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TMI Blog2016 (7) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... tments exceeding the latter sums. The hon’ble jurisdictional high court in CIT vs. Torrent Power Ltd. (2014 (6) TMI 185 - GUJARAT HIGH COURT) negates applicability of section 14A disallowance in such an instance. The Revenue fails to point out any exception thereto in the course of hearing. This former issue is accordingly decided in assessee’s favour Interest disallowance u/s. 36(1)(iii) - Held that:- It has come on record that the assessee had its disposal sufficient interest free funds in excess of the impugned advances to its sister concerns. The CIT(A) observed hereinabove that the assessing authority does not make out a case of diversion of business funds towards the impugned loans hands advances. The Revenue fails to rebut these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the former assessment year. The Assessing Officer in assessment order dated 30-12-2011 disallowed/added the impugned sum of ₹ 16,63,952/- by invoking Rule 8D of the income tax rules. The latter assessment year involves the very disallowance to be of ₹ 27,35,608/-. The CIT(A) deletes the same as under:- 6. After going through rival submissions following points emerge: 1 It is seen that the Assessing officer has made 14A disallowance in a very vague and presumptive way. There is no investment for earning tax free income in A.Y. 2008-2009 and 2009- 2010. The investment has been in A-Y. 2006-2007 and 2007-2008 and even in these years, as obvious from the Balance Sheets enough tax free funds in the form of Reserves Surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd same was also sold off during the year. It was also explained by the Id ARs that investment in Mutual fund has not been disputed for making disallowance u/s 14A by the assessing officer. It was further argued that even in A.Y. 2009-2010, as obvious from the balance sheet Interest free funds of ₹ 119 crore are available as against which there have been no fresh investment but only Advances of ₹ 72 crore. 7 In view of the aforementioned points it is clear that as the appellant has sufficient interest-free funds available for making investments, no disallowance of proportionate interest under Section 14A is called for. Hon'ble Bombay High Court decision in the case of Reliance Utilities Power Limited (313 ITR 340) su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Power Ltd. (2014) 44 taxmann. com 441 negates applicability of section 14A disallowance in such an instance. The Revenue fails to point out any exception thereto in the course of hearing. This former issue is accordingly decided in assessee s favour in both assessment years. The Revenue s corresponding grounds are rejected. 5. This leaves us with the latter issue of interest disallowance u/s. 36(1)(iii) of the Act to the tune of ₹ 13,40,273/- and ₹ 17,73,192/-; respectively. The CIT(A) deals with the issue after taking note of the Assessing Officer s finding as under:- 9 Ground No. 4 in both the assessment years relates to disallowance of interest for ₹ 13,40,273 in A.Y. 2008-09 and ₹ 17,73,192 in A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has sufficient Interest free funds to cover both Investments yielding tax free income and Advances given at lower rate of interest than rate of 15% (presumed by Assessing Officer to be appropriate rate of charging interest) in this background no interest could be disallowed u/s 36(1)(iii) of the Act. Reliance was placed upon decision of Hon'ble Supreme Court in the case of Munjal Sales Corporation 298 ITR 298 and the decision of Ahmedabad ITAT in case of Torrent Financiers Vs. AC1T 73 TTI 624. Regarding the reasonableness of the interest to be charged, reliance was placed upon the decision of Hon'ble Supreme court in case of S.A. Builders Limited Vs. CIT 288 ITR 1 wherein it was held that the revenue cannot justifiabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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