TMI Blog2021 (8) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... the first time at Second Appellate stage, we deem it appropriate to restore this issue to the file of Assessing Officer to examine availability of own funds of the assessee for investment. If own funds of the assessee are sufficient to meet the investments, no disallowance under Rule 8D(2)(ii) is warranted. Ground of the appeal of assessee is allowed for statistical purposes. Disallowance of interest expenses on loan converted into share application money - HELD THAT:- As relying on ROHIT EXHAUST SYSTEMS PVT. LTD. AND VICE-VERSA [ 2012 (10) TMI 1101 - ITAT PUNE] interest paid upto the date of allotment of shares i.e. 21/12/2012 is allowable as revenue expenditure. - Decided in favour of the assessee. MAT computation on disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the facts and circumstances of the case and in law, the Ld. AO erred in making a disallowance amounting to ₹ 67,59,6307- u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 ( the Rules ). The Appellant prays that the disallowance made u/s 14A r.w.r 8D of the Rules amounting to ₹ 67,59,630/-, including the suo-moto disallowance made by the Appellant, be deleted. Ground II: On the facts and circumstances of the case and in law, the Ld. AO erred in making a disallowance of interest of ₹ 4,50,000/- on the alleged ground that the loan taken by the Appellant was share application money received by it and thereby holding that no interest should have been paid on the alleged share applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see suo-motu made disallowance of ₹ 64,51,340/- under section 14A of the Act in respect of exempt income. The said disallowance is primarily towards interest expenditure. The Assessing Officer while passing draft assessment order recomputed disallowance under section 14A r.w.r 8D to ₹ 4,52,60,284/-. The assessee filed objections before the DRP against disallowance made by the Assessing Officer. The DRP restricted disallowance u/s 14A of the Act to ₹ 67,59,630/- including suo-motu disallowance made by the assessee. The ld. Authorized Representative of the assessee submitted that a perusal of computation of income at page - 26 of the Paper Book would show that apart from suo moto disallowance of ₹ 64,51,340/- on intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Jurisdictional High Court in the case of CIT vs. Bengal Finance Investments Pvt. Ltd. in Income Tax Appeal No.337 of 2013 decided on 10/02/2015 has upheld the decision of Tribunal, wherein it was held that while computing book profit under section 115JB of the Act no disallowance under section 14A can be added. 5. The ld. Authorized Representative of the assessee submitted that in ground No.2 of appeal, the assessee has assailed disallowance of interest expenditure of ₹ 4,50,000/- on share application money. The ld. Authorized Representative of the assessee submitted that the assessee had taken loan of ₹ 4.50 crores from its holding company M/s. Piramal Enterprises Ltd. The assessee paid interest to holding com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative submitted that the DRP rejected assessee s claim as the assessee failed to furnish necessary documents. 7. Both sides heard, orders of authorities below examined. In respect of disallowance u/s. 14A r.w.r. 8D the content of the ld. Authorised Representative of the assessee is that no disallowance in respect of interest expenditure should be made as the assessee has sufficient own interest free funds for making the investment, interest bearing funds were not utilized for the purpose of investments. The assessee has earned dividend income of ₹ 81,66,391/- during the relevant period. For earning tax free income, the assessee made suo-motu disallowance of ₹ 64.51 lakhs. During the period relevant to the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on loan amount should be allowed as expenditure upto the date of application for allotment of shares or the date of allotment of shares. Similar issue had come up before the Pune Bench of Tribunal in the case of S.R. Thorat Milk Products Pvt. Ltd. vs. ACIT (supra). After considering the decision rendered in the case of ACIT vs. Rohit Exhaust Systems (P) Ltd. in ITA No. 686 of 2011 decided on 05/10/2012, the Tribunal concluded as under: 10. In the light of the decision of the Co-ordinate Bench of ITAT, we find considerable merits in the argument of the assessee. We also find substance in the various contentions raised on behalf of the assessee. We are of the view that the share application money per se cannot be characteriz ..... X X X X Extracts X X X X X X X X Extracts X X X X
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