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TMI Blog2016 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ELD THAT:- AO has accepted that the investments made out of borrowed funds in quoted shares as use of borrowed funds for the purpose of business of the company. However to the extent borrowed funds were used in making investments in unlisted/unquoted companies, the AO has treated the same as not for the purpose of business of the Assessee. Such a distinction was rightly held by the CIT(A) to be not proper. We therefore do not find any merit in Gr.No.3 raised by the Revenue. The same is accordingly dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... The disallowances work out to ₹ 1,20,82,774/-. Rule 8D(2) (i) NIL Rule 8D((2)(ii) interest 1,29,16,413 X 17,17,80,126+ 10,46,99,437/- 2 _____________________________________ 18,81,64,850+12,53,23,297 = 1,29,16,413+13,83,39,781 18,81,64,850+ 12,53,23,297 = 15,67,44,073 = 1,13,91,576 Rule 8D (2) (iii) ½ % of ₹ 13,82,39,781 6,91,198 Total 1,20,82,774/- In view of the above provisions, necessary expenses pertaining to exempted income is calculated at ₹ 1,20,82,774/- and the same is being disallowed and added to the total income". 5. Aggrieved by the order of the AO, the assessee has preferred appeal before the CIT(A). The submission of the assessee before the CIT(A) was that the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the Hon'ble Tribunal has held that disallowance u/s.14A cannot exceed the exempt income. Further, it is stated that in appellant's own case for A. Y.2009-10, the AO has vide his order u/s 143(3) dated 17.11.2011 restricted the disallowance u/s14A to the extent of dividend income earned. In support of this contention a copy of assessment order for A.Y.2009-10 is furnished for ready reference. Thus, it is contended that the disallowance in the relevant year under appeal in case of the appellant, therefore, cannot exceed ₹ 83,13,550/- being the dividend income earned during the year. After considering the submission of the appellant along with the case laws relied upon perusing the entire facts of the case and particularly tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: "DISALLOWANCE OF INTEREST The assessee has debited ₹ 1,29,16,413/- secured loan and unsecured loan for ₹ 14,61,16,864/- and ₹ 3,95,67,216. Examination of balance sheet also shows investment in unquoted share for ₹ 57,51,120/- as per Sch. 5 and also loan and advance as per Sch,5 for ₹ 88,35,187/-. The assessee was asked to explain vide order sheet dated 08.02.2008 why interest debited to P/L a/e should not be disallowed on pro rata basis considering that investment and loan and advances are not used for business purpose, as no benefit is derive. The assessee made a written submission on 25.03.2008 as under:- "The investment made by the assesee company in unquoted equity shares is detailed in schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erived the appellant during the year out of the said loan amount. However, in this regard, the AR of the appellant submitted that the main business of the appellant company is dealing in shares, leasing and finance in all kinds of goods and securities and making investments etc. During the year under assessment, the appellant company has purchased share of Apollo Tyres Ltd. sold shares of Sunlife Trade Links Pvt. Ltd. and secured loan taken from body corporate. It is further submitted that the expenditure incurred by the appellant company during the year under assessment is expenditure which is necessary to keep the company's business running. By referring to the schedules 8, 9 & 10 of the Annual Accounts, it is contended that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness purposes of 3 appellant. It is seen that one of the main business activities of the appellant has dealing in shares along with leasing and finance in all kinds of goods and securities and making investments. Therefore, I agree with the contention of the appellant that the appellant company has not derived any benefit from the investment of shares in the relevant year under appeal cannot be the sole reason for disallowance of interest expenditure Claimed towards the loan fund so long as the fund has been used for one of the main purposes of business of the appellant. In the light of the above discussion and findings and perusing the facts and circumstances of the case and respectfully following the decisions of the cases relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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