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2024 (1) TMI 108 - AT - Income TaxDisallowance of interest expenses - sufficiency of own interest free funds - HELD THAT:- Assessee had interest free funds of Rs. 28,40,84,158/- against which it has advanced money to the extent of Rs. 26,15,95,884/- which is less than the interest free funds available with the assessee. A.O. has ignored the fact that the amount given as advances to Jaihind Projects Ltd. (JPL) in the nature of share investment and not in the nature of loans and advances. The assessee company has made strategic investment in JPL and as per the terms of lenders and the Corporate Debt Restructuring Package approved by the CDR cell which is governed by Reserve Bank of India, the assessee made further share investment. A.O. only considered that amount invested is to be disallowed. CIT(A) held that the funds given to JPL were as per the requirement of lending banks to infuse funds by promoters in the JPL which is business expediency to give the funds to JPL without interest. The above investments were converted into equity shares, in view of the same, the disallowance made u/s. 36(1)(iii) of the Act is not justified relying upon case of Gujarat Narmada Valley Fertilizers Co. Ltd. [2013 (5) TMI 759 - GUJARAT HIGH COURT] and S.A. Builders [2004 (5) TMI 50 - PUNJAB AND HARYANA HIGH COURT] However the Ld. CIT(A) has agreed with the remaining interest payments are for non-business purposes and thereby confirmed the disallowance made u/s. 36(1)(iii) - No infirmity in the above finding of the Ld. CIT(A) and the Revenue could not place any material on record in substantiating its ground before us. Therefore Ground No. 1 raised by the Revenue is hereby dismissed. Disallowance u/s 14A - As admitted fact that the assessee has not received any dividend income against the investments made by it. Therefore the Ld. CIT(A) following judgment in the case of CIT vs. Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] held that no disallowance u/s. 14A should be made and deleted the addition made by the A.O. It is further seen that the Ld. CIT(A) has followed Co-ordinate Bench of this Tribunal following Gujarat High Court Judgment of Corrtech Energy Pvt. Ltd. as well as other High Court judgments on this issue. We do not find any infirmity in the order passed by the Ld. CIT(A). Thus this Ground No. 2 raised by the Revenue is devoid of merits and the same is rejected.
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