9911796707
TMI Blog2016 (8) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... curities, then a presumption arises that the investments were made from its interest-free funds. Before us, Revenue has not placed any contrary binding decision in its support. In view of the aforesaid facts and relying on the decision of Hon’ble Bombay high Court referred to hereinabove, we are of the view that no disallowance of expenditure u/s.14A other than that offered by assessee is called for in the present case. - Decided in favour of assessee - ITA No(s) 912/Ahd/2012, 913/Ahd/2012, 1211/Ahd/2012 - - - Dated:- 22-6-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Assessee : Shri S.N. Soparkar, AR For The Revenue : Shri K. Madhusudan, Sr.DR ORDER PER BENCH : Two appeals by the Assessee in ITA Nos.912 913/Ahd/2012 are directed against separate orders of the Commissioner of Income Tax(Appeals)-XI Ahmedabad ( CIT(A) in short) dated 20/03/2012 22/03/2012 pertaining to Assessment Years (AYs) 2007-08 2008-09 respectively. Revenue is in cross-appeal for AY 2008-09 in ITA No.1211/Ahd/2012. Since these appeals relate to same assessee, these are being disposed of by way of this consolidated order for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the claim of expenses was disallowed by the AO in earlier years on the ground that the expenses was contingent in nature and that it would be allowed in the year of payment. He submitted that assessee has made the payment of interest in the impugned year and therefore the expenses should have been allowed. He further submitted that against the earlier year orders, assessee and Revenue had preferred appeals before the appellate authorities and the status of those appeals is reflected on page No.9 of ld.CIT(A) s order. From chart which is reproduced by the ld.CIT(A), the ld.AR submitted that as far as the issue in AY 2003-04 is concerned, in the second round the matter is pending before the Tribunal. For AY 2006-07 the Department s appeal is pending before the Tribunal. As far as issue in AYs 2004-05 and 2005-06 are concerned, he submitted that the Hon ble Tribunal had allowed the appeal of the assessee against which the Revenue has preferred appeal before the Hon ble High Court and the matter is pending. He therefore submitted that since the appeals of earlier years are pending before various authorities, necessary direction may be given to AO that on finalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. In such a situation, we find force in the plea of the ld.AR that the claim of expense be allowed in one of the year, i.e. either in the year when the expense has been booked or in the year in which the payment is made subject to the fulfillment of the required conditions as per the provisions of the Act. We therefore direct the AO to re-examine the claim of assessee after the issue attains finding by the higher Forum and consider the claim in accordance with law. Thus, this ground of assessee is allowed for statistical purposes. 6. Now we take up Assessee s appeal in ITA No.913/Ahd/2012 and Revenue s appeal in ITA No.1211/Ahd/2012 for AY 2008-09. 6.1. Assessee electronically filed its return of income for AY 2008-09 on 30/09/2008 declaring loss of ₹ 24,62,005/-. Subsequently, assessee revised its return of income on 19/03/2009 declaring loss of ₹ 24,62,005/-. The case was selected for scrutiny and thereafter the assessment was framed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dated 05/05/2010 and the taxable income was determined at ₹ 18,35,470/- and book profits u/s.115JB of the Act was determined at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance u/s.14A of the Act and was show-caused as to why proportionate disallowance of interest expenditure not be made to which assessee inter alia submitted that no disallowance of interest was required as no interest expenditure was incurred for earning tax-free income. The submission of the assessee was not found acceptable to the AO in view of the fact that assessee was maintaining common bank account from which investments were made. AO also noted that assessee had not proved that the investments were out of interest-free funds and that assessee had borrowings in the form of secured and unsecured loans and on such borrowings assessee had paid interest and it had claimed interest expenditure. He thereafter worked out the disallowance u/s.14A of the Act at ₹ 43,47,474/- and since assessee had already disallowed ₹ 50,000/-, he made addition of differential amount of ₹ 42,97,474/-. Aggrieved by the order of AO, assessee carried the matter before ld.CIT(A), who confirmed the order of the AO by holding as under:- 3.3. I have carefully considered rival submissions. I have also perused various case laws relied upon by the ld.AR. It is a clear proposition of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has sufficient interest-free funds in the form of Share Capital and Reserves and Surplus which are much more than the investments and in such a situation, the presumption is that the investments are out of interest-free funds and not from borrowed funds. He also submitted that during the year the investments have reduced from that of earlier years and in support of the aforesaid arguments, he pointed to the copy of the Balance Sheet which is placed at page Nos.11 to 21 of the paper-book. He further placed reliance on the judgement in the case of India Gelatine reported in 376 ITR 553. He therefore submitted that no disallowance other than that which has been offered by the assessee is required in the present case. 6.8. With respect to Revenue s appeal in ITA No.1211/Ahd/2012 for AY 2008-09, ld.AR submitted that the disallowance made by the AO u/s.14A was considered while computing the MAT profits. He submitted that in case the assessee s appeal(supra) is decided in favour of assessee, then the Revenue s appeal would become infructuous. Apart from that, he submitted that the Revenue s appeal will have to be dismissed on account of low tax effect as per latest CBDT Circular No ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
