In this case only interest of Rs 2,96,731/- was paid on funds utilized for making investments on which exempted income was receivable. Further it was observed that in respect of investment of Rs. 6,07,775,000/- made in subsidiary companies , they are attributable to commercial expediency, because as per submission made by the assessee, it had to form Special Purpose Vehicles (SPV) in order to obtain contracts from the NHAI and the SPVs so formed engaged the assessee company as contract to execute the works awarded to them (i.e. SPVs) by the NHAI. In its profit and loss account for the year, the assessee has shown the turnover from execution of these contracts and therefore no expense and interest attributable to the investments made by the appellant in the PSVs can be disallowed u/s 14A r.w. Rule 8D because it cannot be termed as expense/ interest incurred for earning exempted income. Under the circumstances, Ld. Commissioner of Income Tax (Appeals) is correct in holding that dis allowance of a further sum Rs 40,556/- calculated @ 2% of the dividend earned is sufficient.
Tribunal held that the expenses which have been claimed by the assessee were not towards the exempted income. The dis allowance, therefore, was rightly limited to a sum of Rs 40,556/-. The question of interpreting Rule 8-D is not in dispute and the only dispute is with regard to facts which have been settled by the Tribunal.
HIGH COURT OF DELHI AT NEW DELHI
ITA 605/2012
CIT
Versus
Oriental Structural Engineers Pvt. Ltd.
CORAM:
HONORABLE MR. JUSTICE BADAR DURREZ AHMED
HONORABLE MR. JUSTICE R.V.EAS WAR
O R D E R
