9911796707
TMI Blog2018 (6) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% subsidiary of the assessee company and therein the same line of business. It was also not shown before us that investment is made only for the purpose of earning dividend. In view of the decision in CIT Vs. Phil Creation [2011 (6) TMI 912 - BOMBAY HIGH COURT]. According to us, the issue is squarely covered in favour of the assessee. Disallowance of entertainment expenditure sustained @ 10% out of the total expenditure at 50% of Directors traveling expenses - non busniss purposes - Held that:- We have noted that this issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in assessee’s own case for assessment year 2007-08 [2010 (8) TMI 1108 - ITAT DELHI] wherein it has been held that when there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustaining the disallowance of expenditure amounting to ₹ 17,67,210/- under section 14A Income-tax Act, 1961 alleged to have been incurred for earning tax free dividend income. 4) That the authorities below have erred in law and on facts in arbitrary disallowing ad- hoc sum of ₹ 1,09,727/- and ₹ 4,14,430/- out of entertainment and travelling expenses merely on premises, surmises and conjectures without appreciating that the said expenses were incurred wholly and exclusively for the purpose of business. 2. The Revenue has raised the only ground of appeal in I.T.A. No. 3844 (Del) of 2014 wherein the learned CIT (Appeals) has allowed the relief of ₹ 95,12,830/- out of the total disallowances of ₹ 1,12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) held that no direct expenditure on account of interest is disallowable. He further held that no indirect expenditure of interest is also disallowable as assessee has interest free fund of ₹ 35.30 crores in the year of investment. However, he retained the disallowance of 0.5% of the value of the investment yielding tax free income. He, therefore, retained the disallowance to the extent of ₹ 17,67,210/-. 6. The learned Departmental Representative vehemently submitted that Rule 8-D applies in this assessment year and, therefore, disallowance has been correctly made by the learned Assessing Officer. 7. The learned authorized representative submitted that when assessee has not earned any exempt income during the year, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount has been utilized for purchase of shares of two companies of M/s. Pashupati Nath Resorts P. Ltd. and M/s. Bashisht Farms Pvt. Ltd. The purpose of the prima term loan shown to be for re-payment of the loans whereas assessee purchased shares from the borrowings. Further the auditors in tax audit report reported that loan of ₹ 5.20 crores raised from a bank during the year for the purpose of re-payment of loans have not been used for the purpose for which it was obtained. Therefore, the learned Assessing Officer held that assessee has paid interest of ₹ 23,28,196/- on the above loan and such interest is not allowable as deduction from its income. 12. Assessee preferred appeal before the learned CIT (Appeals) un-successful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of investment. Now It is to be seen that when subsidiaries are also in the same line of business whether assessee has used money for the purposes of its business or not. The assessee has relied upon the decision of the Hon ble Bombay High Court in the case of CIT Vs. Phil Creation 244 CTR page 226 (Bom). However, in the present case the assessee has shown that assessee has made investment in the companies which are 100% subsidiary of the assessee company and therein the same line of business. It was also not shown before us that investment is made only for the purpose of earning dividend. In view of the decision of the Hon ble Bombay High Court in CIT Vs. Phil Creation (supra). According to us, the issue is squarely covered in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 2011-12. Both the parties are in appeal before us, on the issue of disallowance under section 14A of the Act. 23. Though assessee has not earned any exempt income, the disallowance of ₹ 19,79,546/- was upheld by the learned CIT (Appeals) and deleted the addition of ₹ 1,35,92,107/- under section 14A of the Act. Therefore, both the parties are in appeal. 24. As the assessee has not earned any exempt income during the year, the appeal of the Revenue is dismissed and appeal of the assessee is allowed, for the reasons given by us while deciding the appeal of the assessee and the Revenue for assessment year 2010-11 in assessee s own case. 25. In the result, all the four appeals are disposed off. The order is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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