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2020 (8) TMI 69 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - HELD THAT:- For the process of making investment in one's own company, factually it is not possible to incur any expenditure unless the investments are made out of interest-bearing funds. When a company is formed it is obvious that all the expenditure related to its management, formation etc., are met out by the newly formed company itself out of its capital and not by the individual or the assessee company who promotes such subsidiary company. Revenue Authorities have not pointed out any expenditure incurred by the assessee company towards such investment other than the apprehension of interest expenditure incurred, from the statement of accounts and the books of accounts produced by the assessee before them. Since, the assessee company has claimed that it had invested in its 100% subsidiary company out of its non-interest bearing funds and has not incurred any expenditure towards such investment earning exempt income, We are of the considered view that these factual aspects must be examined by the Ld. AO and if the submission of the assessee company is found to be correct, then delete the addition made by invoking the provisions of section 14A r.w. Rule 8D of the Rules, and if found otherwise pass appropriate order in accordance with law and merit. Disallowance u/s 40(a)(ia) - assessee in default u/s. 201(1) - HELD THAT:- Assessee has not deducted tax at source for the payment made towards interest for ₹ 4,94,956/-. It is apparent that the provisions of section 40(a)(ia) of the Act will come into play. However, the second proviso to section 40(a)(ia) of the Act has come into effect from 1/4/2012 by virtue of Finance Act, 2012 wherein it is stated that “where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the taxes on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso”. On perusing the facts of the case, we find that the Ld. AO has not verified that the assessee is treated as an assessee in default U/s. 201 of the Act or otherwise. Hence, We hereby remit this issue also back to the file of the Ld. AO to decide the matter in accordance with the provisos of section 40(a)(ia) - Appeal of the assessee is allowed for statistical purposes
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