2016 (8) TMI 163

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... BI, assessee pledged the shares. The CIT (Appeals) as well as the Tribunal found that the RBI's letter, placed on record, concerns the same transaction. On both counts thus, there was evidence suggesting that the transaction of assessee pledging its shares fell through for want of RBI permission, no question of law arises Disallowance under Section 14A for interest for earning tax free income - ITAT deleted the addition - Held that:- In this respect, the Tribunal noted that the assessee had sufficient interest free funds for investing into tax free investments. The Tribunal, therefore, accepted assessee's version that interest free funds were not diverted for such investment. The Tribunal placed reliance on decision of this Court in case .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... or which, the assessee had provided guarantee. Such guarantee came in form of pledging shareholding of Mundra Port and SEZ Limited owned by the assessee-company. It was noticed that this guarantee was provided for charging any guarantee fees. The assessee was, therefore, put to notice why arm's length guarantee fees should not be computed in relation to this transaction. In response to the notice, the assessee contended that the assessee-company deed intend to provide a guarantee by pledging its shares. However, before the same could be done, permission of Reserve Bank of India ['RBI' for short] was required to be obtained. RBI did not grant such approval and that therefore, the assessee never gave such guarantee. 3. The TPO, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 6. Having heard learned counsel for the parties, we find that the CIT(Appeals) as well as the Tribunal held from materials on record that the assessee was correct in pointing out that though at one stage, the assessee had intended to pledge its shares for guarantee in favour of an AE, however, such transaction did not go through since the RBI permission, which was needed, was not granted. The TPO ventured in the realm of conjectures when he recorded that despite this refusal, the assessee may have gone through with the pledging of shares, but there is nothing on the record to suggest that despite refusal from RBI, assessee pledged the shares. The CIT (Appeals) as well as the Tribunal found that the RBI's letter, placed on record, conc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X