Case Law Details
Geetanjali Hotels & Promoters Pvt. Ltd. Vs ACIT/DCIT (ITAT Jaipur)
It is noted from the record that the assessee company is engaged in the business of Hotel Industries and Toll Tax Collection. During the course of assessment proceedings, the AO noted that the assessee company had debited the interest expenses amounting to Rs. 4,23,15,400/-. During the course of assessment, the AO was of the view that the income received by the assessee from investments made in AOP is exempted and consequently he applied the Section 14A r.w.rule 8D made disallowance of Rs.16,67,662/-. In first appeal, the ld. CIT(A) taking into consideration the assessment and submissions of the assessee enhanced the income of the assessee amounting to Rs.1,74,18,626/- (Rs.1,90,86l,288 minus Rs.16,67,662 vide para (xiv) of his order by observing as under:-
(xiv) It is noted that the appellant was paying interest at the average rate of 13% per annum on its secured/unsecured loans, therefore it would be appropriate to compute disallowance out of interest expenses claimed by the appellant @ 13% of Rs. 14,68,17,600/- which amount to Rs. 1,90,86,288/-. Thus a sum of Rs.1,90,86,288/- is being disallowed u/s 36(1)(iii) of the Act as theses were not incurred for the purposes of the business of the appellant company. Consequently, the income of the appellant is hereby enhanced by a sum of Rs. 1,74,18,626/-(1,90,86,288 –16,67,662).”
During the course of hearing, the ld. AR of the assessee has lucidly submitted the details of the investment made in AOP by the assessee company. The investments made by the assessee in subsidiaries and AOP are as under:-
