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Pudumjee Industries Ltd, 60, Dr.A.V.B.Gandhi Marg, Mumbai. Vs. Asstt. Commissioner of Income Tax Circle 2(2) (OSD), Mumbai.
January, 20th 2015
                    ,                  ""          

         .. ,                          .. ,   
                   ./I.T.A. No.3603/Mum/2012
                (   / Assessment Year :2009-10)

  Pudumjee Industries Ltd,       / Asstt. Commissioner of Income
  60, Dr.A.V.B.Gandhi Marg,      Vs. Tax ­Circle 2(2) (OSD),
  Mumbai.                            Mumbai.
       ( /Appellant)             ..      (    / Respondent)

               . /   . / PAN/GIRNo. :AAACPO487B

            / Appellant by            : Shri Vijay Mehta
              /Respondent by            Shri Neil Philip

             / Date of Hearing
            /Date of Pronouncement : 16.01.2015

                                / O R D E R

 Per B.R.BASKARAN, Accountant Member:

       The assessee has filed this appeal challenging the order dated 09-
 03-2012 passed by Ld CIT(A)-5, Mumbai and it relates to the assessment
 year 2009-10. The assessee is aggrieved by the decision of Ld CIT(A) in
 confirming the addition made by the AO u/s 14A of the Act. At the time of
 hearing, the Ld A.R did not press ground no.3 relating to advance tax
 payment. Accordingly the said ground is dismissed as not pressed.

 2.    We heard the parties and perused the record. We notice that the
 assessee has earned dividend income of Rs.8,19,084/- on long term
 investment made in the shares of M/s Pudumjee Pulp & Paper Mills Ltd to
 the tune of Rs.2.67 crores. The assessee did not make any disallowance
 u/s 14A of the Act, since it claimed that the above said investment was

made from time to time out of own funds. The said claim did not find
favour both with the AO and Ld CIT(A).

3.    At the time of hearing, the Ld A.R invited our attention to pages 2 &
3 of the assessment order, wherein the assessing officer has extracted the
submissions of the assessee. The Ld A.R submitted that the assessee had
submitted the details of year-wise investment made in the above said
company. He further invited our attention to the Balance Sheet placed in
the paper book filed by it and submitted that the own funds available with
the assessee are in excess of of the loan funds. Accordingly, by placing
reliance on the decision of Hon'ble jurisdictional Bombay High Court in the
case of CIT Vs. HDFC Bank (2014)(366 ITR 505), the Ld A.R submitted
that the disallowance u/s 14A is not called for.

4.    On the contrary, the Ld D.R placed reliance on the orders of Ld

5.    From the Balance sheet filed by the assessee, we notice that the
assessee was having own funds of 3888.89 lakhs as on 31.3.2008 and loan
funds of Rs.2968.09 lakhs. The loan funds consisted of Secured Loans of
1270.40 lakhs and Unsecured loans of Rs.1697.69 lakhs. The secured
loans should have been used for specific purposes. The investment made
by the assessee is 1268.16 lakhs (net of Provision for diminution in value).
The Balance sheet is also showing positive balance of Net current assets.
Thus, we notice that the own funds are more than the loan funds and
hence the decision rendered by the jurisdictional High Court in the case of
HDFC Bank applies to the fact of the assessee.

6.    Accordingly, we agree with the contentions of the assessee that the
disallowance u/s 14A in respect of interest expenditure is not called for.
With regard to the disallowance of administrative expenses under Rule
8D(2)(iii), the Ld A.R did not press the same in view of the smallness of

the amount involved.     Accordingly, we sustain the disallowance made
towards administrative expenses. Accordingly we modify the order of Ld
CIT(A) in the lines discussed above and direct the assessing officer to
sustain the addition relating to administrative expenses only.

7.    The assessee has also raised an additional ground relating to the
computation of book profit u/s 115JB of the Act. The Ld A.R submitted
that the said ground is consequential in nature.        Accordingly the same
does not require any adjudication.

8.    In the result, the appeal filed by the assessee is partly allowed.

      The above order was pronounced in the open court on 16th

           16th Jan 2015    
      sd                                           sd

(.. / H.L. KARWA)                         (..  ,/ B.R. BASKARAN)
  / PRESIDENT                               /Accountant Member
  Mumbai: 16th Jan, 2015.

. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.     () / The CIT(A)- concerned
4.      / CIT concerned
5.      ,     ,                   /
     DR, ITAT, Mumbai concerned
6.     / Guard file.

                                                           / BY ORDER,
            true copy
                                                   (Asstt. Registrar)
                                     ,  /ITAT, Mumbai
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