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TMI Blog2021 (6) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In terms of the agreement dated 11.01.2007, interest on the financial assistance given to the wholly owned subsidiary was payable to the assessee from first quarter calendar year 2011 and the same was received. CIT (Appeals) as well as the tribunal have rightly treated the payment of interest by placing reliance on the decision of S.A. BUILDERS VS. CIT (Appeals), CHANDIGARH , [ 2006 (12) TMI 82 - SUPREME COURT ] - The aforesaid finding, which is concurrent in nature does not suffer from any infirmity and cannot be said to be perverse. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee. Disallowance u/s 14A - HELD THAT:- CIT (Appeals) has negatived the submission of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court on the following substantial questions of law: "(1) Whether on the facts and circumstances of the case the Tribunal is right in law in setting aside the disallowance made by the assessing authority relating to expenditure claimed by assessee to an extent of ₹ 11.11 Crores even when the assessee had failed to prove that the said expenditure has been incurred by assessee and not in the hands of M/s. VGPL? (2) Whether on the facts and circumstances of the case the Tribunal is right in law in confirming the order of the Commissioner of Income Tax (Appeals) relating to disallowance of 0.5% of the average of the value of the investment, the income from which is exempt from tax even when the assessing authority rightly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e diverted borrowed capital was also disallowed. Thus, in all, disallowance of ₹ 43,85,79,362/- was made. 3. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 29.06.2012 allowed the claim with regard to interest paid but not treated as revenue expenditure. Similarly, the disallowance under Section 14A read with Rule 8D(2)(i) of the Rules was restricted to ₹ 1,10,967/- and disallowance of interest on the diverted borrowed capital was directed to be deleted and it was held that there was no justification for making disallowance under the aforesaid head to the extent of ₹ 11.39 Crores. 4. Being aggrieved, the assessee as well as the revenue filed appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) as well as the tribunal. It is further submitted that with reference to claim of disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules, the submission of the assessee has not been accepted and Assessing Officer has been directed to re work the disallowance and therefore, it is not necessary to answer the second substantial question of law. It is further submitted that third substantial question of law has rightly been answered in favour of the assessee by the Commissioner of Income Tax (Appeals) as well as the tribunal. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Interest of ₹ 11.11 Crores which was incurred was utilized for providing financial as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax (Appeals) after taking into account the details furnished by the assessee, has recorded the finding that there is a nexus between the loan and the business of the assessee and there is no nexus between interest bearing funds and the investment made in the sister concern of the assessee. Therefore, the finding recorded by the Commissioner of Income Tax (Appeals) that investments are presumed to be made out of surplus funds and the borrowed funds have not been diverted for the purpose of providing interest free financial assistance to its sister concerns has been upheld. The aforesaid concurrent finding of fact does not suffer from any infirmity and cannot be termed as perverse. The third substantial question of law is therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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