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Issues:
The judgment involves issues related to the disallowance u/s 14A and u/s 36(1)(iii) of the Income Tax Act for the assessment year 2008-2009. Disallowance u/s 14A: The assessee challenged the disallowance u/s 14A by mechanically applying Rule-8D and including interest not directly related to the exempt income. The AO and CIT (A) upheld the disallowance without adequately considering the assessee's contentions. The Ld Counsel argued for a re-examination based on the jurisdictional High Court judgment in the case of Godrej & Boyce Mfg. Ltd. The Tribunal agreed, remanding the matter to the AO for fresh examination in line with the mentioned judgment. Disallowance u/s 36(1)(iii): Regarding the disallowance of interest under u/s 36(1)(iii), the assessee contended that it had sufficient interest-free funds, which were not considered by the lower authorities. The Ld Counsel referred to the case law of CIT vs. Reliance Utilities Power Ltd. and requested a re-examination of the issue. The Tribunal found merit in the argument, noting that the existence of excess funds was not adequately addressed by the AO or CIT (A). Consequently, the matter was remanded to the AO for a fresh adjudication in light of relevant legal precedents. In conclusion, the appeal of the assessee was allowed for statistical purposes, and the relevant conclusions of the revenue authorities were set aside for re-examination based on the applicable legal judgments.
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