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2015 (6) TMI 646 - ITAT BANGALORE

2015 (6) TMI 646 - ITAT BANGALORE - TMI - Revision u/s 263 - interest expenditure claimed on a loan raised from State Bank of India was not allowable since the loan was intended for starting a new amusement park at Mumbai and assessee had dropped the plan - Held that:- In so far as the first issue viz., interest claimed on loan from SBI, used for acquiring the land in question was concerned, Ld. AR has admitted that the issue required a look by the AO, since it was not verified by him at the sta .....

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d as prejudicial to the interests of Revenue. As assessee did not have any exempt income. That a disallowance u/s.14A of the Act, can be made only if there is a claim of exempt income - Decided in favour of assessee. - I.T.A No.722/Bang/2013 - Dated:- 11-6-2015 - Shri. N. V. Vasudevan And Shri. Abraham P. George,JJ. For the Petitioner : Shri. Cherian Baby, CA For the Respondent : Shri. Farhat Hussain Qureshi, CIT ORDER Per Abraham P. George, Accountant Member : In this appeal filed by assessee .....

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hat a part of such claim were on computer peripherals. 03. Thereafter on 28.03.2013, Notice u/s.263 of the Act was issued by the CIT citing two reasons. First was that interest expenditure of ₹ 73,12,500/- claimed on a loan of ₹ 6.5 crores raised from State Bank of India was not allowable since the loan was intended for starting a new amusement park at Mumbai and assessee had dropped the plan. The second reason cited by the CIT was that assessee had made an investment of ₹ 4 cr .....

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nditure. Alternatively it was submitted by the assessee that if it was not considered as revenue expenditure, it should be allowed to be capitalised along with the cost of acquisition of the asset. Vis-à-vis, application of Section 14A of the Act, on investments made in Wonderla Holiday (P) Ltd, submission of the assessee was that no dividend what so ever was received from the said company during the relevant previous year. 05. However, CIT was not impressed in the above reply. According .....

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ive and other expenditure relating to tax free investments. As per the CIT, the AO had failed to take into consideration these issues and therefore, he considered the assessment order to be erroneous insofar as it was prejudicial to the interests of Revenue. 06. Now before us, Ld. AR submitted that in so far as the issue, viz., interest on loan from SBI was concerned, he was not pressing the relevant grounds. However, in so far as the disallowance contemplated u/s.14A of the Act, Ld.AR submitted .....

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admitted that the issue required a look by the AO, since it was not verified by him at the stage of the assessment proceedings. Hence, in so far as this particular claim of the assessee is concerned, we cannot find any fault in the order of the CIT. However, vis-a-vis the second issue, viz., disallowance u/s.14A of the Act, assessee had pointed out before the CIT that it did not have any exempt income. That a disallowance u/s.14A of the Act, can be made only if there is a claim of exempt income, .....

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disallowance of ₹ 2,03,752/- u/s.14A ignoring the fact that there is difference of opinion of various courts on the view taken by the ITAT that in the absence of tax free income, no disallowance u/s.14A is permissible. 10. The High Court while answering the above question held as under:- As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by th .....

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t for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of ₹ 2,03,752/- made by the Assessing Officer was in order. 11. The Gujarat High Court in the case of CIT Vs. Corrtech Energy Pvt. Ltd.(Tax Appeal 239 0f 2014 dated 24-3-2014) held as under:- We have given our thoughtful consideration to the facts and the decision relied upon by the Id AR. The Hon'ble P .....

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Industries Ltd. (supra), we hereby allow this ground and direct the AO to delete the addition. Therefore, ground Nos 1 to 1.2 raised by the assessee in its cross objection are allowed." 12. The Division Bench of Hon Punjab and Haryana High Court in case of Commissioner of Income Tax v Winsome Textile Industries Ltd reported in (2009) 319 ITR 204 had observed as under: "7. We do not find any merit in this submission. The judgment of this court in Abhishek Industries Ltd (2006) 286 ITR 1 .....

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13. The Hon ble Bombay High Court in the case of CIT Vs.Delite Enterprises(Tax Appeal 110 of 2009 dated 26-2-2009) held as under:- The Revenue is in appeal on the following questions ; "A-Whether on the facts and in the circumstance of the case and in law the Hon'ble Tribunal was right in deleting the disallowance made by the Assessing Officer of interest paid by the Assessee Company on borrowed funds amounting to ₹ 241.10 lakhs overlooking the fact that the borrowed funds were us .....

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