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2014 (4) TMI 1252 - ITAT AHMEDABADDisallowance u/s 14A r.w.r. 8D - whether such expenses were incurred? - nexus between the Investment and Borrowed Fund - HELD THAT:- As far as the year under consideration is concerned, it is worth to mention that the same cannot be decided independently on the prevailing facts. On careful perusal of the balance sheet, it appears that there was increase in other investments as well as in addition to the investment as noted by AO - in the absence of a clear nexus that the internal accruals have been utilized towards impugned investments, it is difficult to believe the assessee’s submission that the internal accruals or assessee’s own funds have been used towards investment. Rather, it appears that the interest bearing borrowings have been utilized because the assessee has not controverted the said allegation. We find no force in this ground of the assessee and the same is hereby dismissed. Nature of expenses - repairs for water proofing expenses and replacement of corrugated sheets - revenue or capital expenditure - HELD THAT:- Such type of expenditure pertaining to waterproofing and related to corrugated sheets were nothing but Revenue expenditure. It is wrong to presume that an independent asset was created by the assessee. We are of the view that such type of expenditure pertaining to waterproofing and related to corrugated sheets were nothing but Revenue expenditure. It is wrong to presume that an independent asset was created by the assessee. As relying on own case [2012 (4) TMI 765 - ITAT AHMEDABAD] we hereby reverse the findings of the authorities below and direct to allow the ground of appeal. Addition of interest on the investment made in the subsidiary company by invoking the provisions of section 36(1) (ii) - CIT-A deleted the addition - HELD THAT:- CIT(A) was not correct in holding that the investment made for purchase of shares of subsidiary company was a legitimate business activity of the assessee. According to us, the assessee is not in the business of finance, but a manufacturer of suitings. The Ld. CIT(A) has erred in holding that no disallowance was made in the past, therefore the Assessing Officer was not justified for the impugned disallowance in the year under consideration. Each year is an independent year. Facts of this year are to be seen independently and not to be governed by the decision taken in the past. AO had noted that the assessee was unable to prove that the own non-interest bearing funds have been utilized. Rather, it was held by the Assessing Officer that the assessee had paid heavy interest on the loans and borrowings. - Decided in favour of Revenue.
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