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2018 (4) TMI 869 - AT - Income TaxDisallowance u/s. 14A - Held that:- There is no finding that the assessee has earned any dividend income out of the concerned investments. Hence we hold that no disallowance u/s. 14A is permissible inasmuch as the assessee has not earned any exempt income on the concerned investment. MAT computation - disallowance u/s 14A for purpose of calculating the MAT u/s 115JB - Held that:- Since the assessee has not earned any exempt income, no disallowance is permissible u/s. 14A. No disallowance is required under normal provisions. In this view of the matter, no issue arises as to the disallowance of expenses u/. 115JB of the Act. Hence, this ground raised by the Revenue stands dismissed. Disallowance of interest u/s 36(l)(iii) - assessee had failed to prove during the course of assessment proceedings that the expenditure incurred on its subsidiary companies were from its surplus funds and not interest-bearing funds - Held that:- Identical issue was considered by this tribunal in assessee’s own case for assessment year 2009-10 that the assesses has incurred expenses on behalf of certain foreign subsidiaries and Indian subsidiary and shown them under the head Advances Recoverable. The assessee has not made any non business advance to the these companies, but these amount represents various debits in the nature of sale of spares, royalty receivable, service charges and the expenses incurred on their behalf such as traveling expenses, establishment expenses, financial guarantees, communications expenses, etc. The assessee does not have system of charging interest on such debits of expenses incurred on their behalf. Such advances did not attract any adjustment in Transfer Pricing order also. AO considered these debit balances as advances without interest and disallowed as interest u/s. 36(1)(iii). We do not find any merit for the disallowance so made by the A.O. - Decided in favour of assessee.
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