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2016 (3) TMI 142 - ITAT DELHI

2016 (3) TMI 142 - ITAT DELHI - TMI - Disallowance u/s 14A - Held that:- DR has not controverted the fact that the assessee has not received any exempted income during the year under consideration. In view of the judgment of the Hon'ble Jurisdictional High Court in the case of Cheminvest Ltd Vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT ] and in the case of CIT Vs. Holcim India Pvt Ltd [2014] (9) TMI 434 [Del] wherein it has been held that no disallowance u/s 14A of the Act can be made in a year .....

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that no interest bearing funds were utilised for these impugned interest free advances, then disallowance can be held as sustainable. When the CIT(A) himself has recorded a finding of fact at Pg 8/9 of the order that amounts advanced to six companies was out of internal accruals/ redemption of Mutual Funds and not out of Borrowed funds, we do not find any valid reason to interfere with his finding in the absence of any material brought on record by the ld. DR to contradict the same. - Decided i .....

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IT(A)VIII. 2. The revenue has raised the following effective grounds of appeal in its appeal: 1. The order of the learned CIT(Appeals) is erroneous & contrary to facts & law. 2. On the facts and in the circumstances of the case, the Ld CIT (A) erred in deleting disallowance of interest paid to the tune of ₹ 48,49,411 relatable to fund advanced to sister concerns interest fee in the form of loan and interest fee coverable debentures. This is despite the fact that the auditors of the .....

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he circumstances of the case, the Ld. CIT (A) erred in directing the Assessing Officer to restrict disallowance under Rule 8D (2) (ii) by taking into consideration the value of average investment at ₹ 55 Lacs as against ₹ 14,64,21,896/- taken by the Assessing Officer. 3. The assessee has raised the following grounds in its cross objection: 1. That on the facts and in Law the learned Commissioner of Income Tax, (Appeals)- VIII, New Delhi, erred in upholding that Rule 8D was attracted .....

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stances of the respondent s case the learned Commissioner of Income Tax, (Appeals)-VIII, New Delhi, erred in upholding the disallowance in terms of Rule 8D, clause (iii) of Sub rule (2) at ₹ 7,32,109/. 4. Ground No. 1 of the Revenue being general in nature needs no adjudication. Hence Ground No. 1 of the Revenue stands dismissed. 5. Ground Nos. 3 and 4 of the Revenue and Ground Nos. 1 to 3 of the assessee are taken up together for disposal since they involve similar issue in relation to ex .....

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7; 5,98,50,000/- in unlisted equity shares of group/joint venture company not for purposes of earning dividend. The ld. AR further submitted that the AO without establishing nexus between expenditure incurred and the investment invoked Rule 8D made addition of ₹ 45,26,964/- by (i) incl. Interest ₹ 2,00,63,733/- which has been allowed towards taxable income [no disallowance in view of Bharti Overseas Pvt. Ltd [DHC] (ii) 0.5% of Avg Value of Investment taking the convertible debentures .....

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e same may be set aside by restoring that of the AO. 8. We have heard the arguments of both the sides and carefully perused the relevant material placed on record before us. We find that the ld. DR has not controverted the fact that the assessee has not received any exempted income during the year under consideration. In view of the judgment of the Hon'ble Jurisdictional High Court in the case of Cheminvest Ltd Vs. CIT [2015] 378 ITR 33 [Del] and in the case of CIT Vs. Holcim India Pvt Ltd [ .....

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dismiss Ground Nos. 3 and 4 raised by the Revenue and allow all the grounds raised by the assessee in its cross objections. 9. The only other ground which remains for adjudication is Ground No. 2 of the Revenue in relation to deletion of disallowance of interest. 10. Briefly stated, the facts giving rise to this issue are that the assessee has nine group companies to whom loans were advanced. During A.Y. 2006-07 assessee gave interest free loans aggregating ₹ 4.75 crore to six group compan .....

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free loans have been dealt with by the CIT(A) at para 4 Pg No 8/9 of his order. During the year the assessee received refunds aggregating ₹ 32.65 Lacs, from the said six Group companies which had an opening balance on 1.4.2007 of ₹ 4,29,36,926/- and advanced loans aggregating ₹ 27,31,80,000/- to three group companies bearing interest @ 14%. The said funds were advanced out of borrowing bearing interest @ 12% p.a are as under: (a) Vishal Gujral ₹ 1,00,00,000/ (b) U.K.Paint .....

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The balance funds were advanced to (i) Rockman Projects Ltd (ii) Kay Kay Buildtech Pvt Ltd . The interest pertaining to these advances was capitalized. Details of Interest including capitalization is as under : Interest (other than car Loans) ₹ 3,94,54,990/- Less Interest Capitalised ₹ 1,93.91,256/- Interest [other than car Loans] ₹ 2,00,63,734/- Add:-Interest on car loans ₹ 7.34.695/- Total Deduction claimed [P&L] ₹ 2.07.98.429/- AO has, at Para 3.3, Pg 4 of o .....

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