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2015 (12) TMI 1741 - AT - Income TaxDisallowance u/s 14A - Held that:- As noted from the facts brought before us that loans were taken by the assessee in earlier years. It is informed that no disallowance was made in earlier years on account of interest. Thus, impliedly, it can be said that no borrowed funds have been used in acquiring tax-free investment during the year. It is further noted that onus is upon the AO to prove that interest bearing funds were used for earning tax free income. Reliance is placed in this regard on the judgment of Hon’ble Punjab & Haryana High Court in the cases of CIT vs. Hero Cycles Ltd.[2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT], CIT vs. Winsome Textiles [2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] and CIT vs. Deepak Mittal [2013 (9) TMI 764 - PUNJAB & HARYANA HIGH Court]. Thus, viewed from any angle, the disallowance made by the AO was contrary to law and facts and therefore, the same has been rightly deleted by the Ld. CIT(A). Treating the income earned by the assessee from hoarding, mobile tower, display of advertising hoarding from subletting hotel premises - ‘income from house property’ or ‘income from other sources’ - Held that:- It is noted that the assessee has credited income from hotel business in its profit and loss account and debited expenses with respect to running of hotel and maintenance of the hotel premises in the P & L account. In these facts, the income received from exploitation from the hotel premises in any manner should also be credited in the profit and loss account. The assessee has already debited the expenses with respect to maintenance of the hotel premises. It is clarified that the assessee is also eligible to claim of expenses incurred for earning the aforesaid income.Thus, keeping in view the peculiar facts of this case for the year under consideration, the aforesaid income is directed to be treated as ‘income from business’. Disallowance u/s 40(a)(ia) - Held that:- As in the case of Rajiv Kumar Agrawal vs. ACIT [2014 (6) TMI 79 - ITAT AGRA] wherein it has been held that the second proviso to section 40(a)(ia) is declaratory and curative in nature, and should be given retrospective effect from the 1st April 2005. Thus, the position of law on this issue is now very clear. The other grievance of the Revenue is that evidences with regard to payment of taxes by the payees were not referred by the Ld. CIT(A) to the AO and thus, additional evidences were admitted by him in violation of Rule 46A. Thus, accepting the grievance of the Revenue in this regard, we send this issue back to the file of the AO for the limited purpose of verification of the facts with regard inclusion of income by the payees in their respective returns, and if the claim of the assessee in this regard is found to be factually correct, in that case no disallowance shall be made with regard to impugned payment of interest. Thus, this ground is allowed for statistical purposes.
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