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TMI Blog2015 (2) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion drawn by the CIT(A). The finding of the CIT(A) is that assessee was possessing sufficient interest-free funds of its own, which were generated in the course of relevant financial year apart from the substantial share-holder funds which covered the impugned interest-free advances and therefore a presumption has to be drawn that such interest-free advances have been made out of interestfree funds available with the assessee. Factually speaking, the aforesaid finding of the CIT(A) has not been assailed before us on the basis of any cogent material or evidence. Since the aforesaid finding is not in dispute, then the ratio of the judgement of the Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) is clearly attracted and the disallowance of ₹ 15,21,946/- made by the Assessing Officer has been rightly deleted by the CIT(A). The investment in non-interest bearing advances/shares has been made out of own funds and hence the disallowance u/s 14A is not justified. - Decided against revenue. - ITA No. 90/PN/2014 - - - Dated:- 29-12-2014 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee. The Assessing Officer also held that construction was not the business of the assessee and therefore the gain on the sale of shop amounts to sale of a capital asset. The Assessing Officer noted that the value of the said premises for the purposes of payment of stamp duty was ₹ 13,23,600/- and therefore by applying that provision of section 50C of the Act he brought to tax the difference of ₹ 1,23,600/- (i.e. ₹ 13,23,600/- minus ₹ 12,00,000/-). 5. The CIT(A) noted that assessee had declared a business income of ₹ 9,55,080/- with respect to the impugned transaction and such income was offered to tax by the assessee @ 30% as it was a regular income. The CIT(A) further noted that if the income on sale of shops was to be treated as a capital gain, assessee would require to pay lesser tax i.e. @ 20%. Further, the CIT(A) noted that if the said shop was to be treated as a capital asset then the same was to be treated as a long term capital asset and assessee was to be entitled to the benefit of indexation while computing the long term capital gain. For all the above reasons, CIT(A) noted that if the assessee was made liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal interest debited to the Profit Loss Account was ₹ 15,21,946/-. The said amount was disallowed while computing total income. 8. The CIT(A) has deleted the said addition by following the ratio of the judgement of the Hon ble Bombay High Court in the case of CIT vs. Reliance Utilities Power Ltd., (2009) 313 ITR 340 (Bom) on the ground that assessee possessed sufficient interest-free funds so as to cover the aforesaid interestfree advances. The relevant discussion of the CIT(A) is reproduced hereinafter :- 7.2.1 The disallowance u/s 36(1)(iii) of the Act is not justified in the case of the appellant as the said alleged investment for non-business purpose is ₹ 134 Lakhs whereas as on 31/03/2008 and 31/03/2009, the interest free reserve/accumulated profit available with the company is ₹ 1134.22 Lakhs and ₹ 1398.43 Lakhs respectively. Therefore, the alleged investment for non-business purpose is covered by the interest free reserves and accumulated profits available with the appellant company. The above proposition of law is supported by the decision of Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities Power Ltd. (2009) 313 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been dealt with by the CIT(A). The said aspect is in relation to a reference made by the Assessing Officer to section 14A of the Act. On this aspect, the CIT(A) noted that though the Assessing Officer has referred to section 14A of the Act in the discussion, yet no disallowance has been determined by invoking section 14A of the Act and instead the disallowance has been determined by making recourse to section 36(1)(iii) of the Act. However, the CIT(A) held that even in terms of section 14A of the Act, no disallowance was merited. In this context, the CIT(A) has made the following discussion :- 7.2.2 The disallowance u/s 14A is also not justified as the appellant is also engaged in the business of trading in shares and has declared profit from share trading as under - A.Y. Amount of profit from share trading 07-08 ₹ 4,88,587/- (Sch. 13) 08-09 ₹ 6,42,352/- (Sch. 13) 09-10 Rs. (9,00,474/-) (Sch. 13) The appellant accordingly claimed that the shares of companies have been purchased for the purpose of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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