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2023 (1) TMI 70 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee had earned tax free dividend income during the year under consideration that needed to be apportioned - HELD THAT:- A perusal of the paper book reveals that the AO rejected the assessee company’s computation on the ground that the “assessee company had raised substantial amount of loans for investment in new ventures on which substantial amount of interest was paid”. Appellate Authorities below held that the investments were made out of assessee’s own funds and no borrowed funds were used to acquire investments. There was no interest expenditure which could be directly or indirectly attributed to the exempt income. Appellate Authorities upheld the suo moto disallowance made by the assessee after taking 20% of employee cost and 5% of the administrative cost. The Supreme Court in South India Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] has held that where the assessee has mixed funds (made up partly of interest free funds and partly of interest bearing funds) and the payment is made out of mixed fund, the investment must be considered to have been made out of the interest free fund. CIT(A) deleted the additions u/s 32 based on documents which were duly submitted to the AO as well as CIT(A). CIT (A) duly considered the documents on record and after the verification of the evidence, rightly deleted the addition. ITAT has even recorded that the details were submitted by the assessee during the assessment proceedings as per the reply/submissions dated 11th December, 2012 which is mentioned at page 1 of the assessment order itself. ITAT has also recorded that there was no new evidence brought on record by the assessee and in fact, the AO has totally ignored the reply dated 11th December, 2012, filed by the Assessee. Both the appellate authorities below have recorded concurrent findings of fact on both the issues.
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