TMI Blog2013 (10) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-98 from ICD loan, which was re-paid in A.Y. 03-04 from own funds, which has been accepted by the Department in preceding years – Expenses allowed – Section 14A, not applicable – Decided against the Revenue. - ITA Nos. 2596 & 2597/Ahd/2012, C.O. Nos. 30 & 31/Ahd/2013 - - - Dated:- 11-10-2013 - Shri D. K. Tyagi And Shri T. R. Meena,JJ. For the Petitioner : Shri P. L. Kureel, Sr. D. R. For the Respondent : Shri Sanjay R. Shah, A. R. ORDER Per Bench These are two appeals at the behest of the Revenue and two C.Os. of the assessee which have emanated from the orders of CIT(A)-III, Baroda, dated 29.08.2012 for both assessment years. The Revenue's appeals and Assessee's C.Os. were heard together and are being disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any expenditure incurred with exempt income. It is to be so held now. 3. The CIT(A) erred in confirming the disallowance u/s 14A to the extent investment in Excel Industries Ltd., Excel Crop Care Ltd., Transpek Industry Ltd. Agrocel Pesticides Ltd. Hunnarshaala, Enviro Infrastructure Co. Limited, Oasis Agritech Limited by invoking rule 8D of the I.T. rules. It be so held now." Grounds of ITA No. 2596/Ahd/2012 (A.Y. 09-10) "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in excluding the investments made in shares of M/s. Nibbana Ltd., Pragati Sahakari Bank, Alkapuri Arcade Premises Owners Co-op. Society Ltd. and Mumukshu Finance Services Ltd. without considering the fact that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3,49,14,629/- on its borrowed fund. The A.O. gave reasonable opportunity of being heard why not loan given to the subsidiary company should be treated diversion of income to that extent interest paid on loan given to it. The assessee submitted the explanation before the A.O. and claimed that it was given for business purpose and there was a commercial expediency. It relied upon the Hon'ble Supreme Court decision in case of S.A. Builders 288 ITR 1 (SC) and also on Reliance Utilities Power Ltd. 313 ITR 034 (Bom.). The A.O. was not satisfied by the assessee's submission as there was no direct nexus between expenditure incurred and loan advanced to the subsidy company and no business expediency was found to the A.O., there was no purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany was made in A.Y. 05-06 through its own capital. The advances were given in A.Y. 07-08 at Rs. 18.31 lacs and year under consideration fresh advances have been given out of own funds. He had drawn our attention on returned income which is Rs.2.29 crore. Besides this, the assessee also have reserves and surplus of Rs.25.21 crore as on 31st March, 2008. Keeping in view of the financial position of the assessee company, the advances given to the subsidiary are very minuscule amount. Therefore, we have considered view that CIT(A) was right in deleting the addition. 7. Ground no.2 in A.Y. 08-09 ground no.1 in A.Y. 09-10 are against excluding the investments made in shares of M/s. Nibbana Ltd., Pragati Sahakari Bank, Alkapuri Arcade Premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as per Rule 8D for making disallowances out of interest payment on various reasons mentioned in para 7.3.5, 7.3.6 7.3.7 at page nos. 35 36 of order of CIT(A). Investment in Mumukshu Finance Services Ltd. were made in A.Y. 1997-98 and 98-99 on ICD loan, which was re-paid in A.Y. 03-04, which has been accepted by the Revenue in A.Y. 03-04. The similar findings were given for A.Y. 09-10 9. Now, the Revenue is before us. Ld. Sr. D.R. vehemently relied upon the order of the A.O. At the outset, ld. Counsel for the assessee supported the order of the CIT(A). 10. We have heard rival contentions and perused the material on record in both the years. The dividend in case of Nibbana Ltd. is taxable being a foreign company, whereas investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in shares of the above companies at page no. 7 of the assessment order and calculated the disallowance under Rule 8D at Rs. 10,41,933/-, which was challenged before CIT(A) by assessee who has directed the A.O. to exclude only investment made in share of Nibbana Ltd., Alkapuri Arcade Premises Onus Co-op. Society Ltd., Pragati Sahakari Bank Ltd. and Mumukshu Finance Services Ltd. to calculate the disallowance under Rule 8D. 14. Now the assessee is before us in both years. Ld. Counsel for the appellant argued that the investment made in shares of these companies were out of ICD borrowings made in year 1997-98 and 98-99, which was repaid in the year 03-04. At the outset, ld. Sr. D.R. has drawn our attention on paper book submitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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