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TMI Blog2015 (4) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... ance u/s.14A - HELD THAT:- As relying on own case [ 2013 (11) TMI 1599 - ITAT AHMEDABAD] Tribunal has decided the issue in favour of assessee by placing reliance on the order of Co-ordinate Bench in case of Chudgar Ranchodlal Jethalal [ 2015 (4) TMI 437 - ITAT AHMEDABAD] for the proposition that disallowance u/s. 14A r.w. Rule 8D though is mandatory from A.Y. 2008-09 under no circumstances, should exceed quantum of exempt income. In view of above, Assessing Officer is directed to restrict the disallowance u/s. 14A r.w. Rule 8D should not exceed quantum of exempt income. As far as disallowance of administrative expenses is concerned, in absence of details of investments made during the year, number of transactions in those investments etc, this issue needs to be re-looked by Assessing Officer. So, in the interest of justice, we restore this issue to him with direction to decide in view of above discussion and in accordance with law after providing due opportunity of hearing to the assessee. - ITA. Nos. 2662 & 2908/Ahd/2014 And C.O. Nos. 315 & 316/Ahd/2014 - - - Dated:- 30-4-2015 - Shri Shailendra Kumar Yadav, Judicial Member, And Shri Anil Chaturvedi, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are more or less are same Besides this, various formalities are required to avail the finance from the bank. It is also setteled law that how the business should be carried on is the prerogative of the assessee and the Assessing Officer cannot dictate the terms as to how the business should be carried on. While considering the claim u/s. 36(l)(iii) what is to be required to judge is whether the amount is borrowed for the purpose of business or not. Since the amount has been borrowed in earlier years as well as during the year at a stipulated rate of interest and which has been still utilised for the purpose of business, the interest rate could not have been renegotiated for earlier year. Therefore, rate of interest, paid by the assessee is quite reasonable having regard to the fair market value of such services Therefore the CIT(A) was incorrect in restricting the interest payable to the extent of 15% or 14% which is supported by various decisions mentioned in the order in preceding years. Since the interest rate paid by the assessee is reasonable, the order of the CIT(A) is reversed and addition is deleted. Thus assesses appeals are allowed and Revenue's appeal are dismissed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the bank statement show that on every occasion when the unsecured loan was obtained by the appellant, sufficient funds of its own were available in its bank account at that point of time. It goes on to indicate that there was no actual business need to borrow funds. Thus, the argument of the appellant that the borrowed funds were utilised for the purposes of business does not gets vindicated. A chart indicating borrowings made by the appellant from parties on different dates, period of holding, rate of interest assuming bank rate of 14% etc is reproduced hereunder:- Name of Depositor Name of Bank Date of Deposit Amount Interest Days up to 3/31/2009 14% interest Amt. up to 3/31/2009 Shree Arbuda Transport Company UBI 12.04.2008 7500000 353 1015479 Shree Jaylaxmi Transport Company UB1 12.04.2008 2500000 353 338493 Parbhudas Kishordas HUF UBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Parbhudas Kishordas UBI 25.10.200S 3500000 157 210767 jaswantiat Parbhudas HUF UBI 25.10.2008 400000 157 24088 7758200 Shree Arbuda Transport Company Corp Bank 27.11.2008 6000000 124 285370 Shree Jaylaxmi Transport Company Corp Bank 27.11.2008 4000000 124 190247 10000000 Bharatkumar P Patel Corp Bank 08.01.2009 70000 82 2202 70000 Prahladbhai Parbhudas HUF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vide order dated 31/10/2014 has decided this issue in paras-17 and 18 by observing as under:- 17. Further, in respect of the retention of disallowance of interest of ₹ 10,71,797/-, we find that the CIT(A) upheld the disallowance on his findings that borrowed funds were not required for immediate business needs. In our considered view, the need of business is to be judged from the point of view of businessmen. The assessee is having business turnover of over 211 crores during the year under consideration. The amount which the assessee may need for his business may not be available always to the assessee. Therefore, the assessee has to avail the loan amount when it is available by keeping in view the future needs which may arise in the course of business. Therefore, merely as because the assessee had sufficient own funds on the date of the borrowings it cannot be concluded that borrowings it cannot be concluded that borrowings were not for the purpose of business. 18. In the instant case, we find that it is not the case of the Revenue that the borrowed funds were diverted and actually utilized for any non-business purposes of the assessee. Thus, in our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness purposes and have held that interest on such borrowed funds is an allowable expenditure. The only difference in opinion is to the extent of interest allowable on such borrowed funds. The Commissioner (Appeals) has restricted such allowance to the interest paid to transporters and towards 'goods deposits' whereas the Tribunal has held the interest paid at the rate of 18% to be reasonable. Having regard to the findings recorded by the Tribunal for holding the rate of interest at 18% to be reasonable, it is not possible to state that there is any legal infirmity in the conclusion arrived at by the Tribunal so as to give rise to a question of law, much less, a substantial question of law, warranting interference. 7.3. The Revenue has not placed any contrary material on record suaeestina that the facts and circumstances in the year are different. Therefore, following the judgement of Hon ble Jurisdictional High Court in assessee's own case in Tax Appeal Nos.851 to 856 of 2014 vide order dated 01/09/2014 and the decision of Coordinate Bench of this Tribunal in ITA No.2325/Ahd/2012 for AY 2008-09, we are of the considered view that the Id.CIT(A) was not justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal or High Court on record to controvert the submissions made by ld. A.R that disallowance u/s. 14A cannot he more than tax free income. On the other hand, while dictating the order, we have come across the decision of Hon'ble Delhi High court in the ease of Joint Investment Pvt. Ltd. vs. CIT ITA No. 117 of 2015 decided on 25.02.2015 wherein the Hon'ble High Court has held as under:- 9. In the present case, the AO has not firstly disclosed why the appellant/assessee's claim for attributing ₹ 2,97,440/- as a disallowance under Section 14A had to be rejected. Taikisha says that the jurisdiction to proceed further and determine amounts is derived after examination of the accounts and rejection if any of the assessee's claim or explanation. The second aspect is there appears to have been no scrutiny of the accounts by the AO - an aspect which is completely unnoticed by the CIT(A) and the ITAT. The third, and in the opinion of this court, important anomaly which we cannot be unmindful is that whereas the entire tax exempt income is ₹ 48,90,000/-, the disallowance ultimately directed works out to nearly 110% of that sum. i.e., ₹ 52,56,197/-. By n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT ought to have deleted this disallowance of ₹ 2,56,576/- also. 7. The issue in Revenue s appeal for A.Y. 2011-12 is with regards to disallowance of interest of ₹ 2,59,61,548/- made by Assessing Officer u/s.36(1)(iii) levied, which has been deleted by CIT(A) and same was opposed before us inter alia submitted by learned Departmental Representative that CIT(A) erred in allowing the appeal of assessee on the issue regarding disallowance of ₹ 2,59,61,548/- made by Assessing Officer u/s.36(1)(iii) and shame should be set aside and that of Assessing Officer on issue be restored. On other hand, learned Authorized Representative supported the order of CIT(A) and made the submission on the line of similar issue in A.Y. 2010- 11. We find that issue in Revenue s appeal is similar that of A.Y. 2010-11, which has been discussed and decided by us vide para 4.1 of this order. Facts being similar, so following the same reasoning, we are not inclined to interfere in the finding of CIT(A) who has allowed the appeal on the issue regarding disallowance of interest of ₹ 2,59,61,548/-. Same is upheld. 8. Issue raised in Cross Objection for A.Y. 2011-12 is against c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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