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2024 (1) TMI 798 - ITAT DELHIDisallowance of expenses made u/s 14A - AO made addition applying the computation mechanism provided in second and third limb of Rule 8D(2) of the Income Tax Rules - CIT(A) deleted the disallowance as there was no exempt income claimed by the assessee - HELD THAT:- This issue is no longer res integra in view of the decision of Era Infrastructure (India) Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] wherein it was held that no disallowance u/s 14A of the Act could be made when there is no exempt income. Further it was held that the amendment made by Finance Act, 2022 to section 14A by inserting a non-obstante clause and Explanation will take effect from 1-4-2022 and cannot be presumed to have retrospective effect. Hence the entire arguments advanced by the ld. DR before us had already been addressed in this decision by the Hon’ble Jurisdictional High Court. Hence we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee in this regard. Accordingly, the ground raised by the revenue in this regard is dismissed. Disallowance of interest u/s 36(1)(iii) - AO observed that the assessee had given certain interest free advances on one hand and had been paying interest on its borrowings on the other hand and concluded that the borrowed funds were diverted for non-business purposes - CIT(A) deleted addition - HELD THAT:- We find that the CIT(A) on going through the complete details of loans and advances given by the assessee had come to the conscious conclusion that only a sum of Rs 10,59,07,288/- had been advanced for non-business purposes. Hence it could be reasonably inferred that impliedly the ld. CIT(A) had accepted to the fact that the remaining advances were indeed given by the assessee for the purpose of its business as a measure of commercial expediency only. We find that the revenue was not able to bring on record any contrary evidences to the same before us. Once it is proved that the advances were given as a measure of commercial expediency and given in the ordinary course of business, there is no question of disallowance of interest u/s 36(1)(iii) - Reliance in this regard is placed on the decision of Hon’ble Supreme Court in the case of S A Builders Ltd correctly [2006 (12) TMI 82 - SUPREME COURT] Decided against revenue.
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