I.T.A. No. 113/Del/2012 and I.T.A. No. 400/Del/2012, (Assessment Year: 2008-2009). Case: 1. M/s. Metro Institute of Medical Sciences Pvt. Ltd., 2. JCIT(OSD) Vs 1. Dy. Commissioner of Income Tax, 2. M/s. Metro Institutes of Medical Sciences Pvt. Ltd. (formerly known as U.G. Hospitals Pvt. Ltd.). ITAT (Income Tax Appellate Tribunal)

Case Number:I.T.A. No. 113/Del/2012 and I.T.A. No. 400/Del/2012, (Assessment Year: 2008-2009)
Party Name:1. M/s. Metro Institute of Medical Sciences Pvt. Ltd., 2. JCIT(OSD) Vs 1. Dy. Commissioner of Income Tax, 2. M/s. Metro Institutes of Medical Sciences Pvt. Ltd. (formerly known as U.G. Hospitals Pvt. Ltd.)
Counsel:For Appellant: Sh. Sanjeev Kwatra, CA and For Respondents: Sh. Sameer Sharma, Sr. D.R.
Judges:I.C. Sudhir, Member (J) and Shamim Yahya, Member (A)
Issue:Income Tax Act, 1961 - Sections 14A, 36(1)(iii), 37
Judgement Date:July 31, 2013
Court:ITAT (Income Tax Appellate Tribunal)
 
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Order:

Shamim Yahya, Member (A), (ITAT Delhi 'E' Bench)

1. These cross appeals by the Revenue and Assessee emanate out of order of the Ld. Commissioner of Income Tax (Appeals)-IX, New Delhi dated 25.10.2011 and pertain to assessment year 2008-09.

ASSESSEE'S APPEAL

The issue raised in this appeal is that Ld. Commissioner of Income Tax(A) was not justified in upholding the disallowance of 20,000/- u/s. 14A of the I.T. Act on account of alleged proportionate expenses for earning exempt income.

2. Ld. Counsel of the assessee submitted that he shall not be pressing for the appeal. Hence, this appeal is dismissed as not pressed.

REVENUE'S APPEAL

3. The grounds raised read as under:--

(1) The order of the Ld. Commissioner of Income Tax(A) is erroneous and contrary to the facts and law.

(2) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax(A) has erred in deleting the disallowance of interest paid on loan amounting to Rs. 45,38,908/-.

(3) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax(A) has erred in restricting the disallowance under section 14A to Rs. 20000/- despite the fact that disallowance was made in accordance with Rule 8D of the I.T. Rules, 1962 applicable for the year under consideration.

(4) The appellant craves leave to add, alter, or amend any grounds of the appeal raised above at the time of the hearing.

4. Apropos issue of deletion of disallowance of interest paid.

In this case as per the assessment order, the Assessing Officer made an addition of Rs. 45,38,908/- as proportionate disallowance of interest. It is observed that the assessee had claimed interest expenses of Rs. 5.73 crores as per the profit and loss account for the year under consideration. The total loans and advances were shown at Rs. 32.11 crores in the balance sheet as on 31.3.2008, the details of which were furnished to the Assessing Officer. Out of the above, the Assessing Officer found the following advances to be either capital in nature or otherwise given to the group entities:--

Out of the interest expenditure claimed at Rs. 5,73,79,034/-, the Assessing Officer allocated an amount totaling to Rs. 1,27,77,002/- to such loans aggregating to Rs. 16,62,06,019/-, as under:--

The Assessing Officer then made a proportionate disallowance of interest of Rs. 45,38,908/- on the said advances aggregating to Rs. 16,62,06,019/-, in the ratio of own funds and borrowed funds i.e. 35.25%: 64.48%.

5. Before the Ld. Commissioner of Income Tax(A) assessee made elaborate submissions. Considering the same, Ld. Commissioner of Income Tax(A) held as under:--

I have considered the submissions of the appellant, the findings of the Assessing Officer and the facts on record. It is seen from the above that the basis of addition adopted by the Assessing Officer as well as the arguments of the Ld. Authorised Representative are the same as were in the appeal No. 137/09-10 for the A.Y. 2007-08 before me in the appellant's own case. As per my order in the said appeal, this issue was decided in favour of the appellant on the basis of detailed reasons given therein after placing reliance on various judgements. Following my own order in the appellant's case for the aforesaid assessment year in appeal No. 137/09-10 this issue is decided in favour of the appellant. Accordingly, the addition on account of interest is directed to be deleted. The ground No. 2 is thus allowed to the appellant.

6. Against the above order the Revenue is in appeal before us.

7. We have heard both the counsel and perused the records. Ld. Counsel of the assessee submitted that the issue is squarely covered in favour of the assessee by...

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