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Commissioner Of Income Tax, Kolkata-III Versus M/s Naresh Kumar & Co Pvt Ltd

2015 (4) TMI 628 - CALCUTTA HIGH COURT

Addition u/s 36(I)(iii) - whether introduction of provision of sec. 14A with retrospective effect, ITAT was justified in law and on the facts to delete addition coming under sec. 36(I)(iii) - 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. T .....

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t for the purpose of purchasing the shares. Since the assessee did not discharge his obligation, the Assessing Officer had refused to allow the deduction. Without applying mind, the learned Tribunal upheld the contention of the assessee. We, therefore, propose to remand the matter to the Assessing Officer. - Decided in favour of the revenue. - ITA No. 108 of 2007 - Dated:- 8-4-2015 - Girish Chandra Gupta And Arindam Sinha JJ. For the Appellant : Ms A.G. Gutgutia, Advocate, For the Respondent :Mr .....

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er sec. 36(I)(iii) of the Income Tax Act, 1961? It is not in dispute that a sum of ₹ 1.99 crore was invested by the assessee from the cash credit account for purchasing shares by transferring the aforesaid sum to the account of Aryan Energy Pvt. Ltd. It is also not in dispute that on account of transactions in the cash credit account a sum of ₹ 3,99,553/- was debited towards interest. Question arose whether the interest incurred or paid by the assessee is deductible from the taxable .....

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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 direct the AO to delete the addition. 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 .....

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it account and admittedly interest was also paid. Therefore, it was the obligation of the assessee to offer one to one explanation to establish that the money borrowed from United Bank of India was not spent for the purpose of purchasing the shares. Since the assessee did not discharge his obligation, the Assessing Officer had refused to allow the deduction. Without applying mind, the learned Tribunal upheld the contention of the assessee. We, therefore, propose to remand the matter to the Asses .....

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sh 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 under Section 263 of the Income Tax Act. Ms. Gutgutia .....

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