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TMI Blog2019 (6) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the disallowance of interest expenditure amounting to Rs. 88.20 lakh. 4. Brief facts are, for the assessment year under dispute, the assessee firm filed its return of income on 31st March 2016, declaring nil income after claiming loss of Rs. 1,82,723. During the assessment proceedings, the Assessing Officer noticed that the assessee has borrowed money from Kotak Mahindra Prime Ltd. at interest rate of 15.25% per annum. Whereas, it has advanced loan of Rs. 20 crore to sister concern at the interest rate of 10.84% per annum and subsequently such loan was converted to preferential shares. Therefore, the Assessing Officer held that the difference in interest rate on the amount borrowed and the amount lent by the assessee works out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ); ii) Hindalco Industries Co. v/s CIT, [2016] 389 ITR 430 (All.); and iii) CIT v/s Pudukottai Co. Pvt. Ltd., [1972] 84 ITR 788 (Mad.). 7. The learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 8. We have considered rival submissions and perused the material on record. As could be seen from the factual matrix of the case, the assessee had availed loan of Rs. 37.50 lakh from Kotak Mahindra Prime Ltd. at the interest rate of 15.25% per annum. Whereas, it has advanced loan to its subsidiaries Patel Engineering Ltd. and Patel Realty Ltd. @ 12% per annum. The Assessing Officer has disallowed a part of interest under section 36(1)(iii) of the Act due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 64,42,36,391 capable of yielding exempt income by way of dividend. Therefore, he called upon the assessee to explain why disallowance under section 14A r/w rule 8D should not be made. Though, the assessee objected to the disallowance, however, the Assessing Officer rejecting the objections of the assessee proceeded to compute the disallowance under rule 8D(2), which worked out to Rs. 1,97,89,061. The assessee challenged the aforesaid disallowance before learned Commissioner (Appeals). 12. After considering the submissions of the assessee in the context of facts and materials on record, though, learned Commissioner (Appeals) agreed with the Assessing Officer that disallowance under section 14A of the Act has to be made, however, he restr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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