K . RAHEJA CORP P. LTD,MUMBAI vs. ASST CIT CEN CIR 29, MUMBAI

आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण," ए” खंडपीठ खंडपीठ मुंबई मुंबई आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण खंडपीठ खंडपीठ मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI-“A”,BENCH सव"ी जोिग"दर "सह, "याियक सद"य एवं राजे"", लेखा सद"य Before S/ShJoginder Singh,Judicial Member & Rajendra,Accountant Member आयकर अपील सं./ITA No./6900/Mum/2011,िनधा"रण िनधा"रण वष" वष" /Assessment Year: 2008-09 िनधा"रण िनधा"रण वष" वष" M/s. K. Raheja Corporation Pvt. Ltd. ACIT , Central Circle-29 Raheja Tower, Plot No.C-30,G-Block, Opp. Mumbai. Vs. SIDBI, BKC ,Bandra (E),Mumbai-400 051. PAN:AAACP 0522 B (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue by: Shri Arvind Kumar Assessee by: Shri P.J. Pardiwala & Ms. Aarti Sathe सुनवाई क" तारीख / Date of Hearing: 04.04.2016 घोषणा क" तारीख / Date of Pronouncement: 04.04.2016 आयकर अिधिनयम अिधिनयम,1961 क" क" धारा धारा 254(1)केकेकेके अ"तग"त अ"तग"त आदेश आदेश आयकर आयकर आयकर अिधिनयम अिधिनयम क" क" धारा धारा अ"तग"त अ"तग"त आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) अनुसार PER Rajendra A.M.- लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging the order dt. 25.08.2011of CIT(A) the assessee has filed the present appeal. Assessee-company,engaged in the business of real estate development and hotelier,filed its return of income declaring total income of Rs.38,25,67,357/-.The AO completed the assessment on 30.12.2012,u/s. 143(3) of the Act,detrmining the income of the assessee at Rs. 47.72 crores. 2.Effective ground of appeal is disallowance made u/s. 14A r.w.r Rule 8D of the Income tax Rules,1961(Rules),amounting to 9.45 crores.During the assessment proceedings,the AO found that assessee had received dividend of 5.93crores,that it had made investment of 141.80 crores in the shares of various companies,that the assessee had paid interest on borrowed funds.He asked the assessee as to why interest relatable to borrowed funds used in making investment in shares should not be disallowed u/s.14A of the Act.Vide,its letter dt. 22.11.2010,the assessee submitted that it had sufficient non-interest bearing funds that no disallowance of interest was called for,that the additions made by the AO,in the earlier years were deleted by the Tribunal/First Appellate Authority(FAA).However,the AO held that the assessee had made investment in shares of group companies,that it had used the borrowed funds for the purpose of business.Referring to the provisons of section 14 r.w.Rule 8D,the AO made a disallowance of Rs.9.45 Cores(Rs.8.77 Crores under rule 8D(ii)+ Rs.68.69 lakhs under Rule 8D(iii)of the Rules). 3.During the appellate proceedings before the FAA,the assessee argued that investment in shares had been made out of non interest bearing funds,that it had sold shares worth Rs.32.33 Crores.The assessee relied upon the case of Reliance Utilities and Power Ltd.(313ITR340). After considering the available material,the FAA referred to the judgment of Godrej & Boyce Mfg.Co.Ltd.(328 ITR 81) and held that the AO was not precluded from making a reasonable dlsallowance u/s.14A of the Act by making an estimate of attributable expenditure for these earlier years,that an attempt to make a distinction between borrowed and interest free funds for the purpose of section 14A was artificial.Finally,he upheld the order of the AO.