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2018 (4) TMI 1707 - AT - Income TaxDisallowance of exemption u/s 10(23G) in respect of interest income earned by bank - HELD THAT:- As decided in assessee's own case [2013 (8) TMI 1107 - ITAT MUMBAI] there is no denial by the revenue authorities on the fact that the business of the assessee was of undivisible nature and assessee being the creation of the Parliament, is not a banking company and certainly not a company registered under the Companies Act, 1956. The department cannot take the view of proposing the cost of interest to be separately induced on the assessee, as the entire costs have already got embedded in the costs/total expenses. In any case, circular no. 780 dated 07.10.1999, as relied upon by the department cannot be made applicable on the assessee, as the assessee is a public financial institution and not a bank. Further, on going through with the details, as filed, the assessee has substantial own funds, which are employed by it in bonds/securities, and is thus covered by the case of CIT vs Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and other case, as cited and placed/mentioned in the synopsis. The assessee having the business of lending, was correct in claiming the deduction, which was claimed at net figures because, the interest has got embedded in the specific costs. Whether exemption of interest under section 10(23G) of the Act should be granted after deducting actual interest cost instead of notional interest cost ? - HELD THAT:- As decided in assessee's own case [2013 (8) TMI 1107 - ITAT MUMBAI] and HDFC BANK LTD. [2014 (8) TMI 119 - BOMBAY HIGH COURT] 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. Exemption under section 10(34) of the Act is to be granted at dividend income without deducting notional interest cost and estimated managerial expenses - HELD THAT:- As decided in own case [2015 (11) TMI 1305 - ITAT MUMBAI] it is seen by us 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 Disallowance of interest expenses on foreign currency loan under section 14A read with section 8D - HELD THAT:- We do not agree with the contention of the appellant that borrowings in Indian currency which are for a short period like under CBLO etc. should also be excluded simply because they are short-term borrowings which cannot be invested in long term investments. There is no bar to the appellant to invest money borrowed in the short term in assets which yield exempt income. In view of the above, the A.O. is directed to re-compute the disallowance u/s14A read with Rule 8D after excluding interest paid on foreign currency borrowings which are utilized for foreign currency lending abroad or out of India out of total interest paid by the appellant Depreciation u/s. 32 - sanctity in reducing the WDV of the assets by notional depreciation in the years in which the appellant was not assessable to income-tax - HELD THAT:- The assessee placed reliance on Tribunal’s order for AY 2005-06 [2015 (11) TMI 1305 - ITAT MUMBAI] , wherein the Tribunal has principally decided the issue that 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 asset. Taking a consistent stand and respectfully following the Tribunal’s order, we dismiss this issue of Revenue’s appeal.
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