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2015 (8) TMI 117 - ITAT MUMBAI

2015 (8) TMI 117 - ITAT MUMBAI - TMI - Disallowance under Sec. 14A r.w. Rule 8D - CIT(A) deleted part addition - Held that:- DR could not controvert the finding of the fact by the Ld. CIT(A) that the interest has been paid on term loan taken for the purchase of the fixed assets and therefore there cannot be any disallowance of interest as the Ld. CIT(A) has categorically stated that no direct expenditure has been incurred. We, therefore, decline to interfere with the addition sustained by the Ld .....

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s raised as many as 7 grounds of appeal. However, the Ld. Departmental Representative Shri S.D. Srivastava, at the very outset, stated that he will put forth his argument only in respect of ground No. 7 which relates to the deletion of the addition of ₹ 54.97 lakhs made u/s. 14A of the Act. In respect of other 6 grounds of appeal, the Ld. DR stated that the Revenue has no case, neither on facts nor on the point of law. 3. With this factual background, we take each ground of appeal one by o .....

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profits in other units engaged in trading and manufacturing activities. The AO was of the firm belief that the expenses like selling and administration, interest and depreciation are required to be allocated among different units in the ratio of their turnover. The assessee strongly objected to this and stated that interest payment has been made on term loans and depreciation and interest have been allocated by the assessee in the ratio of fixed assets as these items of expenditures are directly .....

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units. In respect of selling and administrative expenses, the Ld. CIT(A) dismissed assessee's similar contention and agreed with the AO that selling and administrative expenses have to be allocated in the proportion of sales turnover. Except for the allocation of selling and administrative expenses on the basis of turnover, the Ld. CIT(A) deleted the entire reallocation of expenses made by the AO in respect of interest, finance charges and depreciation. 4. Aggrieved by this, the Revenue is b .....

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ground. Ground No. 4.1 is accordingly dismissed. 7. Ground No. 4.2 relates to the deletion of the disallowance of ₹ 42,61,285/- on account of short credit of interest subsidy. 8. The Ld. CIT(A) has considered this issue vide ground No. 3 of the appeal before him and at para 5.4 the Ld. CIT(A) has observed that he has looked into the ledger account maintained by the assessee for the subsidy receivable on the basis of which the subsidy is being disclosed. At para-5.6 the Ld. CIT(A) observed .....

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tion from all the banks without examining from which bank the assessee has already accounted for the subsidy in earlier years. The Ld. CIT(A) finally deleted the disallowance made by the AO holding that once the subsidy has been taxed in accrual basis, the same cannot be taxed on receipt. 8.1. As mentioned elsewhere, the DR could not bring anything in support of the assessment order. We, therefore do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 4.2 is accordin .....

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703/-. On finding no reason for the disallowance, the Ld. CIT(A) deleted the addition. 9.2. As the Ld. CIT(A) has deleted the addition by categorically stating that the AO has not given any reason for the disallowance we decline to interfere. Ground No. 5 is accordingly dismissed. 10. Ground No. 6 relates to the deletion of the addition of ₹ 15 crores made u/s. 68 of the Act. 11. While scrutinizing the return of income, the AO noticed that the assessee had taken an unsecured loan of ₹ .....

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see also furnished the return of income as well as the balance sheet of the said loan creditor for the assessment year 2009-10. The AO was of the firm belief that the loan creditor have no capacity to advance a sum of ₹ 15 crores and made the addition u/s. 68 of the Act. 12. Before the Ld. CIT(A), it was explained that in this line of trade, it is not uncommon for conversion of a trade debt into a loan. It was explained that the assessee had purchased material from various suppliers who in .....

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leted the addition. 13. Before us, the Ld. DR could not bring anything in support of the assessment order. 14. We have given a thoughtful consideration to the findings of the Ld. CIT(A) in the light of the decision of the Hon'ble Supreme Court in the case of Lovely Exports (supra). We do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 6 is accordingly dismissed. 15. Ground No. 7 relates to the deletion of the addition of ₹ 54.97 lakhs made u/s. 14A of t .....

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provisions of Sec. 14A r.w. Rule 8D and computed the disallowance at ₹ 59,17,265/-. 16.1. It was explained to the Ld. CIT(A) that all the investments are old investment which have been funded through own reserves and capital. It was further stated that no notional interest can be assumed to have been incurred for disallowance when the investments were made from out of own capital. 17. After considering the facts and the submissions, the Ld. CIT(A) observed that the AO has restricted hersel .....

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