TMI Blog2021 (2) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... IGH COURT] particularly on the issue that when assessee has substantial interest free funds disallowance u/s. 36(1) (iii) is unwarranted. In the light of the above facts and findings, we do not find any error in the decision of ld. CIT(A). Therefore, this ground of appeal of the revenue is dismissed. Deemed dividend u/s. 2(22)(e) - assessee company was a subsidiary of Corrteck Energy Ltd. and Crosstown Power India Pvt. Ltd. was a subsidiary of Corrteck International Pvt. Ltd - HELD THAT:- The identical issue on similar fact has been adjudicated by the Co-ordinate Bench of the ITAT in the case of M/s. Precimetal Casts Pvt. Ltd. vs. ITO [ 2020 (12) TMI 1152 - ITAT AHMEDABAD] after following the decision of Jurisdictional High Court in the case of MAHAVIR INDUCTOMELT PVT. LTD. [ 2017 (1) TMI 1159 - GUJARAT HIGH COURT] holding that for the applicability of section 2(22)(e) it is required that the assessee company must be a share holder in the company from whom the loan or advances has been taken and it does not provide that any share holders in the assessee company who had taken any loan or advance from another company in which such share holder is also a share holder having su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest expenditure incurred on loan but not made any disallowance u/s. 14A r.w.s. 8D of the I.T. Rule. On query, the assessee explained that it has not claimed any exempt income, therefore, disallowance the u/s. 14A r.w.r. 8D does not arise at all. The assessee has also submitted that the Hon'ble Gujarat High Court had adjudicated the similar issue on identical facts in the case of the assessee itself for assessment year 2009-10 holding that no addition u/s. 14A r.w.s. 8D is warranted. However, the Assessing Officer has not agreed with the submission of the assessee stating that section 14A r.w.s 8D provides for disallowance of expenditure even where taxpayer in a particular year has not earned exempt income. 5. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee after following the decision of Hon'ble Gujarat High Court in the case of the assessee itself pertaining to assessment year 2009-10. 6. Heard both the sides and perused the material on record. It is undisputed fact that the assessee has not received any exempt income during the year under consideration. The Hon'ble Gujarat High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was having substantial interest free fund evident from annual accounts placed as annexure A in the submission of the assessee as under:- Share capital ₹ 2,10,00,000/- Reserves Surplus ₹ 27,05,05,249/- Total ₹ 29,15,05,249/- It is demonstrated from the account of the assessee that it was having interest free fund of ₹ 29,15,05,249/- as against interest free loan of ₹ 26,96,648/-. We have also considered the judicial pronouncements referred by the ld. counsel in the case of CIT vs. Reliance Industries Ltd. 410 ITR 466 (SC), CIT vs. Torrent Power Ltd. - 363 ITR 474 (Guj.), CIT vs. Suzlon Energy Ltd. - 354 ITR 630 (Guj), CIT vs. Gujarat Power Corporation Ltd.- 352 ITR 583 (Guj), CIT vs. Reliance Utilities Power Ltd. - 313 ITR 340 (Bom) and Munjal Sales Corporation vs. CIT- 298 ITR 298 (SC). particularly on the issue that when assessee has substantial interest free funds disallowance u/s. 36(1) (iii) is unwarranted. In the light of the above facts and findings, we do not find any error in the decision of ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Bhaumik Colors Pvt. Ltd. -118 ITR 1 (Mum)(SB) CIT vs. Ankitech (P.) Ltd.- 340 ITR 14 (Del) The identical issue on similar fact has been adjudicated by the Co-ordinate Bench of the ITAT in the case of M/s. Precimetal Casts Pvt. Ltd. vs. ITO vide ITA No. 3499/AHD/2015 dated 16-12-2020 after following the decision of Jurisdictional High Court in the case of Pr. CIT vs. Mahavir Inducto Pvt. Ltd. dated 12th Jan, 2017 holding that for the applicability of section 2(22)(e) it is required that the assessee company must be a share holder in the company from whom the loan or advances has been taken and it does not provide that any share holders in the assessee company who had taken any loan or advance from another company in which such share holder is also a share holder having substantial interest. The relevant part of the decision is reproduced as under:- 7. Heard both the sides and perused the material on record. The Assessing Officer noticed that assessee company has obtained unsecured loan from Gaurav Securities Pvt. Ltd. wherein one of the main shareholders of the assessee company Shri Umesh Bhatiya was holding substantial shares in Gaurav Securities Pvt. Ltd. Look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Delhi High Court in the case of CIT vs. Ankitech Pvt. Ltd. Ltd. reported in 340 ITR 14 Delhi. The relevant part of the decision is reproduced as under:- 50. Identical question came to be considered by the Division Bench of this Court in Tax Appeal No. 253 of 2015. After considering the decision of the Bombay High Court in the case of CIT vs. Impact Containers Private Limited ors rendered in ITA No. 114 of 2012 and the decision of the Delhi High Court in theca se of CIT vs. Ankitech Pvt. Ltd. reported in 340 ITR 14 (Del) and on interpreting Section 2 (22)(e), in para 4 has observed and held as under: 4. Shri Bhatt, learned Counsel appearing on behalf of the revenue has as such tried to justify the decision of the Delhi Court in the case of Ankitech Pvt. Ltd. (Supra) and has vehemently submitted that the Delhi High Court has not considered the third category i.e. shareholder in the assessee Company holding not less than 10% of the voting power in the Company from whom the loan or advance is taken. However, on considering Section 2(22)(e) of the Act, we are not at all impressed with the aforesaid. If the contention on behalf of the revenue is accepted, in that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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