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2016 (2) TMI 338 - ITAT JAIPUR

2016 (2) TMI 338 - ITAT JAIPUR - TMI - Disallowance U/s 14A - Held that:- The assessee claimed that it has furnished evidence of interest free fund available with it before the Assessing Officer but whatever paper book filed, has not referred by the Assessing Officer. The representative of the assessee company has not signed on some of the papers allegedly claimed to be furnished before the Assessing Officer. The ld CIT(A) accepted the additional evidence without giving any finding of admitting .....

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n 14A. - Decided in favour of revenue for statistical purposes only. - ITA No. 916/JP/2013 - Dated:- 3-12-2015 - T. R. Meena, AM And Laliet Kumar, JM For the Appellant : Shri Ajay Malik ( JCIT ) For the Respondent : Shri Rajeev Sogani & Shri Rohan Sogani ( CA ) ORDER Per T R Meena, AM This is an appeal filed by the revenue against the order dated 16/09/2013 of the learned C.I.T.(A)-I, Jaipur for A.Y. 2009-10. The effective grounds of appeal are as under:- "1. Whether on the facts and in .....

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additions by admitting the additional evidences without giving proper opportunity of verification to the Assessing Officer, violating the provisions of Section 46A(3) of the I.T. Rules, 1961." 2. The assessee company is in development of Special Economic Zome (SEZ) and Domestic Tariff area (DTA) in collaboration with Rajasthan Government through RIICO, Jaipur. The return of income was filed on 30/09/2009 declaring income of Rs. NIL. The case was scrutinized U/s 143(3) of the Income Tax Act .....

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as investments in its books of account by the assessee company. The source of the same was inquired and it was found that other than redemption of earlier units of Mutual funds, the assessee had invested in the said units from its OD Account in SBI Bank. He further observed that on perusal of bank account statement on the dates of investment in the mutual fund units, it was found that in all, total debit balance of ₹ 45,23,383/- occurred due to this investment, on which the assessee compa .....

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8D of the Income Tax Rules, 1961 (in short the Rules) and found that the assessee derived dividend income (exempt) of ₹ 16,51,186/-. He gave show cause notice on this issue, which has been reproduced by the Assessing Officer on page 4 and 5 of the assessment order. The ld Assessing Officer reproduced Section 14A on page 5-6 of the assessment order. After analysis made by the Assessing Officer, it has been held that source of amount invested in mutual fund units was issuance of capital and .....

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, even the assessee has not incurred any expenses on earning of dividend income, Section 14A(3) is squarely applicant. He further relied on the decision of Hon'ble Mumbai ITAT in the case of M/s Gherzi Eastern Limited (ITA No. 6562/Bom/94 dated 23rd September, 2002 wherein it has been held that some administrative expenditure was definitely attributable towards earning of this dividend income. He further relied on the decision of Hon'ble Supreme Court in the case of Distributors (Baroda) .....

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order dated 14/06/2010. After considering the assessee's submissions and legal position on this issue, the ld Assessing Officer disallowed the interest U/s 36(1)(iii) of the Act at ₹ 4,52,338/- and disallowance U/s 14A at ₹ 2,76,51,752/-. 3. Being aggrieved by the order of the Assessing Officer, the assessee the matter before the ld CIT(A), who had deleted the addition made U/s 36(1)(iii) at ₹ 4,52,338/- by observing that the Assessing Officer was not correct in the detail .....

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y the assessee i.e. DCIT Vs. Ashish Jhunjhunwala (Kol.)(Trib), JK Investors (Bombay) Ltd. Vs. ACIT (Mum)(Trib), CIT Vs. Gujarat Power Corporation Ltd. (2013) 352 ITR 583 (Guj), JCIT Vs. Pilani Investment & Industries Corpn. Ltd. (Kol)(Trib), REI Agro Ltd. Vs DCIT (ITAT Kolkata) June 24th, 2013, Sundaram Asset Management Co. Ltd. Vs. DCIT (ITAT Chennai). The ld CIT(A) has further held that the ld Assessing Officer was not right by making disallowance U/s 14A because the investment was made ou .....

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ted the order of the Assessing Officer and argued that without any expenditure no income can be earned. It is imaginary for business man to earn any income without any expenditure, therefore, law itself also has provided in Section 14A(3) even the assessee has not incurred any expenditure, the disallowance can be made U/s 14A. The ld Assessing Officer had established the nexus with the overdraft that the assessee had paid the interest @ 10% on what basis the ld AR gave the figure of interest pay .....

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ld CIT(A), which has not been remanded back to the Assessing Officer. 5. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A) and relied upon whatever case laws cited before the ld CIT(A). He has further drawn our attention on page No. 183 of the paper book and argued that the assessee has not invested the exempt fund in the shares but invested in debt based mutual fund. The amount of expenditure incurred on issue of this share capital is already disall .....

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