TMI Blog2023 (1) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 115JB - advances made by assessee to its subsidiaries - assessee company being a holding company advanced certain sum to its subsidiary specifying rate of interest @ 12.5 per cent per annum - CIT(A) deleted the entire addition - HELD THAT:- As in the present case that the assessee advances to its subsidiary for business requirements, which may have impact on the objectives of the assessee for earning future revenue to the assessee. When it made in relation to advances. Though, it is another fact that the business of such nature did not materialized in positive outcome and the subsidiary had to close such business operation. The Hon'ble Supreme Court in S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] held that whether expenditure may not have been incurred under any legal obligation, yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. The case of the assessee is that the assessee has made advances to its subsidiary for business expediency. Therefore, considering the decision of Hon'ble Supreme Court in SA Builder (supra), we do not find any infirmity in the order passed by Id. CIT(A) - Appeals of the Revenue are d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of exempt income received by the assessee during the year under consideration without appreciating the Circular No.S of 2014 dated 11.02.2014 of CBDT. 2. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of disallowance us 14A of the IT Act t the book profit of the assessee without appreciating the clause (f) of explanation 1 to section 115/8(2) of the Income Tax Act. 3. Whether, on the facts and circumstances of the case and in law. Ld. the CIT(A), was justified in directing the AO to delete the addition of Rs.2,86,37,549 being income u/s 5 of the IT Act. 4. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A), was justified in directing the AO to delete the addition of Rs.2,86,37,549 even when the assessee neither passed any resolution of non-charging of interest to the borrower company but only passed the resolution for the provision for impairment of loan (i.e. Rs.2486.40 lacs) nor made any provision of bad debt in its financial statement. 5. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A), was justified in dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Chettinad Logistics P Ltd (supra) and the decision of the Bombay High Court in the case of Nirved Traders, the disallowance made by the AO us 14A cannot exceed the tax-exempt income earned during the relevant year. It is noted that the appellant has not earned any tax-exempt income during the year. As such, no disallowance could have been made under section 14A. It is also noted that the case of the assessee is also squarely covered by the decision of ITAT in its own case. The addition made by the A by resorting to Rule 8D is, therefore, directed to be deleted. 5.2 Further, the Ld. CIT(A) held that since disallowance u/s 14A was deleted in respect of regular provisions and therefore, no adjustment was to be made u/s 115JB for computation of book profit. The relevant finding of the Ld. CIT(A) is reproduced as under: 5.8 The adjustment made by the AO to the book profits computed u/s 115JB relying on computation u/s 14A does not survive once the computation of disallowance u/s 14A is deleted. 6. Before us, the Ld. Counsel of the assessee submitted that issuein-dispute raised in ground No. 1 2 of the present appeals are covered in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso, the following Explanation shall be inserted, namely:- [Explanation.-For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income. 6.3 The relevant finding of the Hon ble Delhi High Court (supra) is reproduced as under: 8. Consequently, this Court is of the view that the amendment of Section14A. which is for removal of doubts cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. 9. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , didn't take any consent of the holding company i.e. the assessee in the instant case. Thus, the borrower unilaterally passed the resolution for non-payment of interest. The assessee claims that it passed a Board Resolution for not charging interest from 01/01/2009. However, in the resolution passed by the assessee, there is only mention of the closure of the borrower company but there is no mention of non-charging the interest. Moreover, before passing the resolution by the money lending company, the money borrowing company had already passed the resolution of not paying interest. This is also beyond imagination as to how a borrowing company can pass a resolution about not paying any interest when the terms and conditions for giving a loan is determined by a money lending company and not by a money borrowing company. If a money lending company passes a resolution about not charging interest that makes sense but in the instant case borrowing company passed a resolution about not paying interest which does not make sense. 8.2.2 Furthermore, this is not a case of commercial expediency or business exigency for not charging interest for the year. The financial condition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jun-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Jul-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Aug-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Sep-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Oct-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Nov-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Dec-15 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Jan-16 22,91,00,38 - 22,91,00,388 12.5 23,86,462 Feb-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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