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Facts
The assessee, Nagreeka Foils Ltd., filed appeals against orders of the CIT(A) for AYs 2010-11, 2011-12, and 2013-14. The primary issue involved the disallowance of expenditure under Section 14A read with Rule 8D and disallowance of interest under Section 36(1)(iii). For AY 2011-12, there was a delay in filing the appeal, which was condoned.
Held
The Tribunal held that the disallowance under Section 14A should be computed only on investments that yielded exempt income, reversing the CIT(A)'s finding. For AY 2011-12, the Tribunal allowed the appeal concerning the disallowance of interest, holding that advances were made from own funds for commercial expediency and borrowed funds were not used for these advances.
Key Issues
Whether disallowance under Section 14A should be restricted to investments yielding exempt income and whether interest expenses for advances to subsidiaries are admissible when made from own funds for commercial expediency.
Sections Cited
14A, 8D, 250, 143(3), 143(2), 142(1), 115JB, 40a(ia), 2(24)(x), 36(1)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
order : 22-July-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: These appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AYs 2010-11, 2011-12 & 2013- 14 dated 27.06.2024, which have been passed against the assessment Page 2 of 11 Page 3 of 11
Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who deleted the disallowance u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 of ₹75,58,500/- and further disallowance of 0.5% of the average value of investments at ₹30,37,03,361/- and granted additional relief to the assessee and the appeal was partly allowed. Further aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.
Rival submissions were heard and the record and the submissions made have been examined. The assessee has filed the written submission as under: