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2023 (12) TMI 140 - DELHI HIGH COURTDisallowance u/s 14A - connection between the subject expenditure and the exempt income - HELD THAT:- Assessing Officer proceeded on a mere assumption that interest bearing funds could also have been utilized for making the investment in question, because the respondent/assessee had failed to establish that source of investments was its own funds. In view of the stand taken by assessee that the investments were made in the mutual funds in ICICI Liquidity Plan wherein the dividend was automatically reinvested with weekly frequency without any efforts for earning dividend income and that it did not have any borrowings, the Tribunal examined the balance sheets of the respondent/assessee from which it came to a definite conclusion that there were no borrowed funds in the books of the respondent/assessee pertaining to the relevant year, therefore there was no question of using borrowed funds for investments in mutual funds and consequently the impugned disallowance under Section 14A of the Act was unwarranted. Adjustments on account of delay in realization of receivables - Tribunal accepted the claim of the respondent/assessee that it being a debt free company, no adjustment on account of notional interest on receivables was warranted in view of an earlier decision of a coordinate bench of the Tribunal - HELD THAT:- This issue stands clearly covered by the decision of a coordinate bench of this court in the case of PCIT vs Boeing India (P) Ltd [2022 (10) TMI 498 - DELHI HIGH COURT] in which after traversing through various judicial precedents, the court held that the assessee company being a debt free company the question of receiving any interest on receivables did not arise so the adjustment made by the Assessing Officer on account of interest on outstanding receivables was liable to be deleted. TP Adjustment - comparable selection - rejection of Accentia Technologies Ltd and TCS E-Serve Ltd - HELD THAT:- The issue stands covered by earlier decisions of this court in the cases PCIT vs Inductis India (P) Ltd [2019 (2) TMI 1745 - DELHI HIGH COURT] AND B.C. MANAGEMENT SERVICES PVT. LTD. [2017 (12) TMI 255 - DELHI HIGH COURT] wherein Accentia Technologies Ltd., was excluded on the basis that the company was functionally dissimilar and that the segmental data for the assessment year with regard to the comparable segment was not available. The second comparable directed to be excluded i.e. TCS E-Serve Ltd., was on the ground that the concern provided high end online software solutions unlike the assessee, which provided internet based medical health related services. The real services, therefore, were entirely dissimilar. No substantial questions of law arises for present purposes.
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