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TMI Blog2015 (8) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... no interference is called for in the order of the learned CIT(A) in deleting the disallowance of interest made by the Assessing Officer in the assessment order. - Decided in favour of assessee Disallowance of proportionate expenses - Held that:- It has been argued by the learned Counsel that the disallowance needs to be worked out again, for the reason that no disallowance under section 14A can be made on the strategic investments made in the subsidiaries. The second contention of the learned Counsel is that no disallowance under section 14A, can be made with respect to the shares held as stock–in–trade. It is seen that though these contentions were not raised by the assessee before the authorities below, undisputedly, in many cases, these contentions have been accepted by the various Benches of the Tribunal. Therefore, respectfully following the cases laws cited above, we set aside the order passed by the learned CIT(A) and restore the issue to the file of the A.O. for verification of the facts as narrated by the learned Counsel and to then accordingly adjudicate this issue afresh. Needless to say that the assessee should also be given adequate opportunity of hearing to put f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil Proportionate disallowance of interest paid ₹ 7,87,70,940 Proportionate expenditure (being % of average value of investment) ₹ 51,82,635 Total: ₹ 8,39,53,575 The Assessing Officer also added back the amount disallowed in the book profit under section 115JB of the Act. 3. The learned CIT(A), after hearing the assessee, deleted the disallowance under section 14A on account of interest made by the Assessing Officer of ₹ 7,87,70,940. With regard to the proportionate expenditure, the disallowance was upheld by the learned CIT(A). Against this order of the learned CIT(A), the assessee as well as the Revenue are in appeal before the Tribunal. 4. The Revenue has contested the action of the learned CIT(A) in deleting the disallowance of interest made by the Assessing Officer under section 14A r/w Rule 8D(2)(ii), whereas, the assessee has contested the disallowance of expenditure made under section 14A by the Assessing Officer which was sustained by the learned CIT(A). The grounds raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deduction from the assessment year for which it pertains to (i.e. AY 2007-08); b) Municipal taxes of ₹ 57.52 lacs 14. erred in not allowing prior period expenses of ₹ 57.52 lacs though the same were crystallized during the year and incurred for the purpose of business; 15. should have appreciated that the additional municipal taxes were crystallized during the year, as there was ongoing litigation between landlord and municipal authority on the basis of which demand was raised by landlord subsequently; 16. without prejudice to the above, should have adjusted prior period expenses against prior period income and only net income should have been taxed; 17. without prejudice to the above, municipal taxes should be allowed as deduction from the assessment year for which it pertains to (i.e. A Y 2007-08); Levy of interest u/s 234C 18. erred in levying interest of ₹ 1.21 lacs under section 234C of the Act, which is illegal and unlawful and/or excessive and should be levied only on returned income. The grounds raised by the Revenue are as under: On the facts and circumstances of the case and in law, the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of proportionate expenditure sustained by the learned CIT(A) is unfair and illegal. 7. We have heard the rival contentions on the issue of disallowance of interest made by the Assessing Officer and deleted by the learned CIT(A) and have perused the material available on record. The learned Counsel for the assessee submitted that the assessee company has used its own funds for acquisition of shares meant for investment purposes and as part of stock in trade. In support of this contention, the following case laws were relied by the learned Counsel: 1. Hindustan Paper Corporation Ltd. (ITA No. 47/Ko1/2012) dated 28 September 2012 (Kol) (Page No.355-362); 2. P N Writer (ITA No. 4388/M/10) dated 14 October 2011 (Page No.363-369); 3. Shopper's Stop Ltd. (ITA No. 1448 4475/M/2010) dated 30 August 2011 (Mum. Trib) (Page No.371-378); 4. K. Raheja Corporation P. Limited (ITA No. 1260 of 2009) dated 8 August 2011 (Bombay HC) (Page No.379-381); 5. M/s Balarampur Chini Mills Ltd. (ITA No. 504/Ko1/2011) AY 2008-09 dated 29 July 2011 (Kol. Trib) (Page No.383-396); and 6. Appellant's assessment order for A Y 2009-10 (Page No.397 -409). 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interference is called for in the order of the learned CIT(A) in deleting the disallowance of interest of ₹ 7,87,70,940, made by the Assessing Officer in the assessment order. Thus, the grounds raised by the Revenue are dismissed. 10. In the result, Revenue s appeal stands dismissed. We now take up the assessee s appeal. 11. With regard to Ground nos.1 to 6 raised by the assessee, wherein, the assessee has contested the disallowance of proportionate expenses of ₹ 51,29,704, sustained by the learned CIT(A), it was alternatively argued by the learned Counsel that in any case, the disallowance was excessive, keeping in view the facts of the case. It has been argued by the learned Counsel that the disallowance needs to be worked out again, for the reason that no disallowance under section 14A can be made on the strategic investments made in the subsidiaries. The second contention of the learned Counsel is that no disallowance under section 14A, can be made with respect to the shares held as stock in trade. In support of this proposition, the learned Counsel relied on the following case laws: 1. Excel Industries Ltd. Vs. DCIT (ITA no. 1067/Mum/2012 dated 02 Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground as ground no.9, of the appeal memo before the learned CIT(A) along with Form no.35. It is seen that this ground has not been adjudicated by the learned CIT(A) in the appeal order. Therefore, in all fairness and to meet the ends of justice, we set aside the impugned order passed by the learned Commissioner (Appeals) and remit this issue to the file of the learned CIT(A) for adjudication of this issue afresh after giving adequate opportunity of hearing to the assessee. Needless to say that the learned CIT(A) shall take into consideration the case laws available on this issue at the time of disposal thereof. Thus, ground no.7, is also allowed for statistical purposes. 15. Regarding grounds no.8 to 17, the learned Counsel for the assessee submitted before us that he did not wish to press these grounds. The learned Departmental Representative, on the other hand, did not object to the submissions of the learned Counsel. Consequently, these grounds are dismissed as not pressed . 16. Ground no.18, relates to charging of interest under section 234C of the Act. 17. Both the parties admitted before us that this ground is consequential in nature. Accordingly, we direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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