Tribunal allows appeals on disallowance & deductions, sets aside fees, and partially admits additional grounds.

The Tribunal allowed the assessee's appeal regarding disallowance under Section 14A, stating such disallowance is not sustainable without incriminating material. The claim for deduction of contributions to the Group Gratuity Scheme was allowed as the disallowance lacked support. The set-off of the contingency amount against the disallowance under Section 14A was not addressed due to relief already granted on the legal issue. The disallowance of Portfolio Management Scheme fees was overturned, directing the AO to allow the deduction. Additional grounds raised by the assessee were partly admitted. Appeals for certain assessment years were partly allowed, while others were dismissed.

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Issues Involved:

1. Disallowance under Section 14A of the Income Tax Act.
2. Contribution to Group Gratuity Scheme.
3. Set-off of contingency amount against disallowance under Section 14A.
4. Disallowance of Portfolio Management Scheme (PMS) Fees.
5. Additional grounds raised by the assessee.

Detailed Analysis:

1. Disallowance under Section 14A of the Income Tax Act:

The assessee contested the disallowance under Section 14A made by the Assessing Officer (AO) during the search assessment under Section 153C, arguing that no incriminating material was found during the search to justify such disallowance. The Tribunal observed that the AO had already made a similar disallowance during regular assessment proceedings under Section 143(3), and no new incriminating material was found during the search to support the disallowance under Section 153C. Citing the decisions in "All Cargo Global Logistics Ltd. Vs. DCIT" and "Continental Warehousing Corporation (Nhava Sheva) Ltd.," the Tribunal held that such disallowance is not sustainable in non-abated assessments without incriminating material. Consequently, the Tribunal allowed the additional ground raised by the assessee, rendering the adjudication of the original ground academic.

2. Contribution to Group Gratuity Scheme:

The assessee's claim for deduction of contributions to the Group Gratuity Scheme was disallowed by the AO due to the absence of documentary evidence and approval of the scheme. The Tribunal noted that the scheme had not been approved, and no supporting documents were provided. As the disallowance was not backed by any incriminating material found during the search, the Tribunal allowed the assessee's ground, stating that such addition is unwarranted in non-abated assessments.

3. Set-off of Contingency Amount against Disallowance under Section 14A:

The assessee sought to set off the disallowance under Section 14A against a contingency amount disclosed during the search. The Tribunal referenced similar cases, such as "Adurjee & Brothers Pvt. Ltd.," where such set-offs were allowed. However, since the Tribunal had already granted relief on the legal issue of recording satisfaction before invoking Section 14A, the question of set-off became academic.

4. Disallowance of Portfolio Management Scheme (PMS) Fees:

The assessee contested the disallowance of PMS fees from the sale consideration of shares while computing capital gains. The Tribunal referenced its decision in "Serum Institute of India Ltd." and held that PMS fees are an allowable deduction from capital gains. The Tribunal directed the AO to apply this ratio to the present case, thereby allowing the ground for statistical purposes.

5. Additional Grounds Raised by the Assessee:

The assessee raised additional grounds, including the reduction of returned loss by the contingency amount disclosed during the search. The Tribunal noted that adjudicating this ground required investigating facts, such as the manner of disclosure and examination of seized material, which is not permissible at the appellate stage. Consequently, the additional ground was not admitted.

Conclusion:

- Appeals for A.Y. 2006-07 and A.Yrs. 2009-10 to 2011-12 were partly allowed.
- Appeals for A.Yrs. 2007-08 and 2008-09 were dismissed.

Order Pronounced on February 28, 2018.

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