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2019 (7) TMI 701 - AT - Income TaxCondonation of delay - delay of 190 days - illness - HELD THAT:- Assessee filed an affidavit affirming therein that at the relevant point time he was ill and doctor advised him to take complete bed rest for 4 months, due to which, the delay occurred and hence, the delay may be condoned as there is no deliberate intention to file the appeal belatedly. As the assessee was prevented by sufficient reason, we condone the delay and admit the appeal for hearing and adjudication. Disallowance u/s 14A r.w.r. 8D - interest income received on the investment made out of the borrowed funds - interest expenditure allowed proportionately to the own funds - assessee has earned interest income, which was adjusted against the interest paid and the difference was declared as income from other sources - HELD THAT:- Considering the investment pattern adopted by the assessee during this year, it is clear that assessee has borrowed majority of the funds from lenders and made investment in M/s Pancharatna Metal Processing Ltd. It is clearly an investment activity, which is not earned any income during this year. Rule 8D can be applied only when there is mixed funds available with the assessee, which cannot be segregated, but, considering the financial pattern of the assessee, it is clear that interest expenditure incurred by the assessee is towards investment activities. Therefore, this expenditure can be set off against income from investments. Therefore, assessee cannot claim any expenditure, which is exempt from tax i.e. dividend income as well as share income from partnership firm. Therefore assessee is not eligible to claim portion of interest expenditure incurred towards investment activities, which has not earned any income. CIT(A) has allowed the interest expenditure proportionate to the borrowed funds and own funds. Therefore, we are inclined to accept the findings of the ld. CIT(A) and accordingly, interest expenditure is allowed proportionately to the own funds available with the assessee i.e. 22% and 78% of the interest expenditure is sustained. Accordingly, grounds raised by the assessee are dismissed. With regard to quantum of interest expenditure, the net expenditure to be considered not the total interest expenditure. - Decided against assessee.
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