TMI Blog2022 (6) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the non-current assets of Rs.193.42 crores as on 31.03.2014, a sum of Rs.168.62 crores is investment in unquoted shares of subsidiary companies. So the investment in other/ listed equity shares are to the tune of Rs.24.8 crores. As against this figure of Rs.24.8 crores of the investment, the assessee has interest-free fund of Rs.441.78 crores, which is more than sufficient to cover up the investments giving rise to exempt income. Therefore, the ratio laid down by the Hon ble Bombay High Court in the case of Reliance Utilities Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is squarely applicable on the facts and circumstances of the case. We are, therefore, inclined to hold that no interest disallowance is called for as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has raised the following grounds of appeal: 1.1 That on the facts and circumstances of the case, the Ld. TPO/ Ld. DRP have erred by computing a charge payable by Tega Holdings Pte Limited, Singapore (Tega Singapore) for corporate guarantee received from the Appellant on loans taken from Axis Bank, Singapore, for acquisition of entities in Australia and Chile. In doing so, the Ld. TPO/Ld. DRP failed to appreciate the fact that, the debt leveraged acquisition structure arising out of corporate guarantee provided by the Appellant has actually benefited the Appellant. 1.2 On the facts and circumstances of the case, the Ld. TPO/Ld. DRP have erred in not appreciating that the corporate guarantee provided by the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in determining the disallowance under section 14A of the Act read with Rule 8D without appreciating that Appellant has suo moto disallowed Rs. 2,76,296/-. In doing so, the Ld. AO / Ld. DRP failed to appreciate that invocation of rule 8D is not automatic and recording of satisfaction and establishing a direct nexus between the expenditure incurred and the exempt income u/s 10 is a sine qua non. 2.2. Without prejudice to the above, the Ld. AO / Ld. DRP failed to consider that the Appellant had sufficient owned funds to acquire investments producing exempt income and that presumption ought to be made that such investments were made from interest-free funds. 2.3. Without prejudice to the above, on the facts and in the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 115JB. 3.3 Without prejudice to the above, on the facts and in the circumstances of the case and in law, the Ld. AO / Ld. DRP has grossly erred in determining the disallowance under section 14A of the Act read with Rule 8D without appreciating that Appellant has suo moto disallowed Rs. 2,76,296/. In doing so, the Ld. AO / Ld. DRP failed to appreciate that invocation of rule 8D is not automatic and recording of satisfaction and establishing a direct nexus between the expenditure incurred and the exempt income u/s 10 is a sina qua non. 3.4. Without prejudice to the above, the Ld. AO / Ld. DRP failed to consider that the Appellant had sufficient owned funds to acquire investments producing exempt income and that presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest disallowance under section 14A of the Act should have been made; (2) Ld. Assessing Officer erred in adding the disallowance under section 14A of the Act for determining the book profit under section 115JB of the Act. 6. Ld. Counsel for the assessee submitted that as per the audited financial statement, the assessee-company has sufficient capital and interest-free reserves surplus to cover up the investment made in equity shares fetching exempt income. It was thus contended that interest disallowance of Rs.11.34 lakhs computed under Rule 8D(2)(ii) of the Act may be deleted. 7. Per contra, ld. D.R. supported the order of the lower authorities. 8. We have heard the rival contentions and perused the relevant material avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare capital and Reserves Surplus as on 31.03.2013 is Rs.386.60 crores (approx.) and as on 31.03.2014 is Rs.441.78 crores. The shareholders fund is interest-free fund. Now looking towards the investment fetching exempt income, the same are shown in Schedule 14 under the head Non-Current Assets . As on 31.03.2013 it is Rs.161.76 crores and as on 31.03.2014 it is Rs.193.42 crores It is further brought to our notice that out of the non-current assets of Rs.193.42 crores as on 31.03.2014, a sum of Rs.168.62 crores is investment in unquoted shares of subsidiary companies. So the investment in other/ listed equity shares are to the tune of Rs.24.8 crores. As against this figure of Rs.24.8 crores of the investment, the assessee has interest-fre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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