TMI Blog2022 (2) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the matter is restored to the file of AO for deciding it afresh as per law. Needless to say, the assessee will be allowed an adequate opportunity of hearing and to put forth necessary documents in this regard. Addition to capital work-in-progress on account of property at Bhosari and Hadapsar - Since the capital work-in-progress was not put to use during the year, the AO opined that the amount of interest to that extent was not allowable u/s. 36(1)(iii) - HELD THAT:- Since the assessee did not put to use the two projects under consideration, the interest thereon was required to be capitalized, which was not eligible for deduction u/s. 36(1)(iii). The assessee also admitted this fact before the AO and offered disallowance at ₹ 72.00 lakh. However, no detail was filed either before the AO or before the ld. CIT(A) to show which of the total borrowings were utilized in respect of these two projects. The ld. AR accentuated on the availability of sufficient shareholder' funds for canvassing a view that no interference in the impugned order on this score was called for. The argument of the availability of shareholders' fund does not apply on loans specifically tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - R. S. Syal , Vice President And Partha Sarathi Chaudhury , Member ( J ) For the Appellant : Subhakant Sahu For the Respondents : Kishor Phadke ORDER Per R. S. Syal , VP This appeal by the Revenue arises out of the order dated 01-03-2017 passed by the CIT(A)-4, Pune in relation to the assessment year 2013-14. 2. Revised grounds have been filed, which have not been objected to on behalf of the assessee. 3. The first issue raised through Ground Nos. 2, 6 and 7 is against deleting the disallowance of ₹ 4,12,59,525/- made by the Assessing Officer by invoking the provisions of section 40(a)(ia) of the Income-tax Act, 1961 (hereinafter also called 'the Act'). 4. Succinctly, the facts of the case are that the assessee claimed deduction of interest amounting to ₹ 11,56,59,011/-. During the course of assessment proceedings, the AO observed that a sum of ₹ 4,12,59,525/- was paid by the assessee to non-banking financial companies without deduction of tax at source. On being called upon to explain the reasons for non-deduction of tax at source, the assessee tendered certain explanation. After considering the same, the AO disallowed & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e simultaneously fulfilled, but a certificate in the requisite form issued by a Chartered Accountant also needs to be furnished. It is only on fulfillment of the above conditions cumulatively that an assessee who has otherwise failed to deduct tax at source wholly or partly gets immunity from being treated as an assessee in default. Now turning to the language of section 40(a)(ia) of the Act at the material time, it provides for making disallowance of the expenditure on which the assessee failed to deduct tax or pay after deduction of tax at source before the stipulated date. Second proviso to section 40(a)(ia) states that where an assessee fails to deduct the whole or any part of the tax at source, but is not deemed to be an assessee in default under the first proviso to section 201(1), then for the purposes of this provision, it shall be deemed that he has deducted and paid the tax on such sum, thereby not attracting the disallowance. On a conjoint reading of the second proviso to section 40(a)(ia) and the first proviso to section 201(1), it clearly emerges that on failure to deduct tax at source or payment after deduction, the disallowance which is otherwise required to be made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and development of Bhosari showroom project and interest on the said loan was approximately ₹ 72.00 lakh, which, by mistake was debited to the Profit and loss account instead of capitalizing the same. The AO observed that the assessee did not submit the completion certificate of the said projects. As the assessee failed to submit the exact amount and offered approximately ₹ 72.00 lakh for disallowance by means of capitalization, the AO held that interest on entire closing balance of capital work-in-progress at ₹ 23.90 crore was liable to be capitalized. Applying interest rate @ 12%, he made disallowance of interest at ₹ 2,86,89,546/-. The ld. CIT(A) deleted the addition by directing the AO to restrict such disallowance to ₹ 72.00 lakh after verification, being, the amount suo motu offered by the assessee during the course of assessment proceedings towards loan of ₹ 6.25 crore taken from ICICI bank for this project. 9. Having heard both the sides and gone through the relevant material on record, it is seen that the assessee has work-in-progress in respect of property at Bhosari and property at Hadapsar with closing balance at ₹ 23.90 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ₹ 67,74,102/- made by the AO. Succinctly, the facts of this issue are that the assessee received exempt dividend of ₹ 2,48,176/-. In the absence of the assessee having offered any disallowance u/s. 14A of the Act, the AO computed such disallowance at ₹ 67,74,102/-. The ld. CIT(A) restricted the disallowance to the extent of exempt income, against which the Revenue has approached the Tribunal. 11. Having heard the rival submissions and gone through the relevant material on record, we find that the Hon'ble Delhi High Court in Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) has held that if there is no exempt income, there can be no question of making any disallowance u/s. 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. (2014) 90 CCH 081-Del-HC. More recently the Hon'ble jurisdictional High Court in Pr. CIT VS. Kohinoor Projects Pvt. Ltd. (2020) 425 ITR 700 (Bom.) has also held that in the absence of any exempt income, there cannot be any disallowance of expenses u/s. 14A of the Act. Since the assessee in the instant case earned exempt dividend income of ₹ 2,48,167/- and the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
