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2015 (6) TMI 208 - ITAT AHMEDABAD

2015 (6) TMI 208 - ITAT AHMEDABAD - TMI - Disallowance u/s.14A - Held that:- As per Rule 8D of the IT Rules, 1962, the expenditure should be related to the exempt income which does not form part of the total income. Therefore, the AO should have verified whether the expenditure which he proposed to disallow related to the exempt income or not. In the case in hand, the assessee’s contention qua the interest expenditure is that it had sufficient interest-free funds and the investment has been made .....

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correct, he would delete the addition. - Decided in favour of assessee for statistical purposes

Excess depreciation on vehicle - CIT(A) deleted the addition - Held that:- The assessee is required to demonstrate that assessee-company has purchased vehicles during the year under consideration, the delivery of such vehicles has also been taken and such vehicles were put to use for business purposes. It would not be sufficient that the assessee obtained the registration certificate from t .....

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set aside. The issue of allowability of depreciation is restored to the file of AO for decision afresh. - Decided in favour of revenue for statistical purposes. - I.T.A.No.1667/Ahd/2011, I.T.A.No.1932/Ahd/2011 - Dated:- 13-5-2015 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Petitioner : Shri M.J. Shah, AR For the Respondent : Shri Nimesh Yadav, Sr.DR ORDER Per Shri Kul Bharat, Judicial Member : These cross-appeals by the Assessee and the Revenue are directed against the order of the Ld.Co .....

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e order passed by Learned CIT(Appeals)-VIII, Ahmedabad presents this appeal on following grounds. 2. The Learned CIT(Appeals)-VIII, Ahmedabad, has erred in making disallowance u/s.14A of ₹ 17,14,615/- being though explained. The addition made be deleted. 3. The appellant craves, leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before hearing of this appeal. 2.1. Briefly stated facts are that the case of the assessee was picked .....

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r considering the submissions of the assessee, restricted the disallowance made u/s.14A of the Act to ₹ 17,14,615/-. The ld.CIT(A) has also deleted the addition made on account of disallowance of depreciation on vehicle amounting to ₹ 3,28,175/-. Now, both the Assessee and the Revenue are in cross-appeals before us. 3. The only effective ground of assessee s appeal is against the confirmation of disallowance of ₹ 17,14,615/- by invoking the provisions of section 14A of the Act. .....

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; 24,87,210/-, (iii) interest to other of ₹ 1,66,241/-, (iv) interest on unsecured loan of ₹ 10,54,049/-, (v) interest on tem loan of ₹ 25,74,770/- and (vi) interest on vehicle loan of ₹ 5,34,167/-. The ld.counsel for the assessee submitted that the AO made disallowance of ₹ 23,87,072/- in respect of interest expenses u/s.14A of the Act under the assumption that the entire interest expenses appearing under the profit and loss account is related to investment and, ac .....

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balance sheet of the assessee, on the first day and the last day of the previous year. Therefore, administration expenses should have been disallowed on investment on which tax free income is earned. Rule 8D provides the applicable rate i.e. 0.5% on the average investment on which income earned in exempted. He submitted that out of ₹ 7,43,19,897/-, the AO has taken the average value of investment of ₹ 5,99,49,081/-. He submitted that the AO has wrongly included the investment of  .....

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o make investment in the securities. He placed reliance on the judgement(s) of Hon ble Jurisdictional High Court rendered in the case of CIT vs. Gujarat Narmada Valley Fertilizers Co.Ltd. reported at (2014) 42 taxmann.com 270 (Guj.) and of CIT vs. Amod Stamping (P) Ltd. reported at (2014) 45 taxmann.com 427 (Guj.). 3.2. On the contrary, ld.Sr.DR supported the orders of the authorities below. 4. We have heard the rival submissions, perused the material available on record and gone through the ord .....

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ed out of interest-free funds and the details submitted a chart at page No.6 of the paper-book. Another contention of the assessee is that the borrowed capital was utilized for the purpose of business and no borrowed fund was utilized for the purpose of investments from which the assessee has earned tax-free income. We find that the ld.CIT(A) has decided this issue in paras-6.5 to 6.7 of his order by observing as under:- 6.5. The submission of the Ld.A.R has considerable substance. The argument .....

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exclusively used for those specific purposes and there is no intermixing of funds which were used for acquisition of tax free securities and therefore this argument of Ld.A.R is not accepted. 6.6. In view of these facts the disallowance u/s.14A is recalculated as under:- 1. Interest : 88,56,044 x 3,82,57,000 = 15,23,330 22,24,11,253 2. Adm. Expenses 0.5% of 3,82,57000 = 1,91,285 6.7. As such addition of ₹ 17,14,615/- is confirmed. The appellant gets relief of ₹ 9,72,202/-. This groun .....

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enditure is not related to the exempt income and the investment wherefrom exempt income is earned is made out of interest-free fund needs verification. Therefore, the issue is restored to the file of AO for verifying the contention of the assessee that the interest expenditure is not related to exempt income and also investment out of which exempt income is earned was made out of interest-free fund. In case, the AO finds the contention of the assessee is correct, he would delete the addition. 5. .....

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n account of excess depreciation on vehicle without appreciating the fact that no evidences regarding the delivery of vehicle was submitted. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 6.1. First ground of Revenue s appeal is against the deletion of addition of ₹ 9 .....

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cond ground of Revenue s appeal is against the deletion of addition of ₹ 3,28,175/- made on account of excess depreciation on vehicle. The ld.Sr.DR submitted that the ld.CIT(A) was not justified in deleting the addition. He submitted that the first requirement for allowing the claim of depreciation, the assessee is required to demonstrate that the asset has been used for business purposes. He submitted that the assessee has not furnished any evidence in support of its contention that the v .....

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dences of registration of the State Transport Authority. He drew our attention towards page Nos.28 to 44 and also Certificate of Registration which was placed at page No.78 of the paper-book. The ld.counsel for the assessee argued at length to buttress his contention that the evidences so furnished are sufficient to prove that the vehicles were put to use for business purposes. 8. We have heard the rival submissions, perused the material available on record and gone through the orders of the aut .....

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