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TMI Blog2015 (11) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and order passed by the learned Tribunal in so far as deleting the disallowance of interest expenses under section 14A of the Act in its entirety.- Decided against revenue. Disallowance under section 40(a)(ia) - non-deduction of the TDS on over seas freight - ITAT deleted the disallowance - Held that:- As per section 172 of the Act, payment made to the non-resident shipping company would not be covered in section 194C or section 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 in fact paid to the non-resident shipping company. Under the circumstances, the learned Tribunal has rightly deleted the disallowance made by the Assessing Officer under section 40(a)(ia) of the Act. - Decided against revenue. - Tax Appeals Nos. 276 and 277 of 2015. - - - Dated:- 27-4-2015 - M. R. SHAH and S. H. VORA, JJ. Mrs. Mauna M. Bhatt, Advocate, for the appellant. JUDGMENT The judgment of the court was delivered by 1. M. R. Shah J.-As common question of law and facts arise in both these tax appeals challenging the impugned common judgment and order passed by the learned Income-tax Appellate Tribunal, both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not submitted details of filing of return under section 172 of the Act by non- resident ship liner ? 3. Facts leading to the present tax appeals in a nut-shell are as under : 3.1 That the assessee filed return of income for the assessment year 2009-10 declaring a total income of ₹ 14,19,79,940. The return of income was processed under section 143(1) of the Act. Subsequently, the case was selected for scrutiny and notices under section 143(2) were issued and duly served upon the assessee. 3.2 During the course of assessment proceedings, the Assessing Officer noticed that the assessee had made investment of ₹ 21,14,07,850 in shares and mutual funds. The assessee suo motu offered/disallowed the amount of ₹ 2 lakhs on account of section 14A of the Act. As the Assess ing Officer observed that the assessee is not able to justify that the invest ment made in shares is from his own funds or from the funds on which no interest payment is made by the assessee and, therefore, the provisions of section 14A of the Act is applicable and since the assessee has not offered disallowance worked out under section 14A of the Act, a show-cause notice was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax (Appeals) in so far as confirming the disallowance of administration and calculation charges of ₹ 6,22,228 under section 14A of the Act. The Revenue pre ferred an appeal being I. T. A. No. 781/Ahd/2013 challenging the order passed by the learned Commissioner of Income-tax (Appeals) in so far as deleting the disallowance of ₹ 5,84,706 out of the total disallowance of ₹ 12,06,934 made by the Assessing Officer under section 14A of the Act as well as deleting the disallowance made by the Assessing Officer under section 14A of the Act for non-deduction of TDS on overseas freight. By the impugned common judgment and order the learned Tribunal has allowed the appeal preferred by the assessee being I. T. A. No. 611/Ahd/ 2013 and has deleted the disallowance made by the Assessing Officer under section 14A of the Act in its entirety, i.e., the entire amount of ₹ 12,06,934 disallowed by the Assessing Officer under section 14A of the Act and consequently dismissed the appeal preferred by the Revenue in so far as challenging the deletion of disallowance made by the learned Com missioner of Income-tax (Appeals) and also confirmed the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance made under section 40(a)(ia) of the Act for non-deduction of TDS on overseas freight. Making the above submissions and relying upon the above decision, it is requested to admit/allow the present tax appeals. 5. Heard Mrs. Bhatt, learned counsel appearing on behalf of the Revenue at length. We have gone through and considered in detail the assessment order as well as the order passed by the learned Commissioner of Income-tax (Appeals) as well as the impugned judgment and order passed by the learned Tribunal. 5.1 Now, so far as the deletion of disallowance of interest expenses under section 14A of the Act by the learned Tribunal/Commissioner of Income-tax (Appeals) is concerned, it is required to be noted that the Assess ing Officer made the disallowance under section 14A of the Act on the ground that the assessee was not able to justify that the investments made in the shares and mutual funds amounting to ₹ 21,14,07,850 was made out of the interest-free funds. However, it is required to be noted that both the learned Commissioner of Income-tax (Appeals) as well as the learned Tri bunal have categorically found on the basis of the material on record that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Commis sioner of Income-tax (Appeals) which is confirmed and ground No. 1 of appeal of the Revenue is dismissed. 8. Further, the Assessing Officer also made disallowance of ₹ 8,22,228 out of administrative expenses but had restricted the dis allowance made to ₹ 6,22,228 as the assessee himself had made dis allowance of ₹ 2,00,000 as expenses incurred for earning tax-free dividend income. The Commissioner of Income-tax (Appeals) observed that the said expenses must have been incurred by the assessee in making the investments and, therefore, confirmed the dis allowance of ₹ 6,22,228 made by the Assessing Officer. The autho rised representative of the assessee submitted that the assessee has earned dividend income of ₹ 12,200 as will be evidenced from the statement of accounts of the assessee at page 26 of the paper book for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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