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2017 (11) TMI 1306 - AT - Income TaxDisallowance of interest paid on the funds which were advanced interest free - Held that:- It is an undisputed fact that the assessee had interest free funds available with it at the time when advances were given which ranged between ₹ 38.60 crores to ₹ 39.21 crores right from assessment year 2009-10 to 2011-12. On the other hand, amount advanced to the related parties/sister concerns was only ₹ 8.24 crores which far exceeded the interest free funds available with the assessee, as has been incorporated in the foregoing paragraphs. Once that is so, then the ratio laid down by the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT), as relied upon by the ld. Counsel for the assessee before us, gets squarely applicable. Accordingly, the order of the ld. CIT (A) in deleting the disallowance of interest is upheld - Decided in favour of assessee. Disallowance u/s 14A r.w.r. 8D - Held that:- From the perusal of the nature of expenditure and also total expenditure debited under the head “administrative expenses”, we find that first of all, total expenditure debited itself is ₹ 13 lakhs which also contains major expenditure on account of legal and professional expenses which has nothing to do with earning of dividend income. Similarly, registration & filing fees, etc. also cannot be said to be linked with earning of exempt income. Thus, having regard to the nature of accounts and expenditure debited, the amount disallowed by the assessee at ₹ 2,33,444/- is quite reasonable and fair and the Assessing Officer without finding any defect, either in the nature of account or in the claim of the assessee, has erroneously proceeded to arbitrarily compute the disallowance under rule 8D(2)(iii), especially when disallowance has been worked out far excess than the total expenditure debited. Accordingly, the order of the ld. CIT(A) deleting the said disallowance is upheld and the Revenue’s appeal is dismissed.- Decided in favour of assessee.
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