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TMI Blog2024 (1) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... investments were converted into equity shares, in view of the same, the disallowance made u/s. 36(1)(iii) of the Act is not justified relying upon case of Gujarat Narmada Valley Fertilizers Co. Ltd. [ 2013 (5) TMI 759 - GUJARAT HIGH COURT] and S.A. Builders [ 2004 (5) TMI 50 - PUNJAB AND HARYANA HIGH COURT] However the Ld. CIT(A) has agreed with the remaining interest payments are for non-business purposes and thereby confirmed the disallowance made u/s. 36(1)(iii) - No infirmity in the above finding of the Ld. CIT(A) and the Revenue could not place any material on record in substantiating its ground before us. Therefore Ground No. 1 raised by the Revenue is hereby dismissed. Disallowance u/s 14A - As admitted fact that the assessee has not received any dividend income against the investments made by it. Therefore the Ld. CIT(A) following judgment in the case of CIT vs. Corrtech Energy Pvt. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] held that no disallowance u/s. 14A should be made and deleted the addition made by the A.O. It is further seen that the Ld. CIT(A) has followed Co-ordinate Bench of this Tribunal following Gujarat High Court Judgment of Corrtech Energy Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d advances The appellant company has made strategic investment in JPL and as per the terms of lenders and the Corporate Debt Restructuring Package approved by the CDR cell which is govered by Reserve Bank of India. The funds given to Jaihind Projects Ltd (JPL) were as per the requirement of lending banks to infuse funds by promoters in the JPL Accordingly, the same was for business expediency to give the funds to JPL by the Appellant without interest. Further, the Appellant contended that the amount was not in the nature of loans and advances but the same is to be converted into equity investment and in view of this it was not be disallowed under section 36(1)(ii) of the Act. In view of the above submission of the appellant and also on the facts, as the A.O. has not established as to how the advances made to subsidiary company Jaihind Projects Ltd (JPL), is made out of the interest bearing funds. It is seen that total interest free funds available comes to Rs. 28,40,84,158/- against which the interest free advances are Rs 26,15,95,884/- only which is less than the amount of funds available. It can be safely held as has been held in by Hon'ble Gujarat High Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Boyce mfg. Co. Ltd., disallowance u/s 14A r.w. Rule 8D is required to be made. He has further observed that appellant must have incurred administrative expenditure which is attributable to investment portfolio. He has relied upon decision of Delhi special bench in case Cheminvest Ltd. and observed that for the purpose of disallowance u/s 14A, there is no requirement that actual income need to be earned. On the other hand, appellant has argued that since no exempt income is earned from investment made by it, following decision of Hon'ble Gujarat High Court in case of CIT Vs Corttech Energy Pvt. Ltd. (45 Taxmann.com 116), no disallowance should be made. It was argued that it has sufficient interest free own funds to cover above investments hence proportionate disallowance of interest expenditure cannot be made. So far as disallowance of administrative expenditure, appellant has contended that entire expenditure is incurred for the purpose of its business hence such disallowance of presumptive basis cannot be made. 5.2. On careful consideration of observation of Assessing Officer and contention of appellant, it is observed that during the year under consideration, appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corrtech Energy Pvt. Ltd. (referred supra), held as under: The Authorized Representative of the assessee has relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Corrtech Energy (P) Ltd, reported in (2014) 272 CTR 262 (Guj.)(HC), wherein it has been held that where the assessee has not made any claim for exemption of any income from payment of tax, no disallowance could be made us 14A of the Act. The Departmental Representative has not disputed the submission of the assessee that during the assessment years under consideration the assessee has not claimed any income as exempt from tax in its Return of Income filed. Therefore, respectfully following the decision of Hon'ble Gujarat High Court in the case of Corrtech Energy (P) Ltd (supra), we delete the disallowance of expenditure made u/s 14A read with Rule 8D of Rs. 1,60,45,775/- in the Assessment Year 2007-08 and Rs. 2,04,30,869/- in the Assessment Year 2008-09. Thus, this ground of appeal of the assessee is allowed in both the years under appeal. 5.4. Further, Hon'ble Delhi High Court in case of Holcim India Pvt. Ltd. (ITA No. 486/2014 ITA No. 299/2014), Hon'ble Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as he is unable to contact the assessee as well as the briefing Counsel. It is thereafter notices were served through Income Tax Department by affixture, however none appeared on behalf of the assessee. So with the materials available on record, we proceed to hear the appeal with the assistance of Ld. Sr. D.R. 6. Ld. Sr. D.R. Ms. Neeju Gupta appearing for the Revenue supported the order passed by the Assessing Officer. The Ld. CIT(A) erred in restricting the interest disallowance made u/s. 36(1)(iii) and deleting disallowance made u/s. 14A r.w. Rule 8D of the Act. However the Ld. D.R. could not place any material contrary on record or distinguish the findings arrived by Ld. CIT(A). 7. We have given our thoughtful consideration and perused the materials available on record. It is undisputed fact that the assessee had interest free funds of Rs. 28,40,84,158/- against which it has advanced money to the extent of Rs. 26,15,95,884/- which is less than the interest free funds available with the assessee. The Ld. A.O. has ignored the fact that the amount given as advances to Jaihind Projects Ltd. (JPL) in the nature of share investment and not in the nature of loans and advances. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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