Tribunal's Decision: Appeals partly allowed with specific directions on key issues.

The Tribunal partly allowed both appeals, providing specific directions on various issues. The judgment reflects a thorough analysis of facts and legal principles, ensuring decisions are grounded in evidence and precedents. Notable outcomes include the acceptance of the appeal for AY 2008-09 despite a delay, no disallowance of interest expenditure under Section 14A, deletion of disallowance of repair expenses, rejection of alleged suppression of sale value, deletion of disallowance of professional fee paid to a director, and upholding of disallowance of interest on FBT for AY 2009-10.

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Issues Involved:
1. Delay in filing the appeal for AY 2008-09.
2. Disallowance under Section 14A of the Income Tax Act.
3. Inclusion of disallowed amount under Section 14A in the Book Profit under Section 115JB.
4. Disallowance of repair expenses as capital expenditure.
5. Alleged suppression of sale value of property and related brokerage expenses.
6. Disallowance of professional fee paid to a Chartered Accountant who is also a director.
7. Disallowance of interest on FBT.

Issue-Wise Detailed Analysis:

1. Delay in Filing the Appeal for AY 2008-09:
The appeal for AY 2008-09 was barred by a delay of 148 days. The assessee filed a petition to condone the delay, which was accepted by the Tribunal after considering the reasons provided. Consequently, the appeal was admitted for hearing.

2. Disallowance under Section 14A of the Income Tax Act:
The disallowance under Section 14A was contested for both AY 2008-09 and 2009-10. The assessee argued that interest-free funds exceeded the investments, relying on precedents from CIT Vs. Reliance Utilities & Powers Ltd. and DCIT Vs. HDFC Bank Ltd. The Tribunal observed that the assessee had sufficient interest-free funds and held that no disallowance of interest expenditure was required. However, for administrative expenses, the Tribunal noted investment activities and directed a disallowance of 5% of the dividend income for both years, modifying the order of the CIT(A).

3. Inclusion of Disallowed Amount under Section 14A in the Book Profit under Section 115JB:
The Tribunal upheld the inclusion of the disallowed amount under Section 14A in the computation of Book Profit under Section 115JB, citing clause (f) of Explanation 1 below Section 115JB(2), which mandates adding expenditure related to exempt income to the Net Profit.

4. Disallowance of Repair Expenses as Capital Expenditure:
For AY 2008-09, the assessee incurred expenses on renovation after shifting premises. The AO treated these as capital expenditure, but the Tribunal disagreed, stating the expenses did not create a new asset and were necessary for business operations. The Tribunal directed the AO to delete the disallowance.

5. Alleged Suppression of Sale Value of Property and Related Brokerage Expenses:
The AO alleged suppression of sale value based on brokerage calculations, adding Rs. 7,30,000 to the income. The Tribunal found the AO's conclusions speculative and unsupported by evidence, directing the deletion of the addition. However, the brokerage expense was upheld as it related to a depreciable asset, requiring adjustment in the depreciation schedule.

6. Disallowance of Professional Fee Paid to a Chartered Accountant Who is Also a Director:
The AO disallowed part of the professional fee paid to a director, considering it excessive under Section 40A(2)(a). The Tribunal noted the lack of evidence supporting the AO's view and emphasized the commercial decision-making of the assessee. The Tribunal directed the deletion of the disallowance for both AY 2008-09 and 2009-10.

7. Disallowance of Interest on FBT:
For AY 2009-10, the AO disallowed interest on FBT under Section 40(a)(ic). The Tribunal upheld this disallowance as the assessee did not contest its applicability.

Conclusion:
Both appeals were partly allowed, with the Tribunal providing specific directions on each issue. The judgment reflects a detailed examination of the facts and legal principles, ensuring that decisions are based on substantive evidence and established precedents.

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