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2019 (7) TMI 424 - AT - Income TaxDisallowance of interest u/s. 36(1)(iii) - no nexus between the interest payment and the investment made which is non-current investment - as per assessee even if there is to be any disallowance AO should have disallowed the same u/s. 14A and not u/s. 36(1)(iii) - HELD THAT:- Assessee in its balance sheet clearly indicates that it has made long term investment and has not demonstrated it has involved in any trading activities in shares, therefore, we decline to entertain the ground raised by the assessee. Expenditure claimed by the assessee is allowed to carry forward and can be adjusted out of income generated in the investment activities. Assessee has raised ground claiming the investment activities as business. We are in agreement with the assessee but can only be treated as income from activities which are exempt from tax. With regard to interest expenditure, it is not an expenditure from the activities which is taxable under Income-tax Act. Assessee has not declared any exempt income but made investment, which can only earn exempt income. In such situation, the expenditure relating to that part of activities cannot be claimed. Section 14A is applicable only when assessee declares exempt income. In the given case, there is a clear distinction in the activities itself. Hence, ground raised by the assessee is dismissed.
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