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TMI Blog2022 (9) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... and recover the seed money from entrepreneurs during the course of its business and therefore, the interest income on such seed money accrued to the assessee on its own right. It has been further held by CIT(A) that besides retaining the seed money, the assessee, the interest accruing on the seed money has been retained by the assessee and nothing has been brought on record to demonstrate the transfer of this amount to the State Government. CIT(A) observed that where any amount has actually paid by the assessee to the State Government that would be allowed as expenditure in the year it is actually paid and give that no amount has been paid by the assessee during the year, the AO was fully justified in adding interest received on seed money - we do not see any infirmity in the findings of the ld. CIT(A) and the same is hereby confirmed and ground of appeal taken by the assessee is dismissed. - ITA Nos. 1351 to 1353/Chd/2019 - - - Dated:- 26-7-2022 - SMT. DIVA SINGH , JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV , ACCOUNTANT MEMBER Appellant by : Mr. Sanjay Kanwar for Mr. B. K. Nohira , CA Respondent by : Mr. Vivek Nangia , CIT DR ORDER PER VIKRAM SINGH YADA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case the Learned CIT(A) Panchkula has erred in law and facts in upholding the contention of the learned A 0 in adding in disallowing Rs. 4,29,72,691/- under Section 36(1)(viia) on account of provision of NPA written back which has not been claimed as expenditure by the assessee during the assessment year 2013-14 and in any earlier years. 3. That on the facts and in the circumstances of the case the Learned CIT(A) Panchkula has erred in law and facts in upholding the contention of the learned AO in adding Rs. 35,60,752/- on account of interest on seed money belonging to Govt. of India while acting as nodal agency of the Govt. being an undertaking of Govt. of Haryana which is a deviation from consistent view taken in past by the department on account of no addition in earlier years. 4. That the appellant reserves the right to add, amend or delete one or more of the grounds of appeal before the appeal is disposed off. 4. In Ground No. 1, the assessee has challenged the sustenance of addition of Rs. 3.5 lakhs by the ld. CIT(A) u/s. 14A of the Act. In this regard, the brief facts of the case are that during the course of assessment proceedings, the AO ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Max opp Investment Ltd. vs. CIT, New Delhi with Others [Civil Appeal Nos. 104-109 of 2015]/ [2018] 91 taxmann.com 154 (SC). The decision of hon'ble apex court, reiterates the principle as laid down by various High Courts and Supreme Courts, that the principle behind enacting Section 14A in the Act, is to disallow any expenditure incurred 'in relation to the income which does not form part of the total income under this Act'. The apex court held that in determining the disallowance, what is to be considered in law is not the intention or the dominant intention while making the purchase of such investment, which results in earning non-taxable income. It is only to the extent of not considering the intention or dominant intention that the SC has held, that one would need to consider the law, and disallow such expenditure in relation to such non-taxable income. However, one would need to keep in mind certain extremely critical observations of the SC, which are important in determining the law as regards 'what is the expenditure that is in relation to the income which does not form part of the total income'. The hon'ble court states that, only that expenditure w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me has been reduced from the taxable income and accordingly, a show cause notice was issued and after taking into consideration the submissions of the assessee, the addition of Rs. 4,29,72,691/- was made in the hands of the assessee. During the appellate proceedings before the ld. CIT(A), the assessee took various contentions, however, the same were not found acceptable and the ld. CIT(A) by following the order of the ld. predecessor for the AY 2012-13, has confirmed the disallowance on account of NPA u/s. 36(1)(viia) of the Act. 8. After hearing the ld. DR and pursuing the material available on record, we do not see any infirmity in the findings of the ld. CIT(A) where a consistent position has been adopted by the ld. CIT(A) and nothing has been brought on record to contest the said findings for the earlier years and for the year under consideration. Hence, the findings of the ld. CIT(A) are hereby confirmed and the ground of appeal is dismissed. 9. In Ground No. 3, the assessee has challenged the sustenance of addition of Rs. 35,60,752/- on account of interest on seed money. In this regard, we find that the ld. CIT(A) has elaborately discussed the matter in Para Nos. 6.3 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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