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TMI Blog2023 (9) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... butable to investments which has yielded exempt income during the year. The investments were made long back to the firm, M/s. Laxmi Estate and investment were made in other companies. We note from the submissions made before the CIT(Appeals) as well as AO that the assessee has not utilized borrowed funds during the impugned assessment year. Assessee has not incurred any expenditure in order to earn exempt income. Admittedly, there is no nexus between the investment in the firm of M/s Lakshmi Estates and the borrowed funds. The AO in the order of the earlier years has also given a categorical finding that the investment in M/s Lakshmi Estates has been made out of assessee's own interest free funds. Therefore, the interest paid on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the CIT(A) was right in not appreciating the contents of the CBDT Circular No 5/2014 dated 11.02.2014? iv) For the above grounds and any additional grounds that may be agitated during the course of hearing. 2. At the outset, it is noticed that ITA No.489/Bang/2023 was filed by the revenue on 06.07.2023 in physical form. The Registry noted that another appeal was filed against the same order of the CIT(Appeals) through e-filing on 10.07.2023 and the department was intimated of the same. The DCIT, Circle 1(1) by letter dated 26.07.2023 stated that the appeal filed in physical form filed on 06.07.2023 may be treated as withdrawn. Accordingly, ITA No.489/Bang/2023 is dismissed as withdrawn. The appeal filed on 10.07.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal. 6. The ld. DR relied on the order of the AO and submitted that the disallowance made by the AO is correct and he has recorded satisfaction that the assessee has incurred interest/indirect expenditure, therefore it cannot be said that the loan funds have not been utilized by the assessee. He also submitted that there is amendment by the Finance Act, 2022 which is clarificatory in nature. Therefore, the CIT(Appeals) is not justified in restricting the disallowance to the extent of exempt income received by the assessee. 7. The ld. AR relied on the order of the CIT(Appeals). 8. Considering the rival submissions, we note that the AO has disallowed Rs. 4,30,82,139 u/s 14A r.w. Rule 8D(2). The assessee has incurred intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a categorical finding that no borrowed funds were utilized for the purpose of making investment in the firm of M/s. Lakshmi Estate. 7.5 As observed by the Hon'ble High Court, the AO has not recorded satisfaction even for this year, with regard to claim of the appellant that it has not incurred any expenditure in order to earn exempt income. Admittedly, there is no nexus between the investment in the firm of M/s Lakshmi Estates and the borrowed funds. The AO in the order of the earlier years has also given a categorical finding that the investment in M/s Lakshmi Estates has been made out of assessee's own interest free funds. Therefore, the interest paid on borrowed funds is not attributable to the investment the firm. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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