Pr. Commissioner Of Income Tax-6, New Delhi v. O R D E R24.01.2018

$~56 * IN THE HIGH COURT OF DELHI AT NEW DELHI+ ITA 85/2018 PR. COMMISSIONER OF INCOME TAX-6, NEW DELHI ..... Appellant Through: Mr. Ajit Sharma, Sr. Standing Counsel. versus MAYAR INDIA LTD. Through: None. ..... Respondent CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA % O R D E R24.01.2018 Two questions are urged by the Revenue in its appeal under Section 260A of the Income Tax Act, 1961. The first pertains to the issue of disallowance under Section 14A. The assessment order bringing the amount to tax was modified by the CIT (A). However, the ITAT set aside the Commissioner’s order and remitted the matter for fresh consideration as to the applicability of correct principles in relation to Rule 8D of the Income Tax Rules. Being a mere remand, the Court is of the opinion that no question of law arises on this score. The second question relates to the disallowance of `21,53,715/- out of the total interest in financial charges. The assessee had borrowed amounts from financial institutions and banks and during the relevant assessment years advanced `2.69 crores to its subsidiary ITA 85/2018 Page 1 of 2 companies. The interest claimed as deduction was disallowed by the Assessing Officer. The assessee had explained that the amounts advanced were mainly to its subsidiaries and that these were necessary for projects of lands for SEZ developments. It was also stated that the balance amounts represented opening balance of advances given in the earlier years. The assessee urged more importantly that loans and advances were made due to initial generation of funds and were not borrowed. The CIT (A) accepted the assessee’s plea, took note of and applied the law declared in Commissioner of Income Tax v Bharti Televenture [2011] 331 ITR 502 (Del). The Revenue’s appeal was rejected by the ITAT which broadly followed the reasoning followed by the CIT (A). In the absence of any fact to displace the inference drawn by the CIT (A) that the assessee generated sufficient funds of its own to advance the amounts that it did to its subsidiaries and other companies, the question of disallowing the interest payments made could not have arisen on account of Bharti Televenture (supra). The Court also notices that in respect of some of the amounts, the advances reflected opening balance of loans given in the earlier years. As these are all essentially findings of fact, no question of law arises. The appeal is, therefore, dismissed. S. RAVINDRA BHAT, J JANUARY 24, 2018/vikas/ ITA 85/2018 A. K. CHAWLA, J Page 2 of 2