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TMI Blog2024 (7) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO under Section 14A of the Act read with Rule 8D(2)(ii). 2. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in not accepting the contention of the appellant that investment made in the partnership firm was out of surplus noninterest bearing funds available with the company. 3. Whether on the facts and circumstances of the case, the learned CIT(A) was right in confirming the action of the AO in including Bank Charges and Bank guarantee charges of Rs. 21,85,514/-, as interest on borrowings for the purposes of calculating disallowance u/s 14A of the Act read with Rule 8D(2)((ii). 4. Whether on the facts and circumstances of the case, the learned CIT(A) has erred in ignoring the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, the assessee filed his submissions vide letter dated 25.02.2016 and contended that it has already disallowed a sum equal to 0.5% of average investments considering the expenses attributable to such investments. The assessee further contended that it had sufficient interest free funds for investments hence, in respect of interest, no disallowance is called for. Before the Assessing Officer, the assessee also submitted the status of the non-interest bearing funds. However, the Assessing Officer did not accept the contentions of the assessee and proceeded to make disallowance u/s 14A of the Act. Thereby, he made addition of Rs. 9,06,947/-. 5. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who sustained both the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed in favour of the assessee by the judicial pronouncements by the Co-ordinate Bench of this Tribunal and the Hon'ble Supreme Court in the cases of Godrej Boyce Mfg. Ltd. in Civil Appeal No.7020 of 2011 dated 08.05.2017 and reliance was placed upon the judgement of Hon'ble Supreme Court in the case of Hero Cycles Pvt.Ltd. vs CIT 379 ITR 347 (SC). 10. We have heard Ld. Authorized Representatives of the parties and perused the material available on record. There is no dispute with regard to the fact that before the authorities below, the assessee had suo motto disallowed the expenditure related to administrative expenses. However, in respect of the disallowance for the interest, it was stated that the assessee was having sufficient inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,27,87,265/- is available for investment and working capital requirements, therefore, the appellant submitted that no disallowance of interest can be made under Rule 8D(2)(iii). I have considered the argument of the appellant. It is seen that appellant has paid interest of Rs. 56,67,261/- which is not directly attributable to any income. This interest includes the bank charges and bank guarantee charges also which are part and parcel of the interest. Since, the funds available with the appellant company are invested in different assets, therefore, it cannot be directly be said that the funds received as share capital and reserve and surplus were utilized for making investment in partnership firms and funds taken on interest were utilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the Assessing Officer, particularly, in the absence of any new fact or change of circumstances. Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available (Rs. 270.51 crores as on 1.4.2001 and Rs. 280.64 crores as on 31.3.2002) remains unproved by any material whatsoever. While it is true that the principle of res judic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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