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The ACIT, Central Circle 1 (3) , Ahmedabad Versus Saumya Construction Pvt. Ltd.

2016 (7) TMI 1037 - ITAT AHMEDABAD

Disallowance u/s 14A - Held that:- As in CIT vs. Holcim India Pvt. [2014 (9) TMI 434 - DELHI HIGH COURT] holds that the impugned section 14A disallowance does not apply in absence of exempt income since the same is to be made in relation to the latter one. We are of the view that the impugned disallowance is not sustainable on this score alone. It further emanates that the assessee has not made any investment for earning its exempt income in the two impugned assessment years. This is followed by .....

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ance u/s. 36(1)(iii) - Held that:- It has come on record that the assessee had its disposal sufficient interest free funds in excess of the impugned advances to its sister concerns. The CIT(A) observed hereinabove that the assessing authority does not make out a case of diversion of business funds towards the impugned loans hands advances. The Revenue fails to rebut these crucial findings in the course of hearing before us. We do not deem it appropriate to venture much in a detailed factual inve .....

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roceedings under section 143(3) r.w.s. 153(1)(b) of the Income Tax Act, 1961; in short the Act . 2. It is evident from a combined perusal of Revenue s grounds pleaded in the instant appeals that it seeks to raise two identical substantive issues. The first one seeks to restore section 14A disallowance of ₹ 16,63,952/- and ₹ 27,35,608/- made by the Assessing Officer in corresponding assessment orders and deleted in the lower appellate proceedings. Second substantive issue sought to be .....

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8D of the income tax rules. The latter assessment year involves the very disallowance to be of ₹ 27,35,608/-. The CIT(A) deletes the same as under:- 6. After going through rival submissions following points emerge: 1 It is seen that the Assessing officer has made 14A disallowance in a very vague and presumptive way. There is no investment for earning tax free income in A.Y. 2008-2009 and 2009- 2010. The investment has been in A-Y. 2006-2007 and 2007-2008 and even in these years, as obvious .....

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377; 7,87,49,990 were made (Rs 3,60,00,000 in Amrashagun Investments + ₹ 3,75,00,000 in Amrakadam Investments + ₹ 15,00,000 in Adani Township & Real Estate Co. Limited + ₹ 12,50,000 in Applewoods Estates Pvt. Limited + ₹ 99,990 in Suyojan Realty Pvt. Limited + ₹ 24,00,000 in Acquest Estate Pvt. Limited) whereas the appellant had Interest Free funds of ₹ 9,08,71,341 as Reserves and Surplus and of ₹ 62,03,38,566 as Booking Advance from members as on 31 .....

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Fund investment for which it was informed that investment was made during the year and same was also sold off during the year. It was also explained by the Id ARs that investment in Mutual fund has not been disputed for making disallowance u/s 14A by the assessing officer. It was further argued that even in A.Y. 2009-2010, as obvious from the balance sheet Interest free funds of ₹ 119 crore are available as against which there have been no fresh investment but only Advances of ₹ 72 c .....

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allowance is called for u/s 36(1)(iii). This decision has been followed by Hon'ble ITAT, Bench - A, Ahmedabad while dealing with disallowance u/s 14A the case of ACIT v/s Hipolin Limited (ITA No. 4259/Ahd/2007). 8 In view of the discussion in para 6 & 7 above, the Assessing Officer is directed to delete the addition under Section 14A of ₹ 16,63,952 in A.Y. 2008-09 and ₹ 27,35,608 in A.Y. 2009-10. 4. We have heard both the learned representatives reiterating their respective s .....

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as not made any investment for earning its exempt income in the two impugned assessment years. This is followed by the crucial appellate finding that it had sufficient reserves and surpluses in the corresponding assessment year of investments exceeding the latter sums. The hon ble jurisdictional high court in CIT vs. Torrent Power Ltd. (2014) 44 taxmann. com 441 negates applicability of section 14A disallowance in such an instance. The Revenue fails to point out any exception thereto in the cour .....

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#8377; 13,40,273 in A.Y. 2008-09 and ₹ 17,73,192 in A.Y. 2009-10. The addition has been made as per para 4 of the assessment orders. According to the Assessing Officer, (as per table on page 4 of the orders) the assessee has charged interest on Advances at rate less than 15%, in some cases @6% , in some 7% , in others 9% and in still others @ 12%. The Assessing Officer formed an opinion that the rate of interest charged on Advances should have been not less than 15% and proceeded to disall .....

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upon the decision of Madhav Prasad Jatia v/s CIT 118 ITR 200 . Attention of this office was drawn by the appellant towards following findings of the assessing officer: "After considering the replies filed and the arguments put forward during the hearing it is seen that most of the loans and advances were given wholly and exclusively for the purpose of business. The available interest free fund with the assessee were in exceeds of the investment yielding tax free income and thus were used i .....

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sion of Ahmedabad ITAT in case of Torrent Financiers Vs. AC1T 73 TTI 624. Regarding the reasonableness of the interest to be charged, reliance was placed upon the decision of Hon'ble Supreme court in case of S.A. Builders Limited Vs. CIT 288 ITR 1 wherein it was held that the revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circum .....

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