2011 (6) TMI 806 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against order of Commissioner (Appeals) regarding disallowance of expenditure and application of section 14A for assessment year 1999-2000.

Disposal of Appeal:
- The appeal was ex-parte as the assessee did not appear despite notice.
- The sole issue was disallowance u/s 14A of the Income Tax Act, 1961.
- The first appellate authority allowed the appeal based on availability of surplus funds.
- The Tribunal upheld the decision citing the increase in non-interest bearing funds compared to investments in shares.
- The Tribunal referred to previous decisions regarding the applicability of the Special Bench decision in ITO v/s Daga Capital Management Pvt. Ltd.
- The Tribunal also mentioned the reversal of the Mumbai Special Bench decision by the Bombay High Court in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT.
- The Bombay High Court's decision in CIT v/s Reliance Utilities & Power Ltd. was cited regarding the presumption of investments made from interest-free funds.
- Consequently, the appeal by Revenue was dismissed.

Conclusion:
- The Tribunal upheld the order of the Commissioner (Appeals) that no expenditure by way of interest is disallowable under section 14A of the Act.
- The grounds raised by Revenue were dismissed.