TMI Blog2009 (8) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... - 504 of 2008 - - - Dated:- 25-8-2009 - ADARSH KUMAR GOEL and MRS. DAYA CHAUDHARY JJ. Ms. Urvashi Dhugga for the appellant. Ms. Radhika Suri for the respondent. JUDGMENT The judgment of the court was delivered by 1. ADARSH KUMAR GOEL J.- The Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench-B, in I. T. A. No. 613/Chandi/2007, dated November 26, 2007, for the assessment year 2004-05, proposing to raise following substantial question of law : "Whether, in the facts and circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal was justified in holding that the order of the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given details or expenses which were not vouched. Considering the facts mentioned above, the impugned addition is held to be arbitrary, whimsical and capricious, hence it is deleted." 4. The above finding has been affirmed by the Tribunal in following terms : "20. We have given our careful consideration to the rival contentions. In this case, the Assessing Officer has presumed that the investment in shares had been made by the assessee out of borrowed funds. He has accordingly estimated the interest payable in respect of such borrowed funds to make a disallowance under section 14A. This finding has been disputed by the assessee as, according to it, no borrowed funds have been utilised for the purpose of acquisition of shares. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares of M/s.Winsome Yarns Limited , disallowance under section 14A shall have to be calculated even when investment has been made in the course of business of the assessee and the assessee qualifies for deduction under section 36(1)(iii). So, however, section 14A provides that no deduction shall be allowed in respect of expenditure incurred by the assessee in relating to income which does not form part of the total income under the Act. So, it is, therefore, necessary to find out if any expenditure was incurred by the assessee for making investment in the shares of Winsome Yams Limited. During the course of assessment proceedings the assessee had furnished written submission in which it was claimed, vide paragraph 5 of the letter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own funds, the assessee had taken loans on which interest was paid and all the money available with the assessee was in common kitty as held by this court in CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 and, therefore, disallowance under section 14A was justified. 7. We do not find any merit in this submission. The judgment of this court in Abhishek Industries Ltd. [2006] 286 ITR 1 was on the issue of allow-ability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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