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TMI Blog2012 (3) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 out of total disallowance of Rs. 15,94,830 made by the Assessing Officer under section 14A of the Income-tax Act, 1961 being the interest on borrowed capital invested to earn exempt income by holding that the disallowance was to be made on proportionate basis as net cash flow statement could be drawn in the case of the assessee to substantiate as to which part of the interest-bearing funds was utilised in which investments and the learned Commissioner of Income-tax (Appeals) admitted the additional ground without calling for the report of the Assessing Officer. 2. That the learned Commissioner of Income-tax (Appeals)-II has erred in directing the Assessing Officer to allow the credit of TDS of Rs. 1,94,387 which was in respect of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the year would stand reduced. In view of the same, the Assessing Officer dis allowed total interest claimed at Rs. 15,94,830. The Commissioner of Income-tax (Appeals) vide paragraph 4.1 from the details furnished during the appellate proceedings and which were also filed before the Assessing Officer, observed, that out of interest of Rs.15,94,830, interest of Rs. 3,92,775 was on the amounts invested in the firm M/s. Eastman Impex and whereas interest of Rs. 5,61,302 is on account of amounts invested in Janpath Estates P. Ltd. and Rs. 6,40,753 as amount invested in others. The Commissioner of Income-tax (Appeals) further observed in respect of the interest relatable to the amounts invested in the firm M/s. Eastman Impex that therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,80,974 and Rs. 6,40,753, totalling Rs. 9,21,727. The relief allowed to the assessee by the Commissioner of Income-tax (Appeals) was Rs.6,73,103. The Revenue is in appeal against the said allowance of Rs. 6,73,103. The learned authorised representative for the assessee fairly pointed out that no appeal has been filed by the assessee against the disallowance upheld by the Commissioner of Income-tax (Appeals). The learned author ised representative for the assessee drew our attention to the details filed before the Assessing Officer and the Commissioner of Income-tax (Appeals). The learned Departmental representative for the Revenue stressed that the assessee had raised new plea before the Commissioner of Income-tax (Appeals) and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea of the learned Depart mental representative for the Revenue that the learned authorised representative for the assessee had raised new plea before the Commissioner of Income-tax (Appeals), which was not before the Assessing Officer. The break-up of the interest expenses of Rs. 15,94,830 is as under : Total interest expenses on borrowed funds invested in Eastman Impex Rs. 3,92,775 Total interest expenses on borrowed funds invested in Janpath Estates Pvt. Ltd. Rs. 5,61,302 Total interest expenses on borrowed funds invested in others Rs. 6,40,753 Total Rs. 15,94,830 It may be pointed out that interest expenses of Rs. 6,40,753 on borrowed funds advanced to parties, from whom no interest is received has been disallowed by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raph 4.2 of the appellate order has held that the entire interest bearing borrowed capital during the relevant period has been invested either in the firm M/s. Eastman Impex, in M/s. Janpath Estates P. Ltd. or other specific investments and no borrowed funds have been utilised for giving gifts to his relatives or the interest-free advances to employees of the firm M/s. Eastman Impex and hence no disallowance out of interest expenditure. The learned Departmental representative has not controverted the said findings of the Commissioner of Income-tax (Appeals) and in the absence of any evidence to the contrary, we uphold the findings of the Commissioner of Income-tax (Appeals). Thus grounds of appeal raised by the Revenue are dismissed. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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