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TMI Blog2012 (11) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts. b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 2. Adverting first to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring income of Rs.7,30,01,046/- filed on 30.11.2006 by the assessee, engaged in business of manufacturing and trading in industrial gases besides production of electricity from wind mill, was selected for scrutiny with the service of a notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act) issued on 14.09.2007. During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee made investment of Rs.7,21,10,744/- in mutual funds, yielding dividend income exempt u/s 10 of the Act. Since the assessee paid interest and other charges to banks for raising funds, to a query by the AO, seeking to disallow proportionate expenditure on account of financial charges for utilization of borrowed funds in the aforesaid mutual funds, the assessee submitted cost of funds used in making investment for earning exempt income, as under:- [In Rs.] Total assets of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's interest and its borrowed funds have been attempted to be established. Hon'ble Delhi High Court in CIT Vs. Tin Box Co. Ltd. 260 ITR 637) and Hon'ble Punjab & Haryana High Court in CIT Vs. Hero Cycles Ltd. 31 DTR 301 are in favour of the appellant unless contrary findings were given by the Assessing Officer. c) Although in this year under appeal there was increase in claim of finance and other charges to be extent of Rs.6.40 crores, because of fresh borrowings, there was no case of any fresh investments, during the year, instead the investment has come down from Rs.12 crores in past year to Rs.7.66 crores is the present year. This figure has been admitted by the Assessing Officer while calculating the disallowance u/s 14A. Again no contrary findings here been given by the Assessing Officer on this issue. 5.1 Considering the above facts and infirmities in the Assessing Officer's stand and on the basis of the judicial rulings in favour of the appellant, the disallowance of Rs.10,70,080/- cannot be upheld totally. However, appellant has taken an alternative plea that the disallowance, if any, should only be with reference to finance charges to the extent of Rs.2,95,66,516/- (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income; rather investment in mutual funds came down to Rs.7,66,56,044/- as against Rs.12,00,45,300/- in the preceding year. The ld. AR informed that in the preceding year, disallowance was made in relation to interest and finance charges of Rs.2,95,66,516/-. Since no fresh investment has been made in the year under consideration, the ld. CIT(A), following the basis adopted in the preceding year, restricted the disallowance to Rs.4,93,760/-. The Revenue have not placed before us any evidence, controverting these findings of facts recorded by the ld. CIT(A) nor brought to our notice any material suggesting that borrowed funds were indeed utilized in making investment in the year under consideration, yielding tax free income. In this situation, we do not find any infirmity in the approach of the learned CIT(A) and, therefore, ground no.1 in the appeal is dismissed.. 6. Ground no.2 in the appeal relates to disallowance out of repair, and maintenance expenses on plant, machinery and building while ground no.3 in the appeal pertains to disallowance of 5% of miscellaneous and travel expenses. During the course of assessment proceedings, the AO asked the assessee to produce vouchers rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allowed the appeal on facts the Hon'ble ITAT order is on the single issue of bad debts which would indicate that this issue was not agitated by the department while filing the appeal in this case, the view held by the CIT(A)-XV, Delhi are that "I agree with the appellant that without specifying the precise expense within repairs to be of such nature to be classified as capital expenditure, there is no basis for disallowing 10% of the expenses...." Now in the present case the Assessing Officer has based his disallowance on the history of the case from year to year holding that there is no difference in facts this year and therefore disallowance is justified. This basis to my mind is not substantive and worthy of being upheld as it has not found favour even in the past and is contrary to the ratio of rulings pleaded in this respect. I do not see any reason to disagree with the CIT(A)-XV, Delhi on this issue. The ground is, therefore, allowed." 7.1 For similar reasons, the ld. CIT(A) deleted the disallowance out of miscellaneous expenses and travelling expenses, without even specifying as to whether or not the assessee produced all the bills or vouchers, which were not produced b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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