M/S. AMBUTHIRTHA PVT LTD.,BANGALORE vs. INCOME-TAX OFFICER, WARD-1(1)(3), BANGALORE

Date of Hearing : 14.12.2023 Date of Pronouncement : 14.12.2023 O R D E R PER MADHUMITA ROY, JUDICIAL MEMBER:

These two appeals are directed against order of NFAC for the assessment year 2017-18 u/s 250 of the Income-Tax Act, 1961 (in short “The Act”), both are dated 28.8.2023, which in turn one is emanated from the order of AO passed u/s 143(3) of the Act dated 20.12.2019 and another one is emanated from the order passed u/s 154 of the Act passed by the ld. AO dated 20.12.2019. Since the issue in both the appeals is common, these are clubbed together, heard together and disposed of in this common order for the sake of convenience.

1. That the order of the learned Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant, is bad and erroneous in law and against the facts and circumstances of the case.

& 780/Bang/2023 Ambuthirtha Pvt. Ltd., Bangalore Page 2 of 7 2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of physical or video conference hearing before the disposal of the appeal even though a specific request was made for the same and such action is violative of principles of natural justice and the order is liable to be quashed.

3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that the appellant has not made any submissions in response to the hearing notices and such finding is perverse and contrary to the materials available on record.

4. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in confirming the order u/s. 154 of the Act where disallowance u/s. 14A of the Act and 36(l)(iii) of the Act added while arriving at the book profits computed u/s. 115JB of the Act.

5. That the learned Commissioner of Income-Tax (Appeals) ought to have held that in rectifying the alleged mistake as a mistake apparent from the record since the issue is a highly debatable one.

6. That the Commissioner of Income-Tax (Appeals) erred in law and on facts in confirming the action of the assessing officer in passing the rectification order even though there is no mistake apparent from record and no finding in the assessment order on the addition of the disallowed amounts u/s. 14A of the Act and 36(l)(iii) of the Act to the book profits computed u/s. 115JB of the Act.

1. That the order of the learned Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant, is bad and erroneous in law and against the facts and circumstances of the case.

2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of physical or video conference hearing before the disposal of the appeal even though a specific request was made for the same and such action is violative of principles of natural justice and the order is liable to be quashed.

3. Disallowance of Rs. 61,94,800/- u/s. 14A r.w.r 8D. 3.1. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance of Rs. 61,94,8007- u/s. 14A of the Act. 3.2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance u/s. 14A even though the appellant has not earned any exempt income during the year. & 780/Bang/2023 Ambuthirtha Pvt. Ltd., Bangalore Page 3 of 7

3.3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in applying rule 8D(ii) even though the appellant has not utilized the borrowed funds for investments made during the year. 3.4. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not bringing any material on record to prove that the investments made are out of borrowed funds. 3.5. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance u/s. 14A even though such investments made with its subsidiaries are strategic investments.

4. Disallowance of interest of Rs. 1,89,61,874/- u/s. 36(l)(iii) of the Act. 4.1. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance of interest of Rs. 1,89,61,8747- on borrowed funds.

4.2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance of interest u/s. 36(l)(iii) of the Act on the ground that the borrowed funds have been diverted for giving interest free advances to the subsidiary companies. 4.3. Without prejudice to the above grounds, that the learned Commissioner of Income Tax (Appeals) erred in law and on facts in making disallowance u/s. 36(l)(iii) of the Act even though the advances are made with commercial expediency. 4.4 Without prejudice to the above grounds, the learned Commissioner of Income Tax (Appeals) erred in law and on facts in computing notional interest at 13.25% even though the appellant is paying much lower than the above interest on the borrowed funds.

5. Without prejudice to the above grounds, the learned assessing officer ought to have allowed the total assessed income as deduction u/s 8QIA of the Act instead of restricting the deduction to the extant claimed in the return of income.

raised by the assessee on merits have become infructuous, not adjudicated and dismissed accordingly.

7. In the result, both the appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 14th Dec, 2023