9911796707
TMI Blog2017 (6) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ., he has shown the same as an item of expenditure. Further in the case of CIT v, Dalmia Cement (B) Ltd.(2001 (9) TMI 48 - DELHI High Court ) it has been held that, if all the requisite conditions for allowance of interest are fulfilled, it is not possible and open to the Revenue to make a part disallowance, unless there is a positive finding recorded that a part of the amount borrowed was not used for the purposes of the business. No infirmity in the order of CIT(A) for deleting the disallowance of interest in respect of funds borrowed for the purpose of business.- Decided in favour of assessee - ITA No. 1979/Mum/2015 - - - Dated:- 31-3-2017 - Shri R. C. Sharma, AM And Shri Sandeep Gosain, JM Revenue by : Ms. Pooja Swaroop Assessee by : Mr. Madhur Agarwal ORDER Per R. C. Sharma ( A. M. ) This is an appeal filed by the Revenue against the order of CIT(A)-14, Mumbai dated 24/12/2014 for the Assessment Year 2009-10 in the matter of order passed u/s.143(3) of the IT Act, wherein following grounds have been taken by the revenue. (i) The Learned CIT(A) has erred on facts and in law, in deleting the disallowance of ₹ 8,58,32,156/- under section 14A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiary of the appellant and out of total investment of 610.56 crores, investment to the tune of ₹ 598 crores was made in these subsidiary company of the appellant named Dronagiri Infrastructure Pvt. Ltd. As per appellant, the investments being totally for the purpose of business, the ratio of decision in the case of Interglobe Enterprises Ltd. v. DCIT(Del.)(Trib.) has relied upon them is applicable. Along with the decision given by the Hon'ble Mumbai Tribunal in the case of Garware Wall Ropes Ltd. has been relied upon by the appellant. 3.4 I 'have gone through both of these cases and I am bound by the decisions given by the Hon'ble ITAT, Mumbai in the case of Garware Wall Ropes Ltd. wherein on identical facts of investments made with subsidiary company, it was held that the same being in the nature of business investment is not an investment and thus provisions of section 14A of the Act are not applicable. Along with this, the plea taken by the appellant that no dividend was earned on the same also go in favour of the appellant that same was not an investment but business transaction. For these reasons, I am of the considered view that provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It is not in dispute that assessee was not in receipt of any exempt income during the year under consideration, accordingly on this proposition also, no disallowance is warranted u/s.14A r.w.r. 8D. 10. Disallowance made u/s.36(1)(iii) was deleted by CIT(A) after recording the following findings. 4.2 I have considered the facts in the case. The AO has clearly brought this fact on record that the assessee has borrowed interest bearing funds for setting up a multi product Special Ecortomic Zone (SEZ) at Sawantwadi, Dist. Sindhudurg in the state of Maharashtra for the identified certain villages and has engaged the services of Urban Transport Infrastructure Pvt. Ltd. to do the job of intermediary between assessee, land owners and relevant government bodies to negotiate the purchase price of land, make payments and complete the formalities. For the same, the assessee paid ₹ 2.90 crores to M/s. Urban Transport Infrastructure Pvt. Ltd. also. However, due to certain unavoidable circumstances, the intermediary company UTIPL could not fulfill requirements and hence paid back compensation of ₹ 8. 70crores to the appellant company against the deposit taken at ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transport Infrastructure Pvt. Ltd., was less, accordingly, difference between the interest expenditure and compensation so received was disallowed. The CIT(A) has deleted the disallowance by recording a finding of fact that amount was borrowed for the purpose of business and utilized for the purpose of business only. The CIT(A) also observed that merely because the said business transaction with M/s. Urban Transport Infrastructure Pvt. Ltd., could not be materialized which resulted into compensation from the said party to the assessee which has been duly reflected as Revenue receipt by the assessee, disallowance of part of the interest expenses incurred wholly and exclusively for the purpose of business cannot be made. The CIT(A) also observed that any part of expense incurred for the purpose of business may not necessarily result into any profit. On these facts, the CIT(A) has deleted the disallowance of interest. 12. The expression for the purpose of business occurs in Section 36(l)(iii) and also in Section 37(1). A similar expression with different wording also occurs in Section 57(iii) which reads as for the purpose of making or earning income. This issue came up for con ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
