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TMI Blog2019 (11) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... Another [ 2008 (2) TMI 19 - SUPREME COURT] and other various ITAT decisions. We find that the ld.CIT(A) has passed a speaking and reasonable order while relying on the various decisions. Disallowance u/s.14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- CIT(A) has given a clear cut finding as to how no disallowance is required to be made u/s.14A of the Act in respect of investments in shares of The Saraswat Co-op. Bank Ltd and shares of foreign companies. Ld.CIT(A) has rightly observed that income from these shares is not exempt and accordingly no disallowance is called for. Similarly, in respect of investment in shares of Wardha Power Company, ld.CIT(A) noted that assessee is not entitled to any dividend and as such has not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements and filed their return for financial year. Subsequently, the revised financial statement of the appellant after incorporating the transactions of merged entities were prepared, post receipt of approval from High Court. During the course of assessment proceedings, the AO observed that work in progress was ₹ 20.35 crores and accordingly, the assessee was asked to explain whether corresponding interest was capitalized or not, which was replied by the assessee vide letter dated 28.12.2016 wherein the assessee submitted that it had not taken any loan for the acquisition of asset and thus, no question arises as to capitalization of interest in WIP. Thereafter the AO asked the assessee to produce the bank statement to verify the ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital and reserves are ₹ 15,42,05,700. Capital work in progress of MHIL is ₹ 1,20,36,692 and own funds of this entity in form of share capital and reserves are ₹ 154,20,10,000 and capital work in progress of MUSCO is ₹ 6,42,23,223 and own funds of this entity in form of share capital and reserves are ₹ 357,65,00,000. MUSCO HAS NO BORROWED FUNDS. Thus, it can be seen that interest-free funds are available with these companies in form of share capital and reserves are much more than the capital work in progress. Looking to this fact and the fact that funds for capital work in progress have been paid out of a common account in which all receipts are also credited, I am of the opinion that no part of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds used for work in progress has been paid out of own sources . Ld.CIT(A) while deleting the addition relied on the decisions of Hon'ble jurisdictional High Court in CIT Vs. Reliance utilities Power Ltd (2009) 313 ITR 340 (Bom) and in the case of CIT Vs. HDFC Bank Ltd (IT Appeal No.330 of 2012) and also Hon'ble Supreme Court decision in the case of Munjal Sales Corporation Vs. Another (2008) 298 ITR 298(SC) and other various ITAT decisions. We find that the ld.CIT(A) has passed a speaking and reasonable order while relying on the various decisions as cited supra and accordingly, we are inclined to uphold the same by dismissing the grounds of the revenue relating to deletion of disallowance u/s.36(1)(iii) of the Act. 6. The seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act. Similarly, no disallowance is called for in respect of investment in the shares of Wardha Power Company Ltd. because the investment is for the purpose of obtaining power at subsidised rate and these shares are not entitled for any dividend. In fact, this investment is being written off by the appellant over a period of 25 years. Though I am not in agreement with the claim of the appellant that disallowance should not be made u/s.14A of the IT Act in respect of investment of ₹ 79,36,65,729 in the shares of Mahindra Gears Transmissions Pvt Ltd., because it is a strategic investment but I am in agreement with the claim of the appellant that no disallowance should be made u/s.14A of the IT Act in respect of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is found to be correct. This ground of appeal is accordingly, partly allowed. 9. After hearing both the parties and perusing the material available on record, we observe that the ld.CIT(A) has given a clear cut finding as to how no disallowance is required to be made u/s.14A of the Act in respect of investments in shares of The Saraswat Co-op. Bank Ltd and shares of foreign companies. Ld.CIT(A) has rightly observed that income from these shares is not exempt and accordingly no disallowance is called for. Similarly, in respect of investment in shares of Wardha Power Company, ld.CIT(A) noted that assessee is not entitled to any dividend and as such has not received any dividend. Considering the facts on record and the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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