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2019 (1) TMI 300 - HC - Income TaxDisallowance of interests on debentures under Section 14A - interest expenditure was incurred on debentures issued in the financial year 2008-09 for the specific purpose of acquiring a company in the past and not for investing in mutual funds - directions issued by the DRP under Section 144C - Held that:- As perused the financials for the year ended 31.03.2012, more particularly, the note to financial statement for the year ended 31.03.2012 and in column 14, it deals with the current investments and we find that the investment is ₹ 45.27 Crores as against the investment of ₹ 38.24 Crores for the year ending 31.03.2011. This when compared to cash flow statement for the year ended 31.03.2007 would show that the investment has gone up by about ₹ 6.99 Crores. There is a factual error crept in in this regard. This in our considered view the proper authority to examine the contentions would be the Assessing Officer. The Court is fully conscious of the fact that the Assessing Officer is bound by the directions issued by the DRP under Section 144C of the Act. Nevertheless after the order passed by the DRP, the order has been tested before the Tribunal and it is before us and therefore we will be well within our jurisdiction to remand the matter to the Assessing to take an independent decision on the issues raised before us as pointed out in the preceding paragraphs. AO is required to decide as to whether it was correct for disallowing the interest on debenture under Section 14A when the assessee's case is that the interest expenditure was incurred on debenture issued in the financial year 2008-09 for the specific purpose of acquiring the Company in the past and not for investment in future. AO has to consider the submission of the assessee that the interest incurred by the assessee is specifically towards acquisition of shares in M/s.Glamouroom Taps Pvt. Ltd. which Company subsequently stood amalgamated with the assessee Company and such amalgamation has been approved by the Court with effect from 01.04.2008. AO shall take an independent decision in the matter without being any manner influenced with the observations made or the directions issued by the DRP on 31.08.2016 or by the Tribunal in its order dated 15.03.2017.
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