TMI Blog2014 (2) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... s been found between interest bearing borrowings and exempt income. Besides, the loans in question which were earlier raised have been only repaid in this year. In view of these facts and circumstances we uphold the order of CIT(A). - Decided against Revenue. - ITA No. 4635/Del/2007 & 711/Del/2009 - - - Dated:- 27-2-2014 - SHRI R.P. TOLANI AND SHRI B.C. MEENA JJ. For The Appellant : Ms. Meenakshi Vohra Sr. DR For The Respondent : Shri Ajay Wadhwa Adv. ORDER PER R.P. TOLANI, J.M:: These are two revenue s appeals against separate orders of CIT(A1)- XVIII, New Delhi pertaining to A.Y. 2004-05 2005-06. Respective grounds raised are as under: A.Y. 2004-05: 1. The Ld. CIT(A) has erred in law and in facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit loss account, the company has shown income from commission/ service receipts, rent and dividend amounting to ₹ 27,490/-, ₹ 63,02,700/- and ₹ 5,33,000/- respectively. On perusal of return of income it is found that the assessee company has claimed benefit of house tax payment of ₹ 4,19,983/- (1/2 share of the property, 50% of ₹ 7,51,559/- and ₹ 88,407/-). The house tax receipts are issued by the Municipal Corporation Ludhiana in the name of M/s PSEB Finance Investment B-XX, 2841. This issue needs verification. Thus the house tax payment has been incorrectly claimed. Therefore, I have reason to believe that income which should have been chargeable to tax in the hands of M/s R.K. Moulding Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiries or for verification. Reliance was placed on Hon ble Punjab Haryana High Court judgment in the case of Vipin Khanna Vs. CIT 255 ITR 220 (P H); and the Hon ble Supreme Court judgment in the case of CIT Vs. Sun Engg. Works (P) Ltd. 107 CTR (SC) 209. Thus the reopening cannot be made for verification or roving inquiries. On merits the assessee s contentions were accepted on the ground that the interest bearing loans in question were taken much earlier and have been repaid during the year only. (iv) The interest bearing loans have not been utilized for the purposes of earning any share income or diverting it to exempt assets. Section 14A was not applicable in this year. CIT(A) thus deleted the addition on both the counts relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and borrowed funds to the total funds available and worked out the interest on this presumption that interest bearing funds might have also been used for such investment and loans to group companies. The Revenue failed to substantiate such contention by way of corroborative factual findings. It is further added that interestfree advances to subsidiary and other companies and investment in shares of group/subsidiary companies have been made out of interest free funds available with the assessee, has been accepted in the past and no disallowance was made out of interest expenses. The A.O. failed to establish nexus between the interest bearing funds and the investment on loans and advances to the group companies. Further, the A.O. has faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts were in the name of the originals owner and not the assessee. These reasons are for further verification and making roving inquiries. This is more clear from the fact that instead of restricting the disallowance to house property income assessing officer went also beyond the issue of property tax and disallowed the expenditure u/s 14A by a proposition which is applicable from A.Y. 2008-09. Thus it is explicitly clear that the reasons recorded do not have any live nexus with the issues. The claim of house property income was statutorily allowable and the reasons clearly show that the assessment is being reopened for verification which is not permissible. Ld. Counsel further contends that Hon ble Bombay High Court in the case of Godrej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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