Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2499 - ITAT CHANDIGARHDisallowance u/s 14A - Held that:- From the perusal of the balance sheet and other documents filed in the Paper Book, we see that the total investment in shares and mutual funds as on 31.3.2007 was of ₹ 3,83,82,47,226/- while the investment as on 31.3.2008 is of ₹ 4,64,37,73,922. Therefore, there was an increase of around ₹ 80 crores in the investment during the year. While reserves and own funds of the assessee company as on 31.3.2008 are amounting to ₹ 6,24,18,74,854/-. From these figures, it is quite clear that own funds and reserves of the assessee are more than sufficient to cover the investment made during the year. In such a scenario, it can be very conveniently presumed that all the investment have been made out of own funds. Therefore, in such circumstances, no disallowance under section 14A of the Act on account of interest can be made. Though the learned counsel for the assessee has made alternative submissions on the computation made by the Assessing Officer under Rule 8D of the Income Tax Rules, in view of our finding that no disallowance on account of interest under section 14A an be made, we do not find any need to adjudicate these issues. - Decided against revenue. Administrative expenses disallowance under Rule 8D - Held that:- It is a fact on record that the assessee himself had disallowed an amount of ₹ 2,73,13,827/- on account of expenses incurred for earning tax free income and the Assessing Officer has nowhere recorded a finding as to why the disallowance so made by the assessee is not correct. Reliance is placed on the judgment of the Hon'ble Jurisdictional Punjab & Haryana High Court in the case of CIT Vs. Deepak Mittal (2013 (9) TMI 764 - PUNJAB & HARYANA HIGH COURT ) to the effect that in the absence of any satisfaction recorded by the Assessing Officer as to why the calculation made by the assessee is not correct, the disallowance made by him on account of administrative expenses under Rule 8D of the Income Tax Rules is not as per law. In view of the above disallowance made by the Assessing Officer under section 14 of the Act read Rule 8D of the Income Tax Rules is deleted. - Decided against revenue. Capitalization of interest - Held that:- The disallowance has been made by the Assessing Officer on account of proportionate interest for three months, on the premises that interest bearing funds are used for the purposes of acquisition of the paint shop. The reply filed by the assessee was that the funds have been used from the C/C account with ICICI bank, which is allowed by the bank for the purposes of business only. The C/C account is an interest bearing fund. Therefore, disallowance made by the Assessing Officer on this account is correct. As regards the contention of the assessee that there is no extension of the existing business, we do not find any infirmity in the observation made by the CIT (Appeals). It is clear from the record that a new asset has been purchased in the form of paint shop which was imported from Germany. This shop clearly adds to the business of the assessee. No evidence is there on record that this is in replacement of an existing assets. As regards the alternative contention of allowing depreciation on such capitalization, we see that the disallowance itself has been made after providing depreciation. - Decided against assessee.
|