Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 507 - HC - Income TaxDisallowance of deduction u/s 80 IB - Tribunal upholding the decision of ld. CIT(A) reducing the disallowance of deduction u/s 80 IB on the issue of inter-unit investments - allocating interest expenditure of Ludhiana unit for the funds invested in Unit-I, Unit-II and Unit-III at Samba (J&K) based on ration between own capital and borrowed funds - Held that:- The CIT (Appeals) held that the assessee could only make a claim that such transfers were from self-generated funds which did not carry any interest. In this regard, it was further noted that as per the balance-sheet of the Ludhiana Unit, interest-free funds were available and that the funds had also been borrowed by the Ludhiana Unit from financial institutions on interest. The CIT (Appeals), accordingly, adopted the approach of finding out the ratio of the borrowed funds to the interest-free funds. It was found that as per the balance-sheet as on 31.03.2008, about 43 per cent of the capital constituted the interest-free reserves amounting to about ₹ 48.6768 crores, whereas, the borrowed funds constituted 57 per cent of the available funds aggregating to about ₹ 65.35 crores. He, accordingly, apportioned the amounts in respect of the three units depending on the amounts advanced by the Ludhiana Unit to each of them. The ITAT upheld this decision. The approach of the CIT (Appeals) and the ITAT cannot be said to be perverse, irrational or absurd. In fact, it is settled now that when there are interest-bearing funds and interest-free funds, the presumption is that an assessee would invest the amount yielding exempt income from the interest-free funds in the first instance. However, keeping all the facts and circumstances of the case in mind, the appellate authority decided to apportion the amount. - No substantial question of law.
|