TMI Blog2013 (10) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs u/s.2(22)(e) of the Act despite the fact that the assessee which is a subsidiary of Corrtech International Ltd., had received loan/advance from Control Plus Oil Gas Solution Pvt.Ltd., which is also a subsidiary of Corrtech International Ltd. 3. The ld.CIT(A) has erred in law and on facts in deleting the addition of ₹ 12,21,393/- u/s.2(22)(e) of the Act despite the fact that MJB India Technical Service Pvt.Ltd., possessed accumulated profits in the form of Reserves and Surplus. On the fact and in the circumstances of the case and in law, the ld.CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book profit. The appellant prays that the order of the ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave to amend or alter any ground or add a new ground which may be necessary. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was finalize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has given finding on a fact that the assessee is not a share-holder in the lender company, however assessing officer treated the same as deemed dividend in the hands of the assessee-company. Ld.CIT(A) has followed the decision of the Special Bench of ITAT Mumbai rendered in the case of ACIT vs. Bhaumik Colour Pvt.Ltd.(supra). The ld.Sr.DR could not controvert the same and nothing has been brought on record suggesting that the decision of the Hon ble ITAT Special Bench Mumbai in the case of ACIT vs. Bhaumik Colour Pvt.Ltd.(supra) is not applicable. Therefore, we do not find any infirmity in the order of the ld.CTI(A), the same is hereby upheld. This ground of Revenue s appeal is rejected. 7. Third ground is with regard to deletion of addition of ₹ 12,21,393/- made u/s.2(22)(e) of the Act on account of accumulated profits in the form of reserves and surplus. Ld.Sr.DR supported the orders of the AO. He submitted that the AO has given a finding that the loans and advances taken to the extent of reserve and surplus. On the contrary, the ld.coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the appellant by the ld.CIT(A) vide appellate order dated 20/01/2012 and the disallowance was restricted to the amount as per provisions of Rule 8D(2)(iii). In absence of any change of facts during the year under consideration vis- -vis previous year, the ld.CIT(A) was not justified in confirming the addition of ₹ 12,33,628/-. 2. The learned CIT(A) has grievously erred in directing the AO to work out the interest disallowable to that extent out of the total addition of ₹ 3,94,950/- made by the AO. In view of elaborate submissions on facts as well as in law, the entire addition ought to have been deleted. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds as well as to submit additional grounds at the time of hearing of the appeal. 12. Ground Nos.1 to 1.2 are against the order of ld.CIT(A) in confirming the disallowance of ₹ 12,33,628/- made by the AO u/s.14A r.w.r.8D. The ld.counsel for the assessee submitted that the assesseecompany has made investment into the shares, but earned no exempt income during the year under consideration. He placed reliance on the decision of Hon ble Punjab Haryana High Court rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. reported at (2009) 319 ITR 204 (P H) has held that in the present case, admittedly, the assessee did not make any claim for exemption. In such a situation, section 14A could have no application. In this case also, the assessee has not claimed any exempt income in this year. Therefore, respectfully following the judgement of Hon ble High Court of Punjab Haryana in the case of CIT vs. Winsome Textile Industries Ltd.(supra), we hereby allow this ground and direct the AO to delete the addition. Therefore, ground Nos.1 to 1.2 raised by the assessee in its cross-objection are allowed. 14. Ground No.2 is against the order of ld.CIT(A) in directing the AO to work out the interest disallowable on interest-free funds on the basis of his own formula and confirming the disallowance to that extent out of the total addition of ₹ 3,94,950/-. The ld.counsel for the assessee submitted that the assessee-company has sufficient interest-free funds available. He submitted that ld.CIT(A) erred in giving finding that in the absence of clear-cut details of utilization of funds available with the assessee including owned funds and borrowed were used for all purposes including providing int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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