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TMI Blog2018 (7) TMI 2288X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural sprinklers and related items. Income of Rs. 1,10,17,697/- was declared in the return of income. Case selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Act were served upon the assessee. Necessary information as called for was filed. Various additions totaling Rs. 1,78,19,902/- including disallowance of commission expenditure of Rs. 1,64,60,197/- and disallowance u/s 14A of the Act of the Act at Rs. 8,28,518/- were made and the income was assessed at Rs.2,88,37,600/-. Against the impugned additions, the assessee filed appeal before the learned Commissioner of Income Tax (Appeals) and partly succeeded. Now the revenue is in appeal before the Tribunal against the additions/disallowances deleted by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinate Bench in ITA No. 620/Ind/2016 and the revenue's ground was dismissed by the Tribunal observing as under :- 10.We have considered the facts, rival submissions and perused the material available on record. On going through the assessment record as well as findings of the ld. CIT(A), we find that the assessee has submitted detailed evidences like names of the agents, PAN numbers, describing services rendered by the Agents, confirming the transaction, details of the TDS made, Bank account details with returns of income of agents. However, the AO has failed to examine or cross-examine these evidences by calling the concerned Agents. We also note that the question framed by the AO to various Government Agents like Madhya Pradesh Agro Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceutical formulations. During the previous financial year, the assessee had paid total commission of Rs. 13,35,336/-. Out of this, a sum of Rs. 10,24,290/- was paid as commission on sales made to the Government and its agencies and a sum of Rs. 3,11,046/- was paid as commission to nonGovernment purchases. Since, a doubt was raised with regard to the payments made to various parties as commission, enquiry was held. It was found that all the payments have been made as commission to various parties by demand drafts, wherein the identity of each of the agents was also established. It has also been found that the commission was paid exclusively for business purposes only. 4. All these are findings of fact and no substantial question of law, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted income and has also claimed interest expenditure, applied the provisions of section 14A read with rule 8D of the IT Rules and computed the disallowance u/s 14A at Rs.8,28,518/-. The learned Commissioner of Income Tax (Appeals) observing that the assessee had sufficient interest free reserves, scaled down the disallowance to Rs. 1,21,144/- by way of confirming the disallowance @ 1% towards administrative expenditure on the average investments held by the assessee at Rs.1,21,14,449/-. Now the revenue is in appeal before the Tribunal. 6. We have heard both the parties and perused the material available on record. The revenue is aggrieved with the deletion of the disallowance u/s 14A of the Act at Rs. 7,07,374/- as against Rs. 8,28,518/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investments. In the instant case said presumption was established considering the findings of fact, both by the Commissioner (Appeals) and the Tribunal (Para 10)" Further in case of CIT vs. HDFC Bank 366 ITR 505(Bom) it is held that where assessee's own funds and other non interest bearing funds were more than investment in tax free securities, impugned order passed by Assessing Officer disallowing apart of interest payments under section 14A was to be set aside. Also Hon'ble Gujarat High Court in case of CIT vs. UTI Bank Limited (2013) 215 Taxman 8 (Gujarat) MAG ) has held that if there are sufficient interest free funds to meet tax free investments they are presumed to be made from interest free funds and not loaned funds and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 1% of the annual average of monthly opening and closing average of the investments should be taken. This amendment, the purpose being to put and end to the litigation is curative in nature and thus can be adopted retrospectively and not just from the date it has been notified in gazette. Using this formula the annual average investment has shown to be Rs. 1,21,14,449/-. The 1% of the same works out to Rs. 1,21,144/-. The A.O. is directed to reduce the addition from Rs.8,28,518/- to Rs. 1,21,144/-. This ground of appeal is partly allowed." 7. We, therefore, in the given facts and circumstances of the case and also the revenue being unable to controvert the findings of the learned Commissioner of Income Tax (Appeals), are of the considere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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