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TMI Blog2013 (11) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... t:- Assessee-company had received loan of Rs.52,00,000/- from MJB India Technical Services Pvt.Ltd. He submitted that there are no accumulated profit in the case of MJB India Technical Services Pvt.Ltd., considering net of general reserve and debit balance in profit & loss account and, therefore, no amount can be considered u/s.2(22)(e) of the Act – Decided against the Revenue. Disallowance of Rs.12,33,628/- made by the AO u/s.14A r.w.r.8D – Held that:- Assessee-company has sufficient interest-free funds. The ld.counsel for the assessee has placed reliance on the decision of Hon’ble coordinate Bench (ITAT Ahmedabad) in the case of Torrent Financiers [2001 (6) TMI 165 - ITAT AHMEDABAD-A] - ld.Sr.DR could not controvert the finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Gujarat High Court rendered in the case of Alembic Glass Industries Ltd. reported at 149 taxman 15 (Guj.). 4. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided this issue following the decisions relied upon by the ld.counsel for the assessee. The Sr.DR has not demonstrated as to how these decisions which have been relied upon by the ld.CIT(A) are not applicable on the facts of the present case. Therefore, we do not find any infirmity in the order of the ld.CIT(A), the same is hereby upheld. This ground of the Revenue s appeal is rejected. 5. Second ground is with regard to deletion of addition of Rs.26 lacs m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of accumulated profits in the form of reserves and surplus. Ld.Sr.DR supported the orders of the AO. He submitted that the AO has given a finding that the loans and advances taken to the extent of reserve and surplus. On the contrary, the ld.counsel for the assessee supported the order of the ld.CIT(A) and he submitted that the assessee-company had received loan of Rs.52,00,000/- from MJB India Technical Services Pvt.Ltd. He submitted that there are no accumulated profit in the case of MJB India Technical Services Pvt.Ltd., considering net of general reserve and debit balance in profit loss account and, therefore, no amount can be considered u/s.2(22)(e) of the Act. 8. We have heard the rival contentions, perused the material availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been earned or claimed nor the investment has been made out of borrowed funds, no disallowance is warranted u/s.14A as held in the case of CIT vs. Winsome Textile Industries Ltd. (2009) 319 ITR 204 (P H). 1.2. The learned CIT(A) further erred in not appreciating the fact that on identical facts, the disallowance u/s.14A made in previous year i.e. A.Y. 2008-09 has been decided in favour of the appellant by the ld.CIT(A) vide appellate order dated 20/01/2012 and the disallowance was restricted to the amount as per provisions of Rule 8D(2)(iii). In absence of any change of facts during the year under consideration vis- -vis previous year, the ld.CIT(A) was not justified in confirming the addition of Rs.12,33,628/-. 2. The learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. We find that the ld. CIT(A) has decided this issue as under:- 3.2. As regards interest, appellant had borrowed funds on which interest was paid. While making investments, both borrowed funds as well as own funds were used hence one cannot say that borrowed funds were used only for business purpose and owned capital was only used for investment. Admittedly no separate accounts are maintained for business and investment activities therefore appellant s claim is not justified that borrowed funds were not used in making investment. In view of this, I do not agree with my predecessor that since appellant had sufficient interest free funds, no part of borrowed funds can be attributed to investments. Further, app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ground Nos.1 to 1.2 raised by the assessee in its cross-objection are allowed. 14. Ground No.2 is against the order of ld.CIT(A) in directing the AO to work out the interest disallowable on interest-free funds on the basis of his own formula and confirming the disallowance to that extent out of the total addition of Rs.3,94,950/-. The ld.counsel for the assessee submitted that the assessee-company has sufficient interest-free funds available. He submitted that ld.CIT(A) erred in giving finding that in the absence of clear-cut details of utilization of funds available with the assessee including owned funds and borrowed were used for all purposes including providing interest-free loans. On the contrary, ld. Sr. DR supported the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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