9911796707
TMI Blog2019 (2) TMI 1866X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 22,28,644/-. The facts relating to the same are that the A.O., during assessment proceedings had noted that the assessee had given advance of Rs. 2,06,39,953/- to various persons for purchase of plots/flats. The A.O. further noted that no interest was charged on this advance and the advance had no business purpose also. Accordingly, the assessee was asked to explain why proportionate interest on the same may not be disallowed. After considering the assessee's submissions and relying on the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Abhishek Industries Ltd., 286 ITR 1 (P&H), the A.O. disallowed the proportionate interest on this advance and computed the same on the basis of day-to-day balance at Rs. 22,28,644/-. 5. The matter was carried in appeal before the Ld.CIT(A), where copy of the bank account from which the advance was given was asked to be furnished. It was noted therefrom that the advance had been made out of Cash Credit bank account of the assessee. The assessee was confronted as to why disallowance should not be confirmed, to which the assessee contended that all types of funds including interest free funds in the shape of share capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 amounts of Rs. 1.53 crores and Rs. 7.80 lacs respectively were transferred from the current account to the Cash Credit account and immediately thereafter on 25.6.2012, payment was made for two projects, which was reflected at Paper Book page No.111. Our attention was also drawn to Paper Book page No.112 showing a transfer of Rs. 1.70 crores from the current account to the Cash Credit account. The Ld. counsel for assessee also drew our attention to the relevant entries of transfer of money from the current account to the Cash Credit account reflected at page Nos.134, 135, 150, 151, 184, 187 and 189. The Ld. counsel for assessee contended, therefore, that the payments were made from CC account only after transfer of interest free funds from the current account and in the light of the fact that sufficient own interest free funds were available with the assessee, it was to be presumed that the same were used for the purpose of making the investment warranting no disallowance of interest u/s 36(1)(iii) of the Act. The Ld.Counsel for the assessee relied upon the decision of the Hon'ble Apex Court in the case of Munjal Sales Corporation Vs. CIT & Anr. Reported in 298 ITR 298 in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reliance placed by the Ld. counsel for assessee on he decision of the ITAT Chandigarh Bench in the case of M/s Janak Global Resources Pvt. Ltd. (supra) was misplaced since the decision had been rendered on the mis-appreciation of facts on the decision of the Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. (supra). It was further contended that the decision relied upon by the Ld. counsel for assessee in the case of Munjal Sales Corporation (supra) was also not applicable since the main issue there was the scope of ambit of section 40(b)(iv) vis-à-vis section 36(1)(iii) of the Act and not the issue of mixed fund concept, presumption or direct nexus through bank account which is the issue in the present case. The Ld. DR, therefore, vehemently supported the order of the Ld.CIT(A). 8. We have heard the rival contentions, carefully perused the orders of the authorities below and also gone through various decisions relied upon by both the parties. The issue before us pertains to disallowance of interest u/s 36(1)(iii) of the Act and the fact that the assessee had made investment of Rs. 2,06,39,953/- by way of advance for purchase of plots/flats is not disputed. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he own funds were employed for making the investment earning exempt income, was available or not. No discussion on this aspect has been done by the Hon'ble Apex Court on this issue who have merely noted that the assessee had utilized mixed funds and, therefore, held that the principle of apportionment of expenses would apply. The proposition, therefore, laid down in the case of Avon Cycles Ltd. (supra) has to be restricted to the extent of the issue before the Hon'ble Apex Court and the facts before it and not beyond that. It cannot be stretched to be addressing the fact situation where sufficient own interest free funds were available with the assessee which fact was not there before the Hon'ble Apex Court in the said case and which was neither the question raised before it and, therefore, not addressed by it also. The Hon'ble Apex Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd., 198 ITR 297 has held that the judgments have to be considered in the context in which they are made and in the light of question that was there before the Court. In the case of Goodyear India Ltld. & Other Vs. State of Haryana & Another reported in 188 ITR 402 (1991) the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the advance established the user of interest free funds for making the impugned advances calling for no disallowance of interest. But we find that despite specific pleading made by the assessee in this regard the same was not addressed by the Ld.CIT(A).Therefore the fact of interest free funds from the current account of the assessee being used for making the impugned advances, by transferring them to the cash credit account before the giving of advance ,as shown by the Ld.Counsel for the assessee before us, needs verification and examination. We therefore consider it fit to restore the issue back to the CIT(A) to examine, verify and consider the contention of the assessee and thereafter to decide the issue in accordance with law. Ground of appeal No.2 therefore is allowed for statistical purposes. 12. Ground No.3 raised by the assessee reads as under: "3. That on law, facts and circumstances of the case, the Worthy CIT(A) was not justified in partly regarding disallowance made u/s 14A even when the disallowance should have been totally deleted. 13. The assessee in the above ground has challenged the disallowance of expenses made u/s 14A purportedly incurred for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his order are as under: "4.3 I have carefully considered the appellant's submissions. As per the submissions filed by the appellant only an amount of Rs. 5 lakhs was invested out of borrowed funds interest he form of CC bank account on 20/01/013. The remaining investments were made out of appellant's own funds. It is therefore apparent that no mized funds were used for purpose of making investment in shares/mutual fund. Moreover, as submitted by the appellant similar disallowance made in appellant's own case for AY 2011-12 has been deleted by the CIT(A). In these circumstances, it is held that the disallowance made by the AO under rule 8D(ii) is not justified and the same is therefore deleted. As regards, the disallowance under rule 8D(iii) is concerned, the appellant has not given any justification with regard to the disallowance. It is not the appellant's case that no administrative expenses was incurred in maintaining the investment, and in the process of dividend income and long term capital gains which are exempt for tax. Such activities do not involve decision making and other related activities. Keeping in view the aforesaid facts, the disallowance made by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
