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2015 (10) TMI 1713 - ITAT AHMEDABAD

2015 (10) TMI 1713 - ITAT AHMEDABAD - TMI - Disallowance of expenses incurred for increasing the Authorized Share Capital of the Assessee - Held that:- This ground of the Assessee has to be decided against it in view of the decision of Hon’ble Supreme Court in the case of Brooke Bond India Ltd. vs. CIT (1997 (2) TMI 11 - SUPREME Court ) - Decided against assessee.

Disallowance made u/s. 14A - Held that:- When there is no change in the value of investments or its composition from that .....

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Rule 8D are held to be mandatory, we are of the view that the disallowance on account of administrative expenses be made as per the formula prescribed i.e. 0.5% of average investments meaning thereby that the disallowance u/s.14A be restricted to ₹ 1,78,175/- as against ₹ 10,20,670/- made by A.O. - Decided partly in favour of assessee. - I.T. A. No. 2119/AHD/2012 - Dated:- 10-9-2015 - SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARAT, J.M. For The Appellant : Shri Sunil Talati, A.R. .....

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declaring total income of ₹ 5,74,39,342/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 14.12.2010 and the total income was determined at ₹ 5,95,60,010/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 16.07.2012 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following gro .....

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s was rightly claimed by your appellant. It be held so now and the claim be allowed. 3. The learned CIT(A)-IV, Baroda has erred in disallowing ₹ 10,20,670/- by invoking the provisions of section 14A of the Act. Your appellant submits that the provisions of section 14A are not applicable and hence the disallowance is not justified. It be held so now and addition made by the AO be deleted. 4. The learned ACIT has erred in charging interest u/s 234B of the Act. The same be deleted now. 1st gr .....

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nd of Assessee is dismissed. 3rd ground is with respect to disallowance made u/s. 14A of the Act. 5. During the course of assessment proceedings, A.O noticed that Assessee was having investments of ₹ 3.56 crores, had earned tax free income comprising of dividend of ₹ 1,90,450/-, and share of profits from partnership firm of ₹ 6,55,694/- and thus earned aggregate tax free income of ₹ 8,46,144/- and had also paid interest of ₹ 21.87 crores. He was therefore of the vie .....

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isallowance by holding as under:- 4.2 I have perused the assessment order passed by the A.O as well as considered the submissions of the Ld. A.R in this regard. The AR in its above submission has mainly stated that the AO has erred in disallowing ₹ 10,20,670/- u/s 14A rwr 8D. As per the AR no expenses were incurred in relation to earning tax free income. Without prejudice to this, the AR has further submitted that the disallowance, if any, be restricted to 0.5% of average investment since .....

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ellant is paying huge interest on borrowing and therefore it was very much necessary for the appellant to prove before the AO by filing necessary details and evidences that such above investment of ₹ 3,56,34,924/- was not out of borrowed funds. Thus it can be said that the appellant has failed to offer satisfactory explanation about the correctness of the claim to the assessing officer. Even during the course of appellate proceedings also such details and evidences have not been filed by t .....

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and further submitted that A.O has not proved nexus of the interest bearing funds being utilized for the purpose of making investments. He further submitted that the investments of ₹ 3.56 crore are carried forward since A.Y. 2005-06 and no fresh investments have been made during the year under review. He also placed on record the schedule of Investments as shown in the audited Balance Sheet, as on 31st March 2004 to 31st March, 2008 and pointed out that there is no change in the investment .....

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enses, confirmed the disallowance u/s. 14A of ₹ 50,000/-. He placed on record the copy of the aforesaid order of Tribunal and further submitted that the facts of the case in the year under appeal are identical to that of earlier years. He therefore submitted that the no disallowance is called for and in the alternate submitted that similar disallowance as directed by Tribunal in A.Y. 2007-08 be made. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A) and further submi .....

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3,56,29,924/- and as on 31st March, 2005, the investment marginally increased by ₹ 5,000/- and the total investments as on 31st March 2005 was ₹ 3,56,34,924/- and that the same balance of investments have continued from 31st March 2005 to 31st March, 2008 with no change in the value of investments nor its composition meaning thereby that Assessee has not made any new investments during the period 31st March 2005 to 31st March 2008. The aforesaid facts have not been disputed by Reven .....

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