9911796707
TMI Blog2013 (10) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The effective grounds of Revenue's appeals and assessee's C.Os. for both years are as under: Grounds of ITA No. 2596/Ahd/2012 (A.Y. 08-09) "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs.3,39,456/- on account of disallowance of interest on advance paid to M/s. Oasis Agritech Ltd., a subsidiary company without appreciating the fact that the assessee failed to prove the test of business expediency in respect of his claim. 2. 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 Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to show that no interest bearing fund was diverted to make investment. Grounds of C.O. No. 31/Ahd/2013 (A.Y. 09-10) "1. The AO as well as the CIT(A) erred in not appreciating the fact that no new exempted investment has been made during the year, therefore, amount of Rs.2,13,770/- disallowed by assessee is reasonable. It is to be so held now. 2. The learned AO as well as the ld. CIT(A) erred in invoking rule 8D without proving the expenditure of Rs.2,13,770/- disallowed by the assessee as unreasonable or without establishing direct nexus 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he advances were given without charging any interest and borrowing to that extent could not be held for business purposes u/s. 36(1)(iii) of the Act. He also relied upon various case laws and disallowed interest @ 11% at Rs. 3,39,456/-. 4. The assessee carried the matter before the CIT(A) who had deleted the addition by following CIT(A) order in A.Y. 07-08. 5. Now the Revenue is before us. Ld. Sr. D.R. vehemently relied upon the order of the A.O. and argued that the assessee had paid interest whereas no interest has been charged from the subsidiary company of loan given to it. Thus, A.O. was right to disallow the interest. At the outset, ld. Counsel for the assessee supported the order of the CIT(A) and requested to uphold the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the assessee had exempted income at Rs. 3,59,545/- of investment Rs.5.31 crore. The assessee borrowed fund to the extent of Rs.35.21 crore. The A.O. gave reasonable opportunity of being heard on computation of disallowance u/s. 14A r.w. Rule 8D, which was submitted by the assessee and considered by the A.O. A detailed discussion has been made in assessment order from page nos. 6 to 14 by the A.O. and held that the assessee had not been able to give any justification with evidence to show that no interest bearing fund was diverted to make investment. Further, the assessee must have incurred some expenditures like telephone, stationery, personal costs etc. for investment in mutual funds. He further relied in case of Cheminvest Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. were made for business purposes as the assessee purchased the majority shares of the company to control the management, in case of Alkapuri Arcade Premises Onus Co-op. Society Ltd. the investment is only Rs. 1500/- of 30 shares and in case of Pragati Sahakari Bank Ltd. Rs.50,000/-. The investment in shares of Nibbana Ltd. is Rs.3.02 crore which were purchased by the assessee company in the year 1997-98 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. The assessee also relied in case of Reliance Utilities which is squarely applicable in case of assessee as it has share capital reserves and surplus and operating profit during current year. Thus, after considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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