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TMI Blog2012 (9) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... diture incurred to earn exempt income while computing income u/s 115JB of the Act - Decided in favor of Assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant did not have any written agreement showing that it had to pay interest to the creditor i.e. M/s Diana Tea Co. Ltd. No TDS has been deducted on the agreed amount of Rs. 80,00,000!- while as per the agreement dated 7.3.2007, it is the refund of the money along with the interest at the rate mutually decided. As per the memorandum of settlement dated 20.2.2008 M/s Diana Tea Co. Ltd. had given a loan of Rs. 1,10,50,000/- and the assessee has not paid interest thereon from Financial Year 2004-05. There is a contradiction because as per the books of accounts of M/s Diana Tea Co: Ltd. they have been charging interest since F.Y. 2005-06. The debit balance amount was Rs. 2,81,00,000/- as on 31.3.2005. After the said date no fresh loan has been given by M/s Diana Tea Co. Ltd. to the assessee. The assessee has been paying back the debt amount regularly in the F.Y. 2005-06, 2007-08, 2008-09 & 2010- 11 to M/s Diana Tea Co. Ltd. who had been adjusting payment given by the assessee towards the interest and carried forward net amount as credit every year. However, as per the deed of settlement both the parties have mentioned that no interest has been paid. It is also settled in the deed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of this section 194A will apply.. The word interest has been defined in section 2(28A) as given below: "(28A) "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;" The definition of interest is wide and the settlement amount of Rs. 80,000/- falls under the definition of interest, the interest includes a claim or similar right or obligation and also includes any other charge in respect of the money. borrowed or debt incurred. Therefore, the amount of Rs. 80,00,000/- has been settled in view of the credit !borrowed money and as term as interest as per section 2(28a) of the l.T. Act, 1961. 7. The word interest has been defined with a very wide definition in section 2 (28A) where it includes any settlement, obligation, right etc. Further Explanation to Section 194A also provides that when such interest is credited in any account by whatever name it may be called then such credit will be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(a)(ia) of the l.T. Act, 1961. The disallowance of Rs. 80,00,000/- done by the Assessing Officer is upheld on both the grounds that it does not pertain to the current assessment year. This ground of appeal is dismissed. 4.3. As regarding the disallowance u/s 14A of the IT Act he restricted the same to Rs.70,000/- 4.4. Aggrieved by this now the assessee is in further appeal before us. 5. At the time of hearing the ld. Counsel appearing on behalf of assessee has reiterated the submissions made before the revenue authorities which were incorporated by ld. CIT(A) at para 4 in page nos. 2 to 4 of the impugned order and further placed reliance in the case which was referred by ld. CIT(A) in the impugned order . As regarding the adjustment of disallowance made u/s 14A of the IT Act under MAT while computing the tax liability he submitted that the revenue is not justified to make any disallowance u/s 14A of the IT Act in the computation of tax liability under MAT. For this proposition he relied on the decision of ITAT Delhi Bench in the case of Quippo Telecom Infrastructure Ltd vs ACIT.,Circle-14(1), New Delhi vide ITA NO.4931/Del/2010 order dated 18.02.2011. Therefore he requested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... …………………………………………………….. (e)……………………………………………………………………………………" Therefore we find no infirmity in the orders of ld. CIT(A) to be interfered with on this issue. 7.1. As regarding disallowance u/s 14A of the IT Act the relevant observations of the Tribunal order are as under :- "11. In the present case, the AO has also made addition of Rs. 19,58,253/- on account of alleged expenditure incurred to earn exempt income while computing book profit u/s 115JB of the Act, The AO's action has been confirmed by the CIT(A). Both the authorities have applied Rule 8D of the Income-tax Rules while computing the amount of expenditure disallowable u/s 14A of the Act. As already held above, the provisions of Rule 8D are not applicable to the present assessment year under consideration. Therefore, disallowance of expenditure by applying Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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