it is clear that the assessee was having sufficient own funds for investment in subsidiary which was also for the purpose of business. In view of the decision of SA Builders [2006 (12) TMI 82 - SUPREME COURT] since there was business expediency, investment in subsidiary is to be treated for the purpose of business. Accordingly, we do not find any justification for the disallowance of interest u/s. 36(1)(iii) of the Act. Disallowance u/s.14A read with Rule 8D - Held that:- We have considered rival contentions and found that no exempt income has been received by assessee during the year, hence no disallowance can be made u/s.14A in view of the decision of Bombay High Court in case of Ballarpur Industries Ltd. [2016 (10) TMI 1039 - BOMBAY HIGH COURT]. Addition made on the basis of mismatch of AIR information with the assessee’s books of accounts - Held that:- Nothing was placed before us by learned AR so as to persuade as to deviate from the findings and conclusion of the lower authorities, except the sum of ₹ 43,61,859/-. It appears that AO has inadvertently again added the same in assessee’s income. Since the amount has been deleted by DRP, we direct the AO to delete the sum of ₹ 43,61,859/-. Also contention of AR that balance amount has been offered to income in the A.Y.2010-11. In the interest of justice, we direct the AO to verify the income offered by the assessee in the A.Y.2010-11 and if the AO found that same income has been offered by the assessee in the A.Y.2010-11, the same should be excluded from the income of A.Y.2010-11. We direct accordingly.
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