TMI Blog2020 (4) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of expenditure to the extent of dividend income - HELD THAT:- We found the assessee has surplus funds and relied on the decision of CIT Vs. Microlabs Limited [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] held that when investments are made out of common pool of funds and non-interest bearing funds were more than the investments in tax-free securities, no disallowance of interest expenditure under section 14A can be made. Thus we restrict the addition to the extent of ₹ 38,857. Disallowance under Section 40(a)(ia) with respect to interest paid to Tata Capital Ltd. - Non deduction of TDS - AR submitted that the recipient has offered income in their assessment, therefore, there is no requirement to make addition - HELD THAT:- When a query was raised to the learned Authorised Representative regarding obtaining of Certificate from Auditor in Form 26A that the recipient has offered the income in their Assessment. The learned Authorised Representative submitted that the information is available with the assessee and prayed for an opportunity to substantiate before lower authorities. Accordingly to meet the ends of justice, we restore this issue to the file of CIT(Appeals) to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of the case. 3. The learned Authorised Representative submitted the reasons for filing the additional grounds of appeal for which revenue has no serious objections. Hence the additional grounds of appeal of assessee are admitted and the assessee has raised following the grounds of appeal as under : 1. The order of the learned Commissioner of Income-tax (Appeals) - Hubballi passed under Section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances Of the Appellant's 2. The Appellant denies itself liable to be assessed over and above the business loss reported by the appellant of ₹ 20,68,678/-, on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax [Appeals] erred in upholding the disallowance of additional depreciation on computer amounting to ₹ 61,427/- made by the learned assessing officer, on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax [Appeals] is not justified in restricting the disallowance under section 14A read with Rule 8D amounting to ₹ 2,04,708/- from ₹ 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional depreciation is allowed only on block of plant and machinery and disallowed the claim. Similarly, the Assessing Officer made disallowance of delayed payment of PF and also made disallowance under section 14A r.w. Rule 8D(2). Whereas the Assessing Officer has found that the assessee has made investment, in shares and received dividend of ₹ 2,04,708. The Assessing Officer has not accepted the claim of non-incurring of expenditure for earning tax free income and calculated the disallowance under Section 14A r.w. Rule 8D(2) of ₹ 5,38,069 including administrative expenses of ₹ 38,857. Similarly, the assessee has made interest payment to Tata Capital of ₹ 80,016 without deduction of tax at source. Hence the Assessing Officer applying the provisions of Section 40(a)(ia) of the Act made disallowance. The assessee has provided interest free loans to sister concerns and since the interest paid on money borrowed is 12% p.a.. The Assessing Officer observed that there is no business connection on advancing of interest free loans and disallowed ₹ 5,17,058 under Section 36(1)(iii) of the Act and asessed the total loss of ₹ 8,38,875 and passed order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd non-production of evidences. First we shall take up the additional ground of appeal in respect of delayed payments of employees contribution to Provident Fund. We found that the assessee has made deposits within the financial year but the fact remains that this ground of appeal was not raised before the CIT (Appeals). Accordingly, we restore this ground of appeal to the file of CIT (Appeals) to adjudicate on merits and allow allow additional ground of appeal for statistical purposes. Whereas in respect of claim of additional depreciation, the learned Authorised Representative submitted that the assessee has evidences and proof that the computer is an essential part of plant and machinery installed at the factory premises. We found the assessee has not produced any evidence in the appellate proceedings. Hence we consider it proper to remit the disputed issue to the file of CIT (Appeals) for adjudication considering the evidences filed by the assessee. On next issue of disallowance under Section 14A r.w. Rule 8D(2) of restricting the disallowance of expenditure to the extent of dividend income, the learned Authorised Representative contention, are the assessee has own funds and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interest paid to Tata Capital Ltd., the learned Authorised Representative submitted that the recipient has offered income in their assessment, therefore, there is no requirement to make addition. When a query was raised to the learned Authorised Representative regarding obtaining of Certificate from Auditor in Form 26A that the recipient has offered the income in their Assessment. The learned Authorised Representative submitted that the information is available with the assessee and prayed for an opportunity to substantiate before lower authorities. Accordingly to meet the ends of justice, we restore this issue to the file of CIT(Appeals) to consider the submissions of the assessee duly support with evidence of Form 26A and adjudicate on merits. 9. On the last disputed issue, in respect of disallowance of interest on advances provided to the sister concern. The learned Authorised Representative submitted that the assessee has adequate funds and out of surplus funds, the advances are provided to the sister concerns due to business connection. But the Assessing Officer has disallowed interest @ 12% p.a. The contention of the learned Authorised Representative that the advances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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