TMI Blog2017 (10) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of orders of the lower authorities, we find that the disallowance has been made on a purely adhoc basis and such adhoc disallowance cannot be sustained in the eyes of law. In the result, disallowance is hereby deleted - Assessee appeal allowed. - ITA No. 868/JP/16, ITA No. 869/JP/16 - - - Dated:- 31-10-2017 - BEFORE: SHRI KUL BHARAT, JM SHRI VIKRAM SINGH YADAV, AM For the Assessee: Shri S.R. Sharma (C.A.) Shri Rajnikant Bhatra (C.A.) For the Revenue: Shri Varinder Mehta (CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. These are two appeals filed by the assessee against the order of ld. CIT(A)-4, Jaipur dated 15.07.2016 for A.Y. 2010-11 2011-12 respectively. Both these appeals involving common issues were hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y invoking section 14A r.w.r. 8D. It was further submitted that the said disallowance was deleted by the Tribunal in ITA no. 797/JP/15 dated 11.08.2016. It was accordingly submitted that the same may kindly be followed and necessary relief may be provided to the assessee company. 4. It was further submitted by the ld AR that no disallowance can be made when interest free funds available with the assessee company are much higher than investments made to earn exempt income. In support, reliance was placed on decision of Hon ble Bombay High Court in case of Reliance Utilities Power Ltd. 313 ITR 340, Hon ble Gujarat High Court in case of CIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd. 221 Taxman 479, and Hon ble Bombay High Court in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival contentions and perused the material available on record. The assessee company has shown investment of ₹ 3,37,26,325/- as on 31.03.2010 which is identical to the amount of investment shown by the partnership firm M/s KGK Enterprises as on 30.09.2009. The Assessing Officer disallowed an amount of ₹ 6,13,432 invoking provisions of section 14A and Rule 8D. On appeal, the disallowance was reduced to ₹ 2,08,456/- by the ld. CIT(A) whereby he allowed setting off of interest income from gross interest expenses while work out disallowance u/s 14A. We find that no fresh investments have been made by the assessee company during the year and the subject investments are the investments which have been made by and taken over from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that no expenditure has been incurred, no disallowance u/s 14A is warranted. Further, the decision of Hon ble Bombay High Court in case of HDFC Bank Ltd. (Supra) and Hon ble Gujarat High Court in case of Gujarat Narmada Valley Fertilizers (supra) also supports the case of the assessee. In light of above, ground no. 1 of the assessee is allowed. 7. In light of above, following our decision in case of KGK Enterprises referred supra, the disallowance under section 14A is hereby deleted. The grounds no. 1 and 2 of assessee s appeal are thus allowed. 8. Regarding ground No. 3, the AO made disallowance of ₹ 188,366/- being 10% of the total expenses of ₹ 80,83,644/- incurred on various expenses. The ld. CIT(A) confirmed 10% d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess promotion expenses on estimation basis without appreciating the fact that these expenses were incurred wholly and exclusively for the purpose of business. 10. In respect of grounds no. 1 2 relating to disallowance u/s 14A, we find that earlier investment have been carried forward to this year and further, the assessee company has made a fresh investment of ₹ 2,36,98,875 (Rs 5,74,25,200/- less ₹ 3,37,26,325/-) during the year under consideration. In this regard, the submission of the assessee is that such investment has been made from internal accruals and not from any borrowed funds and no expenditure has been incurred by the assessee company. In this regard, the Assessing officer following the same reasoning as given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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