DCIT 3(3)(1), MUMBAI vs. SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LTD, MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the Assessing Officer did not provide justification for the methodology of computing expenses attributable to earning exempt income. The assessee's own interest-free funds were significantly more than its investments.
What were the facts?
The Assessing Officer disallowed interest expenditure of Rs. 1,13,15,225/- under Section 14A read with Rule 8D. The assessee had claimed interest expenditure on unsecured loans, and the AO found that the assessee's own interest-free funds exceeded its investments.
What were the issues?
Whether the disallowance of interest expenditure under Section 14A read with Rule 8D was justified when the assessee's own interest-free funds exceeded its investments.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Reliance Utilities & Power Ltd.2,118 citing313 ITR 340 · 2009 · HC
- Minda Investments Ltd. v. DCIT5 citing65 SOT 187 · 2014 · ITAT
Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘C’ MUMBAI
Before: Shri Joginder Singh, & Shri Rajesh Kumar
आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is in appeal, challenging the impugned order dated 29/06/2016 of the Ld. First Appellate Authority, Mumbai, deleting the disallowance made u/s 14A of the Income Tax Act, 1961 (hereinafter the Act) r.w.r 8-D of the I.T. Rules 1962.
During hearing, Shri Rajat Mittal, ld. DR, defended the addition made by the Assessing Officer. None was present for the assessee in spite of issuance of registered AD notice issued on 13/10/2017. The assessee neither presented itself nor moved adjournment petition. It seems that the assessee has nothing to say, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record.
2.1. We have considered the submissions of Ld. DR and perused the material available on record. The facts, in brief, are that the assessee company is engaged in the business of making investment in infrastructure projects, declared total income of Rs.22,45,90,364/- on 22/09/2011 and booked loss at Rs.3,00,31,665/- u/s 115JB of the Act. From the record of 3 M/s Shapoorji Pallonji Infrastructure Capital Company Limited. the assessee, it was gathered that the assessee had shown unsecured loans from IDFCL of Rs.48 crore as on 31/03/2011 and unsecured loan from the holding company of Rs.23,50,000/- and against such unsecured loans claimed interest expenditure of Rs.65,54,694/-. The Ld. Assessing Officer ignored the submissions of the assessee and worked out the disallowance as per formula specified in Rule-8D, resulting into disallowance of Rs.1,13,15,225/- u/s 14A r.w.r. 8-D. The proportionate interest expenses amounting to Rs.59,77,581/- were disallowed and added back to the total income. On appeal before the Ld. Commissioner of Income Tax (Appeal), the factual matrix was considered and relief was granted to the assessee, which is under challenged before this Tribunal. It is noted that the assessee made suo-moto disallowance of interest of Rs.5,35,28,118/- and of other expenses at Rs.2,50,000/- out of the total expenditure of Rs.6,55,46,945/-. The explanation of the assessee was rejected by the Assessing Officer invoking the provision of section -14A r.w.r-8D of the Rules. We find that there is no justification given by the Assessing Officer against methodology of computing of expenses attributable to earning exempt income. The own interest free funds by way of share
4 M/s Shapoorji Pallonji Infrastructure Capital Company Limited. capital and reserves/surplus are of Rs.316.79 crores, which were more than the investment of Rs.130.08 crores. In the light of the decision from Hon'ble jurisdictional High Court in the case of Reliance Utilities & Power Ltd. 313 ITR 340 (Bom.), Pukhraj Chunnilal Bafna vs DCIT (2014) 65 SOT 187. Own case of the assessee for Assessment Year 2010-11 and 2009- 10, we find no infirmity in the order of the Ld. Commissioner of Income Tax (Appeal), resultantly, the appeal of the Revenue is dismissed.
Finally, the appeal of the Revenue is dismissed.
This order was pronounced in the open court in the presence of the ld. DR at the conclusion of the hearing on 02/11/2017.
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