9911796707
TMI Blog2012 (9) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(iii) by virtue of section 106 by the Indian Evidence Act, was on the assessee to prove that all the borrowings were used for the purpose of the business and that the parking of interest-free funds with the associate concern was for business purpose, as settled in the case of CIT vs. Abhishek Industries Ltd. 286 ITR-01 (P&H). 2.1. Facts in brief as emerged from the corresponding assessment orders for A.Ys. 2005-06 & 2006-07 both passed u/s.143(3) respectively dated 20.12.2007 and 4.12.2008 were that the assessee is in the business of non-banking financial activities. For A.Y. 2005-06, the assessee has claimed interest expenditure of ₹ 9,87,358/- and likewise in A.Y. 200607, the claim of interest expenditure was ₹ 21,15,720/-. In brief, the issue was that the assessee has advanced its own interest-free funds towards interest free-loans of ₹ 97,71,407/- to its group companies and also invested funds of ₹ 7,57,50,210/- as a long term investment in equity shares, as noted in A.Y. 2005-06 by the Assessing Officer. The objection of the Assessing Officer was that had the assessee not diverted its own interest-free funds, then the assessee would not be in a need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple that where sufficient own funds of the assessee were available for making investment, it cannot be assumed that any part of the investment producing the tax-free income must have been made from borrowed funds unless there was evidence to show that any specific investment had been made from borrowed funds. Similar view has also been taken in ACIT v. Eicher Ltd., 101 TTJ 369 (Delhi ITAT), wherein it was held that no disallowance u/s.14A shall be made without pinpointing any expenditure on the basis of material available on record to show that such expenditure was directly relatable to or incurred in earning the tax-free income and nothing could be disallowed u/s.14A on an estimated basis. Similarly, the Mumbai Tribunal in the case of Faze Three Exports Ltd. vs. Addl. CIT (ITA nos.7701 and 4677/Mum/2004 and 2005, after having considered the decision of the Supreme Court in Munjal Sales Corpn. v. CIT, 298 ITR 298, has held that where the assessee was able to show earnings more than the amount of investment made, the AO was not justified in having disallowed interest u/s.14A. In the instant case the appellant had sufficient non-interest bearing funds of its own to fund the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellant had sufficient non-interest bearing funds of its own to fund the investment in equity shares. Accordingly, it is held that the A.O was not justified in making disallowance of interst on account of investment in equity shares, and the disallowance of interest of ₹ 11,66,452/- is directed to be deleted." 5. We have heard both the sides at some length. We have also perused the case-laws cited and the connected facts with supporting evidences as placed in a short compilation before us. Before us, a decision of ITAT "B" Bench Ahmedabad in ITA No.1241/Ahd/2006 (A.Y. 2002-03) tilted as "Asst.CIT vs. GMM Pfaulder Ltd.) vide order dated 11/2/11 is cited, wherein almost in identical circumstances the Tribunal has held as under:- "14. We have considered the rival submissions and perused the material 'on record. In our considered view, the matter would go to the file of AO as per the decision of Hon. Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra) only when it is held that some amount is required to disallowed as there is a nexus between the exempted income C and investment, i.e. if Revenue is able to show that interest bearing capital has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient reserves, share capital and interest-free advances stated to be to the tune of ₹ 1988.26 lacs in A.Y. 2005-06 and ₹ 1827.39 lacs for A.Y. 2006-07, then the decision of the CIT vs. Reliance Utilities and Power Ltd. 313 ITR 340 (Bom.) is to be applied on these facts. Resultantly, we hereby confirm the findings of the ld.CIT(A) and dismiss these grounds of the Revenue for both the years. 7. Next grounds of the Revenue are also identically worded for both the years; reproduced from A.Y. 2005-06 as under:- 2(a) On the acts and circumstances of the case and in law, the learned CIT(A) erred in h9olding that the income assessable under the head "business and profession" as against income from house property as held by the AO, without appreciating the fact that the owner of the house property who allows the use of his property to an outsider and in turn was paid any amount is chargeable under the head 'income from house property'. (b) On the facts and circumstances of the case and in law, the learned CIT(A) ignored the decision of the Hon.Apex Court in the case of Mc Dowell and Co.Ltd. vs. CTO 154 ITR 148, 171 (SC) which is reiterated in the case of union of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the primary object of the assessee while exploiting the property. If it is found, that the main intention is for simply letting out of property or any portion thereof, the resultant income must be assessed as income from house property. If, on the other hand, the main intention is found to be the exploitation of the immovable property by way of commercial activities, then the resultant income must be held as business income. In the instant case, we found that services rendered by the assessee were the result of its activities carried on continuously in an organized manner with a set purpose and with a view to earn profit. Hence, all these activities are in the nature of commercial activities. Accordingly we hold that the income derived by the assessee from shopping malls/business centres is to be assessed as business income and not as income from house property. 4.3. The facts in the instant case are identical to those considered by the ITAT in PFH Mall & Retail Management Ltd., and by the Gujarat High Court in the Saptarshi Services Ltd. Here too the assessee is providing composite services by way of office space, EPABX, lift, secretarial services, data processing conference r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
