TMI Blog2011 (12) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... to ONGC and other oi l refineries, management services to group companies, dividends and interest from investments and income from sale of investment and Trading in shares. It filed return declaring loss of ₹ 56,78,74,068/-. However, the assessment was completed under normal provisions of the Act at loss of ₹ 31,39,57,516/- and u/s 115JB at loss of ₹ 54,13,66,418/- including the disallowance of interest related to shares ₹ 17,32,53,552/- and disallowance of interest on interest free loans ₹ 8,06,63,000/-. 3. On appeal, the Ld. CIT (A) while directing the AO to fallow the appellate order for the assessment years 1999-2000 and 2001-02, partly allowed the appeal. 4. Being aggrieved by the order of the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On appeal, the Ld. CIT (A) observed that the similar issue was considered by him in the appellant s own case for the assessment years 1999-2000 2001-2002 wherein he has calculated the disallowance to be made in the appellants case and there is no material change in the facts and hence he directed the AO to calculate the disallowance of interest on the basis adopted by him in the order dated 6.3.2003 for assessment year 1999-2000. 8. At the time of hearing, the learned counsel for the assessee while explaining the issue from the assessment order submits that this issue is covered in favour of the assessee by the order of the Tribunal in the assessee s own case in M/s. Essar Investments Limited V/s Jt.CIT (OSD) vice-versa in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Tribunal in Daga Capital Management Pvt. Ltd. (117 ITD 169) (Mum) (Special Bench) while holding that the provision of sub-section (2) (3) of sec.14A of the Act are constitutionally valid have held vide placitum 88(vi) appearing at page 138 of the 328 ITR as under: (vi ) Even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub sect ion (1) of sect ion 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incur red in relation to income which does not form part of the total income under the Act . The Assessing Officer must adopt a reasonable basis or method consistent with al l the relevant facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co.Pvt. Ltd. The Assessing Officer should consider al l the contentions of the assessee and accordingly decide the issue of disallowance u/s 14A of the Act. Needless to say that the Assessing Officer shall afford a reasonable opportunity of being heard to the assessee. Accordingly, Ground No.1 is allowed for statistical purposes. 11. In the absence of any distinguishing feature brought on record by the parties we respectful ly fol lowing the aforesaid decisions set aside the orders passed by the Revenue authorities on this account and send back the matter to the f ile of the AO to decide the same de-novo in the l ight of the directions given in the above decisions and according to law after providing reasonable opportunity of being hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the assessee would not be allowed as deduction u/s 36(1)(ii i). The AO relied on judgments of various High Courts in this regard. After arriving at this conclusion, the AO listed the total assets on 31.3.2002 and 31.3.2001 and worked out the average of both. Further AO worked out head-wise % of the total assets and % relating to loans and advances accordingly, and applied the % so arrived at, to the total interest and worked out a figure of ₹ 8,06,63,000/- (after reducing the interest received therefrom) which he disallowed and added to the total income of the assessee. 14. On appeal, the Ld. CIT (A) observed that the similar issue was decided by him in the appellant s own case in AYs 1999-2000 and AY 2001-2002. In line w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical facts the Tribunal in the assessee s own case for the assessment years 1998-1999, 1999-2000 2000-2002 vide para 23 of the order dated 9.7.2008 has held that the assessee had advanced the loans to the group concerns for its business purpose, in such a case, interest on such advances cannot be disallowed. The similar view has been followed by the Tribunal in the assessee s own case in ITA No. 5083 5642/M/2007 for AYs 2000-2001 2003-2004 dated 11.12.2009. In the absence of any distinguishing feature brought on record by the Revenue, we respectfully following the ratio of decision of the Hon ble Supreme Court in SA Builders (supra) and the consistent view of the Tribunal hold that the assessee has advanced the interest free loan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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