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2015 (10) TMI 1888 - ITAT CHENNAI

2015 (10) TMI 1888 - ITAT CHENNAI - TMI - Disallowance made on the component of interest under section 14A - CIT(A) deleted the disallowance in part - Held that:- No valid reason to interfere with his findings in partly deleting the disallowance made under section 14A of the Act and conclusion it is presumed that the appellant had made investments only out of the surplus funds available from the earlier years. Respectfully following the decision of the High Court of Bombay in the case of HDFC Ba .....

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tments as expenditure is confirmed

The Revenue also did not rebut the findings of the Commissioner of Income Tax (Appeals) with evidences. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal raised by the Revenue.

As we have sustained the order of the Commissioner of Income Tax (Appeals), the cross objection filed by the assessee challenging the impugned order in sustaining the disallowance to the extent of 0.5% of average .....

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for the assessment year 2010-11. The issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting the disallowance made on the component of interest amount of ₹ 2,66,89,000/- out of total disallowance under section 14A of the Act. 2. Brief facts are that the Assessing Officer while completing the assessment disallowed ₹ 3,02,07,000/- under section 14A as expenses attributable for earning dividend income of ₹ 13,95,75,006/-. The said amount o .....

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came up in appeal before us challenging the order of the Commissioner of Income Tax (Appeals) in deleting the interest component of ₹ 2,66,89,000/- made under section 14A of the Act. 3. The assessee filed cross objection for sustaining the disallowance to the extent of 0.5% of average investments disallowed under section 14A read with Rule 8D(2)(iii) of the Act. 4. Departmental Representative vehemently supports the order of the Assessing Officer in disallowing ₹ 3.02 crores invoking .....

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the assessee submits that assessee itself has disallowed ₹ 27,87,500/- as expenses attributable for earning dividend income which is reasonable. 6. Heard both sides. Perused orders of lower authorities. The issue in appeal has been elaborately considered by the Commissioner of Income Tax (Appeals) with reference to the submissions made by the assessee and the observations of the Assessing Officer and partly sustained the disallowance to the extent of ₹ 35,18,000/- and deleting the in .....

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the appellant on this issue carefully. I have also gone through the Commissioner (Appeals) order for the Asst. Year 2009- 10 in ITA Nos 39&394/2011-12 dated 28.03.2013 relied on by the appellant. I find that there is considerable force in the submissions of the appellant. The appellant submitted that none of the borrowed funds have been used directly or indirectly for making the investments. The appellant also submitted that for all the investments made in earlier years, the company has suff .....

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lakhs as on 31.03.2009. On the other hand, the AO estimated the disallowance of interest amount without any material placing on the record. The Hon'ble High Court of Bombay in the case of HDFC Bank Ltd. cited (supra) explained the legal position of law in para 5 of the order dated 27.03.2014 as under: "we find that facts of the present case are squarely covered by the judgement in the case of Reliance Utilities and Power Ltd. (supra). The finding of the fact given by the ITAT in the pr .....

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d have to be presumed that investment made by the assessee would be out of interest free funds available with the assesee." Applying the above principles to the facts of the case, it is presumed that the appellant had made investments only out of the surplus funds available from the earlier years. Respectfully following the decision of the High Court of Bombay in the case of HDFC Bank Ltd. cited (supra), decision of the learned CIT(Appeals) in the appellant's own case for the A.Y. 2009- .....

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