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2015 (4) TMI 628

Held that:- How does the interest paid or incurred by the assessee for earning exempt income become an expenditure allowable under section 36 of the Income Tax Act has not been explained by the learned Tribunal nor has Mr. Bagaria, learned Advocate for the assessee tried to make any improvement thereupon. Therefore, the finding given by the learned Tribunal is palpably wrong.

Admittedly, money was paid from the cash credit account. The position would have been different if the money had been paid from a current account or a savings account. Money was admittedly paid from the cash credit account and admittedly interest was also paid. Therefore, it was the obligation of the assessee to offer one to one explanation to establish that .....

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id by the assessee is deductible from the taxable income. The learned Tribunal has answered the question as follows: Considering the totality of the facts of the case and relying on the decisions cited above and considering the fact that the assessee s bank account is a mixed one and the assessee had sufficient funds of its own for the purpose of such investment and further considering the fact that the revenue has not brought on record any concrete evidence to prove the direct nexus between such borrowed funds being utilised for interest free investments, we are of the considered opinion that no part of such interest can be disallowed U/s. 14A read with Section 36(I)(iii) of the I.T.Act. Therefore, we set aside the order of the CIT(A) and .....

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(G.C. Gupta,J.) was a party in the case of CIT vs. RKBK Fiscal Services Pvt. Ltd., reported in (2013) 358 ITR 228 (Cal). What had happened in that case was that the Commissioner of Income Tax had exercised power under section 263 of the Income Tax Act and directed the Assessing Officer to pass a fresh order in accordance with law and to make appropriate disallowance under section 14A of the Act. The aforesaid order of the Commissioner of Income Tax was challenged before the learned Tribunal and the learned Tribunal set aside that order. Aggrieved by the order of the learned Tribunal, the revenue had come up before us. We had set aside the order passed by the learned Tribunal and upheld the order of the Commissioner of Income Tax passed unde .....

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inst the measure we propose to adopt. In the aforesaid case, the Commissioner of Income Tax in exercise of power under section 263 of the I.T. Act had directed the Assessing Officer to pass a fresh order after making appropriate disallowances under section 14A of the I.T. Act. We upheld that order. In the case now before us, we are passing the same order. Therefore, the judgment cited by Ms. Gutgutia really supports the view we are taking in this case, rather than militating against the same. In the result, the question formulated is answered in the negative and in favour of the revenue. The matter is remanded to the Assessing Officer who shall undertake the exercise indicated above. Considering that the matter is pretty old, the Assessing .....

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