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M/s. Bharath Beedi Works Pvt. Ltd. Versus The Addl. Commissioner of Income-Tax Range-2 Mangalore

2016 (9) TMI 553 - KARNATAKA HIGH COURT

Addition u/s 14A - Discharge of the burden that interest free fund far exceeds the value of investment - Held that:- The burden is upon the assessee to show and prove that interest free fund far exceeds the value of investment and thereafter, to justify the quantification of amount of ₹ 4 lakhs towards disallowance for the exempted income. In the present case, the said burden has not been discharged satisfactorily and thereafter, the assessing officer has proceeded to apply the formula pro .....

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for consideration of the matter as any substantial questions of law. The aforesaid is coupled with the aspects as referred by us hereinabove that the finding of fact for non-discharge of the burden which is upto the level of the Tribunal which is the ultimate fact finding authority, has remained final. The finding of fact in our view is outside the scope of judicial scrutiny in the present appeal. - Thus we find that the decision upon which the reliance has been placed is of no help because .....

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T JAYANT PATEL J., The appellant-assessee has preferred the present appeal by raising the following substantial questions of law: 1. Whether on the facts and circumstances of the case, the Tribunal is justified in confirming the addition under Section 14A r.w.s. Rule 8D(2)(iii) of the Rules when no expenditure is incurred for earning the exempt income and assessing officer also not recorded satisfaction with regard to the correctness of the claim of the Appellant in respect of such expenditure? .....

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ls) has examined the rejection of the claim of the assessee for disallowance of the expenses to the extent of ₹ 4 lakhs towards exempted income and has further observed at para.3.1(D) to 3.2(A) which reads as under: 3.1(D) I have considered the rival contentions carefully. I find that the argument of the appellant is vague in as much as when the AO has asked to prove that the appellant has own funds to substantiate the investment as and when the investments are made the appellant is only t .....

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earlier period during the previous year. When pointed out it was argued before the AO that these expenses are crystallized during the previous year and hence claimed accordingly. The appellant was asked to prove the same and the appellant filed letter from the recipient based on which the AO has duly allowed what was substantiated and added ₹ 67,090/- which was not substantiated. 3.2(A). In appeal proceedings the appellant raised the following grounds" II DISALLOWANCE OF ₹ 67,09 .....

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ware Inds. (P) Ltd. V. ITO : ITA No.2028 (Del) of 2008, IV). Apollo Textiles Agency (2006) 283 ITR 591 (All) V). Goetze (India) Ltd. V. Dy. CIT (2008) 115 ITD 119 (Del-Trib). VI). CIT v. Swadeshi Cotton & Floor Mills (P) Ltd. (1964) 53 ITR 134 (SC). c) is not justified in law by overlooking the decisions in the following cases where it was held that the year of allowance is not material when the tax rate is the same. I). CIT v. Nagri Mills Co. Ltd. [1958] 33 ITR 681 (Bom.), II). CIT vs. Bila .....

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Ys 2008-09 & 2009-10 in ITA Nos.914 & 915/Bang/2014, order dated 22.3.2013. We have perused the said order and find that in that case the issue was remanded to the AO for fresh consideration for the reason that the claim of assessee that no amount should be disallowed u/s.14A of the Act was not considered and objectively rejected by the revenue authorities. The Revenue Authorities were directed to consider the claim of assessee and if the same is found to be not acceptable, then apply th .....

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unable to explain as to why only a sum of ₹ 4 lakhs should be disallowed under Rule 8D(2)(iii) of the Rules as against a sum of ₹ 14,00,530. In our view, therefore, the addition sustained by the CIT(A) has to be upheld. Accordingly ground No. II raised by the assessee is dismissed. 5. In our view, when the quantification of the amount of expenses of ₹ 4 lakhs is towards exempted income i s not accepted by the assessing officer, he is required to follow the procedure and calcul .....

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alue of investment, it should be considered and the investment of fund and any disallowance under Section 14-A towards any interest expenditure can be made. He submitted that, in respect of the previous year i.e. assessment year 2008-09 and 2009-10, matters were remanded by the Tribunal vide order da ted 22.3.2013 in ITA 914 & 915/BANG/2014 and therefore, in his submission, when the figures of interest free fund and investment was not finalized, the formula ought not to have been applied as .....

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