TMI Blog2015 (10) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ry disallowance. The onus to prove that no expenditure in relation to income, which is tax-exempt, stands incurred and, further, with reference to its accounts, is on the assessee. In view of the foregoing, we, under the circumstances, only consider it fit and proper that the matter is restored back to the file of the AO to enable the assessee to present its case in the matter. Where, for instance, the loans on which the interest liability has been suffered, are dedicated loans, i.e., toward specified business purposes, and stand utilized for the same, interest thereon would stand to be allowed under section 36(1)(iii) in full, so that no disallowance under section 14A would ensue. In the absence of such utilization being shown or establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port (Rs.7,350/-) and notary (Rs.130/-) are again incidental charges incurred toward specific non-banking (financing), collateral services availed in relation to the debt transaction and, therefore, cannot be considered as part of the interest cost paid to the bank, deduction qua which is exigible u/s.36(1)(iii). The disallowance is thus misconceived and is hereby directed for deletion. - Decided in favour of assessee. - I.T.A. No. 785/Mum/2013 - - - Dated:- 7-11-2014 - Shri Sanjay Arora, AM And Shri Amit Shukla, JM,JJ. For the Appellant : Shri Piyush Chhajed For the Respondent : Shri Neil Philip ORDER Per Sanjay Arora, AM. This is an Appeal by the Assessee, arising out of the order by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esident outside India, income where-from, whether by way of dividend or capital gains, would be subject to tax in India. Accordingly, the AO was directed to exclude the said investment in reckoning the disallowance under section 14A(1) r/w r. 8D. 4.1 Before us, the ld. Authorized Representative (AR) of the assessee, referring to the assessee s Balance Sheet (at paper-book pages 1 2), contended that the assessee had, apart from capital at ₹ 98.40 lakhs, reserves and surplus at ₹ 870.59 lakhs (i.e., as on 31.03.2006), so that the presumption in law would be that the entire investment in shares is financed by own capital and, therefore, no disallowance on account of interest, which comprises the disallowance u/s. 14A in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of income not forming part of the total income for the current year. The hon ble jurisdictional high court in Godrej Boyce Mfg. Co. Ltd. vs. DCIT [2010] 328 ITR 81 (Bom) has abundantly clarified the law in the matter. Disallowance u/s. 14A(1) is a statutory disallowance. The onus to prove that no expenditure in relation to income, which is tax-exempt, stands incurred and, further, with reference to its accounts, is on the assessee. The discussion by the hon ble court qua disallowance of interest, which bears reference to the decision by it in the case of Reliance Utilities Power Ltd. (supra), being relied upon by the assessee, is at paras 85-87 (of pgs. 135 to 138) of the judgment, to which therefore reference be made. The follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oans on which the interest liability has been suffered, are dedicated loans, i.e., toward specified business purposes, and stand utilized for the same, interest thereon would stand to be allowed under section 36(1)(iii) in full, so that no disallowance under section 14A would ensue. In the absence of such utilization being shown or established by the assessee, the presumption of all the assets being proportionately funded cannot be faulted with for the purpose of disallowance u/s.14A(1). Reference in this respect may be made to several decisions by the tribunal, as in the case of Dy. CIT vs. Damani Estates Finance (P.) Ltd. [2013] 25 ITR (Trib) 683 (Mum); AFL (P.) Ltd. vs. Asst. CIT [2013] 28 ITR (Trib) 263 (Mum); and Kunal Corporation vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as stamping charges cannot be equated with or considered at par with the service or other charges levied by the bank in respect of money borrowed or debt incurred. The same, though may be charged by the bank, are payable to the government exchequer as stamp duty on the debt or other related (as securitization or mortgage) transaction/s. The same is only revenue expenditure, no part whereof could be capitalized as a part of the cost of the asset. The law in the matter is well-settled, reference for which may be made to the decision by the hon ble apex court in the case of India Cements Ltd. vs. CIT [1966] 60 ITR 52 (SC), also relied upon before us by the assessee. Similarly, the charges for valuation report (Rs.7,350/-) and notary (Rs.130 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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