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TMI Blog2021 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... act works. The assessing officer completed the assessment making following disallowances/additions:- (a) Interest paid to NBFC u/s. 40(a)(ia) - 41,47,301 (b) Disallowance of wages - 5,23,79,379 (c) Disallowance made u/s. 14A - 2,29,39,153 (d) Disallowance of interest relating to Interest free advance given - 2,14,35,676 (e) Addition made u/s. 56(viia) of the Act 26,58,789 3. The Ld. CIT(A) confirmed the disallowance of item (a) and (e) above. He deleted the disallowance of item (b) and (d) above. He gave partial relief in respect of disallowance made under (c) above. Aggrieved, both the parties have filed appeals challenging the decision taken by Ld. CIT(A) against each of them. 4. We shall take up the appeal filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance made by the AO was Rs. 41,47,301/-. In the assessment order, it is mentioned that the above said payments have been made to various NBFCs like L & T Finance Ltd., Bajaj Finance Ltd., Reliance Capital Ltd., India Bulls Ltd., Daimler Finance Ltd., Kotak Mahindra Bank Ltd., LIC India Ltd. and Tata Capital Ltd. However, the assessee has obtained certificate only from one company named M/s. Tata Capital Ltd., which has claimed to have received interest income of Rs. 13,76,627/-. The assessee has not furnished any certificate from any of other payees for the remaining amount. 8. In view of the above, we confirm the disallowance of interest expenditure paid to NBFCs other than M/s. Tata Capital Ltd. With regard to the payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G Buildwell Engineers Ltd. (2018)(99 taxmann.com 84)(SC) The tribunal has also observed that an identical disallowance was deleted in the above said cases for two reasons, viz., (a) that the books of accounts were not rejected and (b) that expenses were allowed consistently in the past in scrutiny assessments. The tribunal has also noticed that the Ld. CIT(A) has observed that the AO has not pointed any specific defects in any of the vouchers. In the instant year also, the Ld. CIT(A) has observed that the AO has given vague reasons for making the disallowance. Further the AO has not rejected the books of accounts. Accordingly, following the decisions rendered by the co-ordinate benches, we confirm the orders passed by LD CIT(A) on this iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t required to consider the case of the Revenue that the disallowance should be enhanced from Rs. 75.89 crores to Rs. 144.52 crores. Upper disallowance as held in Pr. CIT v. McDonalds India (P.) Ltd. ITA 725/2018 decided on 22nd October, 2018 cannot exceed the exempt income of that year." In view of the above said decisions, we do not find any infirmity in the decision of Ld. CIT(A) in restricting the disallowance u/s. 14A to the amount of exempt income. 14. The next issue urged by the revenue relates to the disallowance of interest expenditure relatable to advance given for acquisition of land. The AO noticed that the assessee has given advance of Rs. 24.13 crores towards purchase of land to a concern named M/s. Naveen Hotel. The AO also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the order passed by co-ordinate bench in the case of DCIT vs. IDEB Projects Ltd. (ITA No. 1531/Bang/2012 dated 28-04-2017). 17. We heard rival contentions and perused the record. We notice that the Ld. CIT(A) has given decision by considering the own funds available with the assessee as the beginning and end of the year. The decision rendered in the case of IDEB Projects ltd (supra) is also related to interest free advances given to sister concerns, wherein a presumption of utilisation of own funds was entertained. 18. However, the issue here is about the applicability of the "proviso to sec. 36(1)(iii) of the Act", i.e., whether any portion of interest expenditure is attributable to capital expenditure incurred in purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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