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Income Tax Appellate Tribunal, DELHIBENCH ‘A’, NEW DELHI
Before: Sh. C. M. GargDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 27.04.2022.
The assessee has raised the following grounds of appeal:
“1. That the Ld. Commissioner, Appeals (“CIT-A”) was not justified in confirming the addition of Rs. 3,00,756/- made under section 14A of the Income Tax Act, 1961 (‘the Act’), read with Rule 8D of the Income Tax Rules, 1962 (‘the Rules’) ignoring the fact that no exempt income had been earned/received or declared during the year and no corresponding expenses have been claimed or can be said to be attributable to such income being NIL and ignoring the judicial precedents laid down in this regard and also the amendment made to section 14A by the Finance Act, 2022 which is made effective 01.04.2022, i.e. AY 2022-23.
2. The Ld. CIT-A was not justified in rejecting the appeal of the appellant and confirming the addition of Rs.
Beltek Canadian Waters Ltd 22,69,198 made under section 36(1)(iii) of the Act, ignoring the fact that there is no direct nexus between the borrowed funds and the advances made by the appellant to its subsidiary company and the fact that the said advances were made out of interest free funds and the judicial precedents laid down by the Hon’ble Supreme Court in this regard.”
Disallowance u/s 14A:
It is an undisputable fact that the assessee has neither earned nor claimed any exempt income during the year. Hence, in the absence of any exempt income, we hold that no disallowance is called for.
Disallowance u/s section 36(1)(iii):
The assessee granted loan to M/s Accomplish Electronics Pvt. Ltd., a wholly own subsidiary of an amount of Rs. 1.68 crores on which the Revenue charges a notional interest of Rs.22.96 lacs. We find that the assessee had own funds to the tune of Rs.4.04 crores which is more than the investments made of Rs.1.68 crores and hence no disallowance on the interest is called for as the assessee has proven to have sufficient funds at their disposal.