TMI Blog2013 (10) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... ose – Decided in favor of Assessee. - ITA.No.52/Hyd/2012 - - - Dated:- 4-10-2013 - Smt. P. Madhavi Devi And Shri B. Ramakotaiah,JJ. For the Petitioner : Shri K. C. Devadas For the Respondent : Shri R. Laxman ORDER Per Shri B. Ramakotaiah, A. M. This appeal by the assessee is directed against the Order of the CIT(A)-IV, Hyderabad dated 20-12-2011 for the assessment year 2008-2009. The assessee has raised 8 grounds on the issue of disallowance of interest of Rs.1,33,50,000/- purportedly under section 14A / 36(1)(iii) of the I.T. Act, 1961 by the Assessing Officer and confirmed by the CIT(A). 2. Briefly stated, the Assessing Officer noticed that assessee has earned mutual fund dividend income of Rs. 79,70,914/- and clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as short term loan to M/s. Aparna Constructions on interest and an amount of Rs. 5 crores was advanced to M/s. SNP Infrastructure between 7/8th March, 2007 again on interest. It was further submitted before the CIT(A) that assessee has invested in mutual funds from 27.07.2007 to 29.02.2008 and in between assessee also redeemed the investments on various dates in the month of August, September, October and December and finally the entire amount on 29.02.2008. Vide Annexure-4A to the written submissions, assessee has explained that the Assessing Officer opinion of investing Rs. 49 crores is not correct as the assessee had invested, at any point of time, maximum of Rs. 27.50 crores. With reference to the source of funds, the assessee enclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on corporate loans were to the tune of Rs.1,46,71,794/- which was offered under the head "Other Income" in the P L account. It was further submitted that by annexure 4A to 4D it was explained that the source of funds were internal accruals and no part of borrowed funds were utilised in investing in the mutual funds. Learned Counsel for the assessee, also countered the observations of the learned CIT(A) about change of explanation as alleged by the CIT(A), to submit that assessee was consistently explaining that the assessee has invested only own funds in the mutual funds and no part of the borrowed funds were utilised for investment. He relied on various case law in support of contentions. However, he fairly admitted that out of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures 4B to 4D, along with the account copies of various ledgers as well as the entire account copy of the accounts maintained with the banks, to justify the contentions that no borrowed funds were utilised. Learned CIT(A), did not examine any of these issues but went on to confirm the order of the Assessing Officer on various presumptions and allegations. As seen from the statement of facts as well as the details furnished in the paper book, the assessee all along contesting only one issue that it has its own business funds for investment in mutual fund and no part of borrowed funds were utilised/placed. Further, it also contended that the amount of investment was not Rs. 49 crores. It also explained that it has earned interest on the tempo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Rs. 21.50 crores was made between the period from 27.07.2007 to 02.08.2007. However, in annexure 4B, the assessee explained investment to the tune of Rs.17.24 crores out of which an amount of Rs. 10 crores was out of the current account of Vysya Bank, in which repayment of loan advanced to Aparna Constructions on 05.02.2007 was credited. Thus, there is a nexus between the borrowed fund to that of investment in mutual fund. It was the contention of the learned Counsel for the assessee, that only 50% of the above amount can be considered as the assessee has other funds. However, as seen from the schedule, assessee has explained only source of Rs. 17.24 crores whereas the initial investment was Rs. 21.50 crores. Balance of the funds on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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