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1 - 10 of 12 (0.34 seconds)Commissioner Of Income-Tax, Bombay ... vs Public Utilities Investment Trust Ltd. on 18 March, 1970
4. Before the learned CIT (Appeals), the assessee
contended that the provisions of section 14A of the Act read
with Rule 8D of the Income Tax Rules are not applicable as
the total investments in shares and mutual funds have been
made out of own funds. The assessee's investment during the
year was a nominal amount of Rs.97,233/- which was made
from the internal cash accruals of the company and no money
was borrowed for making any investment. It was pointed out
that where investment is made out of own resources and
availability of funds in the form of capital reserves and net
profit, the provision of section 14A and Rule 8D do not apply.
Reliance was placed on the judgment of Hon'ble Punjab &
Haryana High Court in the case of CIT Vs. Hero Cycles Ltd.
3
(2010) 323 ITR 518 and Mumbai High Court in the case of CIT
Vs. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Mum).
After considering the submissions of the assessee and the
case laws relied on by it, the learned CIT (Appeals) has held
that since the assessee has earned exempt income under
sections 10(34) and 10(35) of the Act and also it has been
unable to prove the nexus between investment and funds
available, the disallowance is restricted to an amount of Rs.10
lacs to cover up administration and other expenditure
relatable to exempt income. In this way, a relief of
Rs.45,55,801/- was provided to the assessee by the learned
CIT (Appeals) while confirming the disallowance of Rs.10 lacs.
C.I.T.,Mumbai vs M/S.Walfort Share & Stock Brokers P.Ltd on 6 July, 2010
7. The learned D.R. vehemently argued relying on the
order of the Assessing Officer and stated that after insertion
of Rule 8D of the Income Tax Rules w.e.f. assessment year
2008-09, the disallowance under section 14A of the Act is
mandatorily to be computed under this Rule if there is some
exempt income earned by the assessee. The assessment year
being 2008-09, the disallowance made by the Assessing
Officer is quiet as per law and the act of the learned CIT
(Appeals) in restricting the disallowance to Rs.10 lacs is not
as per law. Further, reliance was placed on the judgment of
the Hon'ble Supreme Court in the case of CIT vs. Walfort
Share and Stock Brokers P. Ltd. (2010) 326 ITR 1, whereby it
has been held that the expenses only to the extent incurred
for earning taxable income are to be allowed to the assessee.
Bright Enterprises Pvt Ltd Mbd House ... vs Commissioner Of Income Tax Jalandhar ... on 24 July, 2015
8. We have heard the learned representatives of both
the parties, perused the findings of the authorities below and
considered the material available on record. The only issue to
be decided by us is whether the disallowance sustained by the
learned CIT (Appeals) to the extent of Rs.10 lacs or made by
the Assessing Officer as per Rule 8D is applicable to the facts
of the present case. From the perusal of the documents
5
brought on record, we observe that the assessee has total
owned funds to the tune of Rs.214,46,46,911/- as on
31.3.2008, while the investments as on that date are
amounting to Rs.1,42,73,785/-. These figures show that the
assessee owns funds far more than the investments. In such
a scenario, presumption can be taken that the investments
have been made out of owned funds only. If the investments
are made out of owned funds, no disallowance on account of
interest can be made under section 14A of the Act. The
proposition to the effect that such a presumption can be
taken has been laid down by the Hon'ble Jurisdictional High
Court of Punjab & Haryana in the case of Bright Enterprises
Pvt. Ltd. Vs. CIT in ITA No.624 of 2013 dated 24.7.2015 and
also in the case of CIT Vs. Kapsons Associates, ITA No.354 of
2013 (O&M). Though we are aware of the fact that the
presumption has been laid down by the Hon'ble High Court in
the context of disallowance under section 36(1)(iii) of the Act,
however, we only intend to borrow presumption that in the
presence of sufficient owned funds, it can be taken that the
investments have been made out of these funds only and no
interest bearing funds have been used for said purposes. In
view of this, we do not see any need to make disallowance
under section 14A of the Act on account of interest.
Commissioner Of Income Tax-I Ludhiana vs M/S Kapsons Associates Investment (P) ... on 4 August, 2015
8. We have heard the learned representatives of both
the parties, perused the findings of the authorities below and
considered the material available on record. The only issue to
be decided by us is whether the disallowance sustained by the
learned CIT (Appeals) to the extent of Rs.10 lacs or made by
the Assessing Officer as per Rule 8D is applicable to the facts
of the present case. From the perusal of the documents
5
brought on record, we observe that the assessee has total
owned funds to the tune of Rs.214,46,46,911/- as on
31.3.2008, while the investments as on that date are
amounting to Rs.1,42,73,785/-. These figures show that the
assessee owns funds far more than the investments. In such
a scenario, presumption can be taken that the investments
have been made out of owned funds only. If the investments
are made out of owned funds, no disallowance on account of
interest can be made under section 14A of the Act. The
proposition to the effect that such a presumption can be
taken has been laid down by the Hon'ble Jurisdictional High
Court of Punjab & Haryana in the case of Bright Enterprises
Pvt. Ltd. Vs. CIT in ITA No.624 of 2013 dated 24.7.2015 and
also in the case of CIT Vs. Kapsons Associates, ITA No.354 of
2013 (O&M). Though we are aware of the fact that the
presumption has been laid down by the Hon'ble High Court in
the context of disallowance under section 36(1)(iii) of the Act,
however, we only intend to borrow presumption that in the
presence of sufficient owned funds, it can be taken that the
investments have been made out of these funds only and no
interest bearing funds have been used for said purposes. In
view of this, we do not see any need to make disallowance
under section 14A of the Act on account of interest.
The Commissioner Of Income Tax(Cntl), ... vs M/S Hero Cycles Pvt. Ltd. Ludhiana on 28 August, 1997
4. Before the learned CIT (Appeals), the assessee
contended that the provisions of section 14A of the Act read
with Rule 8D of the Income Tax Rules are not applicable as
the total investments in shares and mutual funds have been
made out of own funds. The assessee's investment during the
year was a nominal amount of Rs.97,233/- which was made
from the internal cash accruals of the company and no money
was borrowed for making any investment. It was pointed out
that where investment is made out of own resources and
availability of funds in the form of capital reserves and net
profit, the provision of section 14A and Rule 8D do not apply.
Reliance was placed on the judgment of Hon'ble Punjab &
Haryana High Court in the case of CIT Vs. Hero Cycles Ltd.
3
(2010) 323 ITR 518 and Mumbai High Court in the case of CIT
Vs. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Mum).
After considering the submissions of the assessee and the
case laws relied on by it, the learned CIT (Appeals) has held
that since the assessee has earned exempt income under
sections 10(34) and 10(35) of the Act and also it has been
unable to prove the nexus between investment and funds
available, the disallowance is restricted to an amount of Rs.10
lacs to cover up administration and other expenditure
relatable to exempt income. In this way, a relief of
Rs.45,55,801/- was provided to the assessee by the learned
CIT (Appeals) while confirming the disallowance of Rs.10 lacs.
Swadeshi Cotton Mills Co. Ltd. vs Commissioner Of Income-Tax, Uttar ... on 20 September, 1966
14. The judgment of the Hon'ble Supreme Court in the
case of Swadeshi Cotton Mills Co. Ltd. (supra) as relied on by
the lower authorities as well as the learned D.R. was
distinguished by stating that the question in that case was
that payment of compensation treated as capital expenditure
within the meaning of section 10(2)(xv) of the Act. The facts
being not peri-matria with the facts of the present case. It
was prayed that the disallowance made by the Assessing
Officer and confirmed by the learned CIT (Appeals) be deleted.
K.T.M.T.M. Abdul Kayoom And Anr. vs Commissioner Of Income-Tax on 23 November, 1961
18. However, before proceeding further, we would like to
remind ourselves the words of the Hon'ble Apex Court
administering caution in the case of Abdul Kayoom Vs. CIT
(1962) 44 ITR 689 (SC), whereby Justice Hi Dayatullah, in the
majority judgment observed as follows :
Assam Bengal Cement Co. Ltd vs The Commissioner Of Income-Tax,West ... on 11 November, 1954
"What attributable to capital and what to revenue has led to
a long string of cases here and in the English courts. The
decisions of this court reported in Assam Bengal Cement Co.
Ltd. v. Commissioner of Income-tax and Pingle Industries
case have considered all the leading cases, and have also
indicated the tests, which are usually applied in such cases.
It is not necessary for us to cover the same ground again.
Further, none of the tests is either exhaustive or universal.
Each case depends on its own facts, and a close similarity
between one case and another is not enough, because even
a single significant detail may alter the entire aspect. In
deciding such cases, one should avoid the temptation to
decide cases (as said by Cordozo) by matching the colour of
one case against the colour of an another. To decide,
therefore, on which side of the line a case falls, its broad
resemblance to another case is not at all decisive. What is
decisive is the nature of the business, the nature of the
expenditure, the nature of the right acquired, and their
relation inter se, and this is the only key to resolve the issue
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in the light of the general principles, which are followed in
such cases."
Commissioner Of Income-Tax, Tamil Nadu ... vs Madras Auto Service (P) Ltd. Etc on 12 August, 1998
19. We are aware of the fact that in the present case,
the issue involved is that of losses and not of expenditure
incurred by the assessee, however,, we feel that the
parameters involved in both the cases are the same. This
proposition has also been fortified by the judgment of Madras
High Court in the case of CIT Vs. Madras Auto Service Ltd.
(19881) 156 ITR 740 (Mad).