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TMI Blog2015 (5) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as "Rules") in its entirety, the Revenue has preferred the present Tax Appeal No.276/2015 with the following proposed question of law "Whether, on facts and in circumstances of the case, the appellate Tribunal is right in deleting the disallowance made on account of interest expenditure u/s 14A r.w.r. 8D though assessee soumoto disallowed the amount on adhoc basis?" [2.1] Feeling aggrieved and dissatisfied with the impugned judgment and order dated 10.10.2014 passed by the learned Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad (hereinafter referred to as "Tribunal") in ITA No.781/Ahd/2013 for Assessment Year 200910 by which the learned Tribunal has dismissed the said appeal preferred by the Revenue confirming the deletion of disallowance of interest expenses under Section 14A of the Act read with Rule 8D of the Rules made by the learned CIT(A) and deleting the disallowance made by the AO under Section 40(a)(ia) of the Act for nondeduction of TDS on overseas freight, the Revenue has preferred the present Tax Appeal No.277/2015 with the following proposed substantial questions of law. "[A] Whether, on facts and in circumstances of the case, the appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and dissatisfied with the order of assessment passed by the AO of disallowance of the interest expenses under Section 14A of the Act read with Rule 8D of the Rules and also the disallowance made by the AO under section 40(a)(ia) of the Act for nonproduction of the TDS on overseas freight, the assessee preferred appeal before the learned CIT(A). That the learned CIT(A) partly allowed the said appeal and deleted the disallowance of Rs. 5,84,706/out of disallowance of Rs. 12,06,934/made by the AO under Section 14A of the Act of amount of disallowance of interest and administrative expenses. Meaning thereby the learned CIT(A) confirmed the disallowance of administration and calculation charges of Rs. 6,22,228/under Section 14A of the Act. The learned CIT(A) deleted the entire disallowance of Rs. 14,06,934/made by the AO under section 40(a)(ia) of the Act for nondeduction of TDS on overseas freight. [3.5] Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A), both the assessee as well as the Revenue preferred Tax Appeal before the learned Tribunal. The assessee preferred appeal being ITA No.611/Ahd/2013 challenging the order passed by the learned CIT(A) insof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission that Rule 8D could be applicable from assessment year 200809 and the expenditures are mix kind of expenditures. Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue has further submitted that even the learned Tribunal has materially erred in confirming the order passed by the learned CIT(A) deleting the disallowance made by the AO under Section 40(a)(ia) of the Act. It is submitted that while deleting such disallowance the learned Tribunal has not properly appreciated the provisions of the Act more particularly section 172 of the Act. It is submitted that admittedly there was no return filed by the recipient as required under Section 172 of the Act and therefore, section 172 of the Act would not be applicable. It is submitted that therefore both, the learned CIT(A) as well as the learned Tribunal have materially erred in deleting the disallowance made under Section 40(a)ia) of the Act for nondeduction of TDS on overseas freight. Making above submissions and relying upon above decision, it is requested to admit / allow the present Tax Appeals. [5.0] Heard Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue at length. We have gone through and conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged any interest free loan to associate concerns. He held that the assessee in fact earned interest income at the rate varying from 9% to 12.5% from the associated concerns depending upon the availability of surplus funds and thereby earned interest income of approximately Rs. 50.74 lakhs during the year. He, therefore, held that disallowance made by the Assessing Officer u/s.36(i)(iii) was of Rs. 40,10,861/was not justified. 7. The Departmental Representative has merely relied upon the order of the Assessing Officer. He has not pointed out any specific error in the order of the Commissioner of Income Tax (Appeals). He could not bring any material on record to show that the assessee could not have advanced interest free loans or loans at lower rate of interest to the sister concerns out of its interest free funds available with it. Therefore, we find no infirmity in the order of the Commissioner of Income Tax (Appeals) which is confirmed and the ground no.1 of appeal of the Revenue is dismissed. 8. Further, the Assessing Officer also made disallowance of Rs. 8,22,228/out of administrative expenses, but had restricted the disallowance made to Rs. 6,22,228/as the assessee himself h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deleting the disallowance of interest expenses under Section 14A of the Act in its entirety. [5.3] Now, so far as the second proposed question of law raised in Tax Appeal No.277/2015 arising out of the judgment and order passed by the learned Tribunal in ITA No.781/Ahd/2013 i.e. deleting the disallowance under Section 40(a)(ia) of the Act for nondeduction of TDS on overseas freight is concerned, it is required to be noted that as per section 172 of the Act, payment made to the nonresident shipping company would not be covered in Sections 194C or 194 of the Act. At this stage it is required to be noted that it is not in dispute that the amount in question was infact paid to the nonresident shipping company. Under the circumstances, the learned Tribunal has rightly deleted the disallowance made by the AO under Section 40(a)(ia) of the Act. [6.0] In view of the above and for the reasons stated above, we find that there is no error committed by the learned Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad while passing the impugned judgment and order. No substantial question of law arise in the present Tax Appeals. Under the circumstances, both these Tax Appeals deserve to be di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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