9911796707
TMI Blog2022 (4) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. 2. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of Rs. 25,72,254/- on account of interest on loan given to 100% Foreign Subsidiary. 3. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance to the extent of Rs. 38,02,347/- made u/s. 14A r/w Rule 8D of the Act while computing the income under the normal provisions of the Act. 4. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance to the extent of Rs. 3,98,520/- made u/s. 14A r/w Rule 8D of the Act while computing the income under section 115JB of the Act. 5. That on facts and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs. 3,18,140/- on account of mismatch of TDS as per form 26AS." 3. Brief facts of the case as emerging from the record is that assessee-company is engaged in the business of manufacturing and dealing in road construction and maintenance machinery and crushing and screening equipment. Assessee has filed its return on 29.11.2014 declaring total income at Rs. 1,56,98,44,760/- under normal provision of the Act and Rs. 66,87,64,960/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w: SI. No. Name Amount (Rs.) 1 Sepco Sikaneta, NDOLA Rs. 1,08,860/- 2 Micheal Nyirendra Rs. 2,96,644/- 3 Romeo Zoppe Rs. 6,82,988/- 4 Binod Shah Rs. 72,100/- 5 Binod Shah Rs. 2,41,966/- 6 Binod'Shah Rs. 3,18,825/- 7 Sola Tech Ltd. Rs. 3,18,825/- 8 Demir Yilmaz Rs. 54,750/- 9 Anup Kumar Sinha Oman Rs. 1,08, 660/- Total Rs. 18,84,793/- The Ld. CIT(A) accordingly upheld the order of the AO on this issue. Aggrieved against the same, the assessee is now before the Tribunal. 5. Before us also submissions of the Ld. counsel for the assessee are more or less on the similar line as were made before the lower authorities. However, he further submitted that similar issue came up before the Tribunal in assessee's own case for the Asstt. Year 2013-14, and the Tribunal in ITA No. 3046/Ahd/2016 vide order dated 19.1.2021 allowed claim of the assessee. While allowing the claim assessee, the Tribunal also followed decision of the Co-ordinate Bench of the Tribunal in the appeal filed by the Revenue in ITA No. 154/Ahd/2015 order dated 19.9.2018 for Asst. Years 2010-11 and 2011-12, by which the Co-ordinate Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has not pressed ground No. 2 for adjudication, therefore, this ground is dismissed for want of prosecution. 9. So far as ground No. 3 and 4 in respect of disallowance under section 14A read with Rule 8D of the Act are concerned, a brief facts of the case is that during the assessment proceedings, the Ld. AO noticed that the assessee has received dividend of Rs. 1,57,78,392/- from mutual funds, and claimed as exempt income. The assessee itself has not disallowed any expenditure for earning such exempt income. In the absence of the details thereof, the Ld. AO sought details of the working under section 14A for computation of total income. It was explained by the assessee that investment was made from the sale proceeds of one of the business concerns of the assessee. Assessee had sufficient interest free funds available with it at the relevant time such as equity capital, reserves and surplus etc. and no borrowed funds were utilized for the purpose of investment. Further, it was submitted that assessee has not incurred any interest cost and book profits were declared consistently year after year. It was submitted that no separate manpower or administrative expenses were required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 115JB for the MAT purpose, he restricted disallowance to extent of Rs. 3,98,520/- which was disallowed by the assessee itself. Still aggrieved, assessee is now before the Tribunal. 11. The Ld. counsel for the assessee reiterated submissions as were made before the lower authorities. He further submitted that so far as disallowance under section 14A of the Act is concerned, from the books of accounts for the year under consideration it is very clear that the assessee has sufficient interest free funds in the form of share capital, reserves and surplus and other cash reserves for making such investment. The assessee has not utilized any borrowed capital for the purpose of the impugned investment. It is settled proposition of the law that when interest free funds available with the assessee were more than the investment and/or borrowed funds, then no disallowance is to be made under section 14A of the Act. As submitted before the lower authorities, the impugned investment was made out of sale proceeds received from the sale of business of the assessee which was reflected in the books of accounts, and such investments are strategic investment for the purpose of the business. Thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, assessee's capital, profit reserves, surplus and bank deposits were higher than the investment in tax free securities, therefore, it could be presumed that investment made by the assessee would be out of the interest free funds available with the assessee and no disallowance was warranted under section 14A of the Act. As noted by the Revenue authorities during the assessment proceedings, the assessee has received dividend income of Rs. 157,78,392/- from mutual funds, and offered suo moto disallowance of Rs. 3,98,520/- after considering a portion of accountant salary in maintaining of the investment. However, the Ld. AO disbelieved the claim of the assessee and he proceeded to compute the disallowance by invoking the provisions of section 14A read with Rule 8D(2) of IT Rules and accordingly Rs. 1,34,23,645/- added to the total income of the assessee. However, the Ld. CIT(A) though in principle concurred with the claim of the assessee in respect of utilization of interest free and surplus funds for the impugned investment, and accordingly deleted the disallowance in respect of interest expenses made under Rule 8D(2)(ii), but he retained administrative expenses to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, for prudent accounting policies, no provision has been made. However, the Ld. AO did not satisfy with the explanation of the assessee on the ground that since the assessee was following mercantile system of account, the same was to be accounted for as income in which year the same was due. In appeal, the Ld. CIT(A) confirmed action of the AO, hence, assessee is before the Tribunal. 18. After hearing both the sides, and having gone through the orders of the lower authorities, we find that impugned mismatch of TDS has happened due to difference in TDS claimed by the assessee of Rs. 93,69,723/- and the amount of TDS shown in the Form No. 26AS of Rs. 94,01,537/-. The fact that the assessee has given advances to TESCO Projects P. Ltd., and the party was not paying either interest or repaying the principal amount, and the assessee has filed a civil suit against the party for recovery of the principal amount and interest. Even some cheques issued by the said borrower have been returned by the bank unpaid. These facts are not disputed by the authorities below. In this connection, the assessee has also filed a paper book which contained copies of legal notice issued to the said TE ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
