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1 - 6 of 6 (0.64 seconds)Commissioner Of Income Tax vs Deepak Mittal on 3 September, 2013
(7) Before us, the Ld. Counsel for the assessee,at the outset , contended that
the issue was covered in favour of the assessee by the decision of the ITAT,
Chandigarh Bench in the case of the assessee itself in preceding years i.e.
assessment year 2013-14 vide their order in ITA No. 1510 & 1518/Chd/2017 dated
20.12.2018 and assessment year 2012-13 in ITA No. 574/Chd/2017 dated
11.12.2017. Ld. Counsel for the assessee further contended that the ITAT had
deleted the disallowance made in assessment year 2013-14 on finding that the
requisite satisfaction of the AO vis-a-vis the incorrectness of the claim of the
assessee of the amount disallowable u/s 14A was absent. Therefore, following
the proposition of law laid down by the jurisdictional High Court in the cases of
CIT vs. Deepak Mittal, (2014) 361 ITR 131 (P&H) & CIT vs. Abhisek Industries Ltd.,
Page 2 of 8
(2016) 380 ITR 652 (P&H), that the aforesaid satisfaction of the AO was a
necessary prerequisite for invoking the machinery provision of Rule 8D, the
disallowance made u/s 14A was deleted. Our attention was drawn to the
relevant findings of the ITAT at para 12-14 of the order .) Drawing our attention to
the said paragraphs, Ld. Counsel for the assessee contended that in the said
case it was noted by the ITAT that the assessee had explained the basis for
making the suo-motu disallowance stating that vis-a-vis investments made
directly the assessee had disallowed Rs. 50,000/- while in relation to those
investments made through PMS, the assessee had worked out the proportionate
amount of expenses incurred on PMS in the ratio of taxable income to non-
taxable income generated by the PMS and disallowed the same. It was pointed
out from para 13 of the order that after noting the said fact, the ITAT found that
the AO in his entire order had not given any finding as to why this basis of
calculating the disallowance of expenses was incorrect, but had only stated
that as per the provisions of Section 14A the onus was on the assessee to prove
that it had not incurred any expenditure to own exempt income, which the
assessee had not been able to discharge. It was pointed out that the ITAT found
this to be factually incorrect, noting that it was never the claim of the assessee
that it had not incurred any expenditure, having suo-motu made disallowance
of expenditure. The ITAT therefore, held that there was no satisfaction of the AO
regarding the incorrectness of the claim of the assessee of expenditure incurred
in relation to expenditure incurred for earning exempt income and accordingly,
the disallowance computed by the AO was deleted.
M/S. Bright Enterprises Pvt. Ltd., ... vs Asstt. Commissioner Of Income-Tax, ... on 17 January, 2019
(20) Before us, Ld. DR relied on the order of the AO, while the Ld. Counsel for
the assessee relied on the order of the CIT(A) and further, pointed out that
identical issue had risen in the case of the assessee in assessment year 2012-13
and 2013-14 in ITA No. 574/Chd/2017 dated 11.12.2017 and ITA No.
1518/Chd/2017 dated 20.12.2018 respectively, wherein the issue was decided in
favour of the assessee on finding that sufficient own interest free funds were
available with the assessee and relying upon the decision of the jurisdictional
Page 7 of 8
High Court in the case of M/s Bright Enterprises Pvt. Ltd vs. CIT (2015) 234 Taxman
Commissioner Of Income Tax (Large Tax ... vs M/S Reliance Industries Ltd on 2 January, 2019
509.
(21) We have heard the contentions of both the parties and perused the
orders of the authorities below and also gone through the decisions referred to
before us. The finding of the fact recorded by the Ld. CIT(A) that the assessee
has sufficient own interest free funds for making the investments has not been
controverted by the Revenue before us. In fact, we find ,that the Ld.CIT(A) has
noted that the AO did not contest this plea of the assessee in the assessment
order. Further it is an admitted fact that in identical facts and circumstances
disallowance made u/s 36(1)(iii) in earlier years had been deleted by the ITAT.
The Ld. DR has been unable to point out any distinguishing facts before us.
Moreover, we find that the Hon'ble Apex Court in recent decision in the case of
Commissioner of Income Tax(Large Taxpayers Unit) vs Reliance Industries in Civil
Appeal No.10 of 2018 & others dated 02-01-2019,has settled the proposition of
law that where sufficient own interest free funds are available the presumption is
that the same were used for the purpose of making non-business purpose
advances calling for no disallowance of interest u/s 36(1)(iii) of the Act. The
relevant findings in this regard are as under:
The Income Tax Act, 1961
Pr. Commissioner Of Income Tax-I vs M/S Abhishek Industries Ltd., (Now ... on 28 March, 2019
(7) Before us, the Ld. Counsel for the assessee,at the outset , contended that
the issue was covered in favour of the assessee by the decision of the ITAT,
Chandigarh Bench in the case of the assessee itself in preceding years i.e.
assessment year 2013-14 vide their order in ITA No. 1510 & 1518/Chd/2017 dated
20.12.2018 and assessment year 2012-13 in ITA No. 574/Chd/2017 dated
11.12.2017. Ld. Counsel for the assessee further contended that the ITAT had
deleted the disallowance made in assessment year 2013-14 on finding that the
requisite satisfaction of the AO vis-a-vis the incorrectness of the claim of the
assessee of the amount disallowable u/s 14A was absent. Therefore, following
the proposition of law laid down by the jurisdictional High Court in the cases of
CIT vs. Deepak Mittal, (2014) 361 ITR 131 (P&H) & CIT vs. Abhisek Industries Ltd.,
Page 2 of 8
(2016) 380 ITR 652 (P&H), that the aforesaid satisfaction of the AO was a
necessary prerequisite for invoking the machinery provision of Rule 8D, the
disallowance made u/s 14A was deleted. Our attention was drawn to the
relevant findings of the ITAT at para 12-14 of the order .) Drawing our attention to
the said paragraphs, Ld. Counsel for the assessee contended that in the said
case it was noted by the ITAT that the assessee had explained the basis for
making the suo-motu disallowance stating that vis-a-vis investments made
directly the assessee had disallowed Rs. 50,000/- while in relation to those
investments made through PMS, the assessee had worked out the proportionate
amount of expenses incurred on PMS in the ratio of taxable income to non-
taxable income generated by the PMS and disallowed the same. It was pointed
out from para 13 of the order that after noting the said fact, the ITAT found that
the AO in his entire order had not given any finding as to why this basis of
calculating the disallowance of expenses was incorrect, but had only stated
that as per the provisions of Section 14A the onus was on the assessee to prove
that it had not incurred any expenditure to own exempt income, which the
assessee had not been able to discharge. It was pointed out that the ITAT found
this to be factually incorrect, noting that it was never the claim of the assessee
that it had not incurred any expenditure, having suo-motu made disallowance
of expenditure. The ITAT therefore, held that there was no satisfaction of the AO
regarding the incorrectness of the claim of the assessee of expenditure incurred
in relation to expenditure incurred for earning exempt income and accordingly,
the disallowance computed by the AO was deleted.
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