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2019 (6) TMI 697 - AT - Income TaxDisallowance of interest made u/s 14A r.w.s. 36 - HELD THAT:- Regarding the advances received from the sale of agricultural land amounting to ₹ 15.50 crores and advances received against sale of godown amounting to ₹ 5 crores, the same was rejected by the AO in the absence of specific written agreement. AO did not make any addition treating the advances as bogus. AO did not suspect or disbelieve the genuineness of the receipt of the money to the extent of ₹ 20.50 crores and the AO did not give any finding to hold that the sum of ₹ 20.50 crores claimed by the assessee bears the interest. Therefore, there is no reason to disbelieve the availability of own funds. Accordingly, there is no case of disallowance of interest u/s 36(1)(iii) for diversion of funds towards business purposes. The second line of argument of the assessee was that there was no exempt income received by the assessee in the impugned assessment year, hence, there is no case for disallowance of expenditure relatable to section 14A. Now this issue is settled and this Tribunal in the case of ACN Infotech(India) Pvt. Ltd., Visakhapatnam [2018 (12) TMI 58 - ITAT VISAKHAPATNAM] has held that in the absence of exempt income, there is no case for disallowance u/s 14A In the instant case, the assessee did not earn any dividend income and this fact was not disputed by the assessee. Tribunal in the case law cited supra has held that in the absence of dividend income, there is no case for disallowance of interest u/s 14A and the department did not bring any other decision of Hon’ble jurisdictional High Court or Hon’ble Apex Court to support the case of Revenue. Therefore, respectfully following the view taken by this Tribunal, we hold that there is no case for disallowance u/s 14A. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee.
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