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2016 (8) TMI 737 - ITAT MUMBAI

2016 (8) TMI 737 - ITAT MUMBAI - TMI - Disallowance u/s. 14A - Held that:- The undisputed facts of the case are that the assessee had shown dividend income of ₹ 25. 99 lakhs that it had not made any disallowance u/s. 14 A of the Act, that the AO after considering the submission of the assessee made a disallowance of ₹ 50. 64 lakhs. We find that the assessee had borrowed the funds for its business (pages 107-09 of the paper book), that it had not invested the borrowed money for making .....

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record any fact proving that the loan taken by the assessee was not used for the business purposes. If the assessee had utilised the borrowed funds for its business and not for the investment, there was no justification for invoking the provisions of section 14A of the Act. Therefore, we hold that the order of the FAA confirming the disallowance of ₹ 43. 42 lakhs under the head interest expenses cannot be endorsed. As far as the disallowance made under the head 0. 5% of the average investm .....

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resent appeal. Assessee-company, engaged in the business of printing and publishing of magazines, filed its return of income on 30/09/2009, declaring total income at Rs. (-)1. 39 Crores. The Assessing officer(AO) completed the assessment u/s. 143 (3) of the Act, on 30/12/2011, determining its income at ₹ 27, 69, 170/-. 2. The solitary ground of appeal is about confirming the disallowance of ₹ 50. 64 lakhs, made u/s. 14A of the Act. During the assessment proceedings, the AO found that .....

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ts letter dated 9/12/201 and 12/12/2011 the assessee argued that it had not incurred any direct expenditure for earning dividend income or for making any investment in the mutual funds, that the investments were made out of the surplus funds. After considering the submission of the assessee, the AO observed that the effect of section 14A was to widen the theory of the apportionment of the expenditure, that the expenditure incurred u/s. 14A would include direct and indirect expenditure but the re .....

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uthority(FAA). Before him, it was contended that while making disallowance out of interest, the AO had considered the entire interest expenditure without appreciating the fact that the borrowed funds were mainly utilised for payment of purchase consideration of brands of magazines, that no expenditure had been incurred in arriving at income which was not chargeable to tax. The assessee relied upon certain case laws. After considering the submission of the assessee and the assessment order, the F .....

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under the Rule 8D of the Rules. Finally, he upheld the disallowance made by the AO. 4. During the course of hearing before us, the Authorised Representative(AR) contended that the loan was taken for the business purposes, that the borrowed funds were not utilised for making investment resulting in exempt income, that the own fund of the assessee was far more than the investments for the year under consideration, that AO had not made any disallowance under the head interest expenditure while com .....

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