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TMI Blog2021 (11) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ile in ground no.4, the assessee is aggrieved by order of the ld.CIT(A) in upholding addition of Rs. 1,80,000/- on account of deemed house property income. 5. The ground no.2 of assessee's appeal is interconnected with ground no.2 of Revenue's appeal. The common issue involved in both the grounds relates to computation of expenditure required to be disallowed for earning tax free income. 6. Brief facts of the case are that the assessee has filed return of income on 30.11.2015 declaring total income at Rs. 27,81,68,880/-. After processing the return, case of the assessee was taken up for scrutiny assessment by issuance of notice under section 143(2) of the Act. During the assessment proceedings, it was noticed by the AO that the assessee had made huge investments and earned dividend of Rs. 1,42,19,234/-, which was claimed as exempt income. However, no suo moto disallowance was made by the assessee for earning exempt income. On further verification of the record, it was revealed to the AO that in the profit & loss account, the assessee-company has debited interest expenditure on account of interest payment on loans. The ld.AO doubted the same and therefore, he issued show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome without incurring any expenditure, as the assessee has sufficient interest free funds available with it for making investment, and some of these investments are in the nature of strategic for the purpose of the business. The ld.CIT(A) in the impugned order has recorded a finding that investment in shares of Rs. 38.9 crores against which the assessee has share capital of Rs. 24.5 cores and reserves and surplus of Rs. 262.6 crores, and therefore, the assessee has sufficient interest free funds available with for making this much investment. Undisputedly, before us, the ld.DR could not show that the amount of investment made by the assessee in those investments, which earned tax-free income, is higher than the amount of share capital and free reserve available with the assessee, nor could show that borrowed funds were utilised so as to invoke the provisions of section 14A of the Act, therefore, we do not find any infirmity in the order of the ld.CIT(A) in deleting the disallowance on account on interest expenditure, and thus, do not find any merit in the ground of appeal raised by the Revenue challenging deletion of Rs. 91,46,082/-. 9. As regards disallowance of administrative ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Coordinate Bench cited by the assessee. In this view of the matter, we do not find any infirmity in the order of the ld.CIT(A) on this issue, which is upheld, and this ground of assessee is rejected. 11. As regards fourth ground no. i.e. confirmation of addition of Rs. 1,80,000/- on account of deemed house property income is concerned, we have perused the written submissions filed by the assessee on this issue. On perusal of the balance sheet, it was revealed to the AO that the assessee was having four flats. When the assessee was asked to explain about the utilization of these flats for the business purpose, the assessee submitted that the flats were utilized as guest house for the purpose of business, and no income was generated, therefore, the same could not be clubbed under the head "income from property". Though the assessee has failed to give satisfactory reply with any evidence, the ld.AO showed a leeway by calculating notional income only in respect of two flats and treated remaining two flats as guest house. Thus, an addition of Rs. 1,80,000/- (Rs. 90000 x 2) was added to the total income of the assessee. The ld.CIT(A) confirmed the finding of the AO and upheld the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 8,92,30,519/- made on account of deduction claimed under section 80IA of the Act. 18. Shortly, we take note of facts of the case which would suffice to adjudicate the issue, which the assessee was successfully agitating from the assessment year 2009-10. Repeated fact is that one Shanti Processors Ltd. was transferred and got merged with assessee-company consequent upon order of the Hon'ble Gujarat High Court. Consequently all the assets and liabilities of amalgamating were transferred to the amalgamated company i.e. assessee-company. The assessee company had taken over all the assets, which included power plant standing in the name of amalgamating company. After amalgamation the assessee-company claimed deduction under section 80IA in respect of power plant, which according to the assessee was new one and eligible for deduction under section 80IA(12), as were applicable to the amalgamating company for the remaining period. The ld.AO however construed that plant & machinery in question were of old one, and since there was no material to suggest otherwise, the amalgamating company is not entitled for such deduction under section 80IA. Thus, ld.AO disallowed clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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