TMI Blog2020 (4) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... omply with the requirements of the AO in accordance with law. AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law. With regard to the payment to HSBC, we find merit in the submissions made by the Ld. AR for the reason that this issue is covered by Article 11(3) - Since, the assessee has made out of a case under item (c) of Article 11(3), supra, the corresponding grounds of the assessee are allowed. - I.T.A. No. 3398/Chny/2018 - - - Dated:- 12-2-2020 - Shri N.R.S. Ganesan, Judicial Member And Shri S. Jayaraman, Accountant Member For the Appellant : Shri. Vikram Vijayaraghavan, Advocate For the Respondent : Shri. AR V Sreenivasan, JCIT ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER: The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-15, Chennai in ITA No. 155/2015-16/CIT(A)-15 dated 26.09.2018 for assessment year 2012-13. 2. M/s. Sundaram Clayton Ltd., the assessee, is carrying on Manufacture of Automotive Components and Application. While making the assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Year 2009- 10 in ITA Nos 39 394/2011-12 dated 28.03.2013 relied on by the appellant. I find that there is considerable force in the submissions of the appellant. The appellant submitted that none of the borrowed funds have been used directly or indirectly for making the investments. The appellant also submitted that for all the investments made in earlier years, the company has sufficient own funds for making the investments. The appellant has clearly established with the financial statements for the period from 2001-02 to 2009-10 that (a) it had sufficient funds to make the investments (b) It had sufficient profits in the earlier years when the investments were made (c) And in all the years the borrowed funds were utilized for the purpose of the business and (d)The borrowed funds were actually reduced to ₹ 28869.44 lakhs as on 31.03.2010 compared to ₹ 33929.88 lakhs as on 31.03.2009. 5 ITA No.2612/Mds/2014 C.O. No.137/Mds/2014 On the other hand, the AO estimated the disallowance of interest amount without any material placing on the record. The Hon'ble High Court of Bombay in the case of HDFC Bank Ltd. cited (supra) explained the legal position of law in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f average investments which work out to ₹ 35,18,000/- which is reasonable and justifiable. This ground of appeal, as it relates to disallowance of 0.5% of average investments as expenditure is confirmed. The total disallowance u/s 14A is restricted to ₹ 35,18,000/-. Hence ground No.2 of the appeal relating to disallowance of expenditure for earning the exempt income u/s 14A is treated as partly allowed. 7. On going through the above order of the Commissioner of Income Tax (Appeals), we do not find any valid reason to interfere with his findings in partly deleting the disallowance made under section 14A of the Act. The Revenue also did not rebut the findings of the Commissioner of Income Tax (Appeals) with evidences. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal raised by the Revenue. Therefore, following the above order, the AO is directed not to make any disallowance u/s. 14A r.w.r 8D(2)(ii). Thus, the corresponding grounds of the assessee on this issue are allowed. 5. Further, the Ld. AR submitted that the Ld. CIT(A) ought to have appreciated that only those investment that had yielded exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on the same. In this regard, he invited our attention to the copy of the sample invoice, declaration of period of stay from the consultant and DAA are enclosed in the paper book. 7.2 In the case of Mr. Detlef Hasenfuss, the AR submitted that the payment to Mr. Detlef Hasenfuss is made towards the fees for consultancy services rendered by him. This is covered by Article 14 Independent Personal Services of the DTAA between India and Germany, according to which, the income is taxable in India, only (i) the consultant has stayed for a period of 183 days or more in India and the income is attributable to the activities carried out by him in India, or (ii) the consultant has a fixed base in India and the income is attributable to that fixed base. Since the period of his stay in India during the FY is less than 183 days and he does not have a fixed base in India, the same is not taxable in India. Hence, no tax has been deducted on the same. In this regard, he invited our attention to the copy of the sample invoice, declaration of period of stay from the consultant and DAA are enclosed in the paper book. 7.3 Per contra, the Ld. DR invited our attention to the order of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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