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TMI Blog2020 (1) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... ances to related party. The disallowance of interest expenses against these loans have been discussed in the assessment order passed for preceding A.Y. 2011- 2012. In the same manner, interest on loans/advances given to M/s. Prateek Resorts & Builders Pvt. Ltd., has been disallowed. The A.O, therefore, disallowed Rs. 1,51,65,269/- under section 36(1)(iii) of the I.T. Act, 1961. The assessee made detailed written submissions before the Ld. CIT(A). However, the Ld. CIT(A) dismissed the appeal of assessee. 3.1. Learned Counsel for the Assessee submitted that addition has been made by the A.O. simply by relying on the Order passed in preceding A.Y. 2011-2012 in the case of the assessee. However, the said addition has been deleted by the Ld. CIT(A) and Department did not move any appeal against the said decision. Copy of the grounds of appeal for the A.Y. 2011-2012 is filed on record in support of this contention. The Order of the Ld. CIT(A) for the A.Y. 2011- 2012 is filed at Pages 186 and 187 of the paper book. In addition to the above submissions, the Learned Counsel for the Assessee further submitted that detailed break-up of advances given to M/s. Prateek Resorts & Builders Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of own funds. There was also an opening balance as contended by the Learned Counsel for the Assessee in preceding year, on which, addition has already been deleted. The assessee has also placed on record the correspondence between the parties to show that advance have been given for commercial expediency. It is well settled Law that when interest free funds are available to the assessee which were sufficient to made its investments, it would be presumed that the investments were made from the interest free funds available with the assessee. We rely upon the Judgment of the Hon'ble Bombay High Court in the case of Reliance Utility and Power Ltd., 313 ITR 340 (Bom.) (HC) and Judgment of Hon'ble Supreme Court in the case of Reliance Industries Ltd., 410 ITR 466 (SC) and Judgment of Hon'ble Supreme Court in the case of Munjal Sales Corporation 298 ITR 298 (SC). Considering the totality of the facts and circumstances of the case, we do not find any justification to sustain the addition. We, accordingly, set aside the Orders of the authorities below and delete the addition of Rs. 1,51,65,269/-. Ground Nos. 1 and 2 of the appeal of assessee are allowed. 6. On Ground Nos.3 and 4, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exact value of the investment which yielded taxable income, he did not correct the error to chose to apply his own equity. Given the record that it be done so to substitute the figure of Rs. 38,61,09,287/- with the figure of Rs. 3,53,26,800/- and thereafter, arrive at the exact details of .05%. In view of the above reasoning, the findings of the ITAT and lower authorities are hereby set aside. The appeal is allowed and the matter is remitted to work-out the tax effect to the A.O. who shall do so after giving due notice to the party." Learned Counsel for the Assessee on the same proposition also relied upon other decision of the Hon'ble Delhi High Court. Learned Counsel for the Assessee further submitted that the A.O. has merely made the impugned addition by stating that since the assessee has earned exempt income, therefore, provisions of Section 14A are applicable. It is evident that in the assessment order there is no satisfaction recorded by the A.O. before making any disallowance, therefore, no addition could be made. He has relied upon Judgment of Hon'ble Delhi High Court in the case of Max Opp Investment Ltd., vs., Commissioner of Income Tax 347 ITR 272 (Del.) (HC), which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ./2017 for the A.Y. 2012-2013 of the Assessee is allowed. A.Y. 2013-2014 : 10. On Ground Nos.1 to 4, the assessee challenged the disallowance of Rs. 2,04,97,971/- under section 14A read with Rule 8D of the I.T. Rules, 1962. 11. The A.O. noted that in the balance-sheet filed along with the return of income, an investment of Rs. 414.96 crores have been shown as non-current investment. In view of this, disallowance is to be made as per Section 14A read with Rule 8D. The assessee was asked to submit as to why disallowance under section 14A should not be made. The assessee submitted that during the year under consideration the assessee has not earned any income by way of dividend and that no expenditure is incurred in relation to any exempted income. The A.O. however, did not accept the contention of assessee and made the disallowance of Rs. 2,04,97,971/- under section 14A read with Rule 8D of I.T. Rules, 1962. On appeal, the Ld. CIT(A) dismissed the appeal of assessee. 12. Learned Counsel for the Assessee submitted that in assessment year under appeal assessee has not earned any exempt income. He has referred to PB-29 which is balance-sheet of the assessee to show that as on 31.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is allowed. A.Y. 2014-2015 : 19. On Ground Nos. 1 to 6, the assessee challenged the disallowance of Rs. 2,39,66,670/- made by A.O. invoking the provisions of section 14A read with Rule 8D of the I.T. Rules, 1962. 20. The A.O. noted that in assessment year under appeal assessee has shown investment of Rs. 543.71 crores as non-current investment. The A.O. noted that disallowance have to be made under section 14A of the I.T. Act. The assessee submitted that in assessment year under appeal, assessee has earned dividend of Rs. 1,97,449/- only for which no expenditure was incurred in relation to exempt income. The A.O. however under the above provisions disallowed the impugned amount. The Ld. CIT(A) confirmed the addition. 21. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has submitted that the assessee has received this dividend out of investment made in Reliance Mutual Funds whose opening and closing balance during the year were NIL (PB- 26). Thus, the average value of investment will be calculated as NIL as is evident from audited financial year statement of the assessee. Complete copies are placed at pages 7 to 43 of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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