Case Law Details
GMR Infrastructure Ltd Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that Share Application Money should not be included in the value of investments. Accordingly, for the purpose of computing disallowance under section 14A of the Income Tax Act, the Share Application Money should be excluded.
Facts-
The assessee contended that the own funds available with it as on 31-3-2008 was Rs. 5,604.57 crores, while the investment made was Rs. 4,753.34 crores. Accordingly it was contended that the interest disallowance was not called for. However, AO noticed that the loans and advances given by the assessee to its subsidiary companies have not been considered by the assessee. The AO noticed that the loans and advances stood at Rs. 170.04 crores as on 31-3-2007 and the same has increased to Rs. 1211.77 crores. The AO aggregated both the investments and Loans & advances and then noticed that there was net increase of own funds to the tune of Rs. 3,964.78 crores, while the net increase in both investments and Loans & Advances was Rs. 4.478.01 crores.
Accordingly, AO held that the assessee is not having sufficient own funds. With regard to the disallowance of Rs. 25.00 lakhs made by the assessee towards expenses, AO held that the above said disallowance is not sufficient. The AO worked out disallowance at Rs. 31,92,36,737 consisting of interest disallowance of Rs. 19,61,28,191 under rule 8D(2)(ii) and Expenditure disallowance of Rs. 15,31,08,546 under rule 8D(2)(iii). Accordingly, after setting off the voluntary disallowance made by the assessee, the assessing officer added the amount of Rs. 29,70,81,132 to the total income and also while computing book profit under section 115JB of the Act.
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