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2021 (2) TMI 228 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee in the revised return of income has excluded 0.5% of average value of investments - HELD THAT:- Section 14A disallowance was rightly claimed by the assessee and the CIT(A) has properly made a partial allowance of the said claim. As per Section 14A read with Rule 8D(2), those investments which have actually yielded exempt income during the relevant year, shall alone be taken into consideration and thus was rightly excluded while determining average value of investments under Rule 8D(2). CIT(A) observed that the assessee claimed deduction on interest paid for taking IT equipment on Finance lease for period of 36 months. CIT(A) held that in view of decisions of ACB India Ltd. Vs. ACIT [2015 (4) TMI 224 - DELHI HIGH COURT] and CIT(A) vs. Holcim India [2014 (9) TMI 434 - DELHI HIGH COURT] claim of deduction under Rule 8D(2) (ii) was upheld. CIT(A) further observed that claim of deduction of ₹ 3,71,603/- u/s 37(1) on interest paid to HP Financial Services (India) Pvt. Ltd. for taking IT equipment on financial lease for period of 36 months being specific purpose borrowings as treated under Rule 14A read with Rule 8D(2)(ii). Thus, CIT(A) made total disallowance u/s 14A read with Rule 8D accordingly. Thus, Ground No. 1 of Revenue’s appeal is dismissed. Addition u/s 37 - expenses in connection with new line of business - AR submitted that from the books of accounts and the balance-sheet it was clearly mentioned that from October 2011, the assessee has sought the transaction related to borrowing to the subsidiary companies and, therefore, the expenditure was rightly claimed u/s 37(1) - HELD THAT:- Fact remains undisputed that out of total lease rental expense of ₹ 52,79,02,826/-which was incurred during the present assessment year was recovered by the assessee company from the subsidiary company amounting to ₹ 47,59,99,859/- and balance amount was incurred by the assessee towards rendering support service to subsidiaries companies - assessee company also incurred rental expenses towards providing leased accommodation to its employees and the copies of agreements entered between the landlord and the assessee company was examined by the CIT(A) which was totally overlooked by the Assessing Officer. As regards electricity and water expenses along with repair and maintenance expenditure, the same were also demonstrated by the assessee company with the details before the CIT(A) and the Assessing Officer that these are allowable expenses under Section 37(1) of the Act. The CIT(A) has given a detailed finding. Thus, there is no interference of the finding of the CIT(A). - Decided against revenue.
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