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of <h1>Appeal partially allowed by ITAT Mumbai on 1st Oct 2021. Section 14A disallowance remanded for fresh adjudication.</h1> <h3>Apurva Natvar Parikh & Co. Pvt. Ltd. Versus DCIT, Cen. Cir. - 7 (1) Mumbai</h3> Apurva Natvar Parikh & Co. Pvt. Ltd. Versus DCIT, Cen. Cir. - 7 (1) Mumbai - TMI Issues:1. Disallowance under section 14A read with rule 8D of the Income-tax Rules, 19622. Treatment of one-time membership entrance fees as capital receipt3. Treatment of amount spent on repairs and maintenance as capital expenditureAnalysis:1. Disallowance under section 14A:The appellant, engaged in the service sector and entertainment industry, earned exempt dividend income and offered a suo-moto disallowance of direct expenses. The Assessing Officer (AO) computed disallowance under Rule 8D, which was challenged. The argument that the AO did not consider the suo-moto disallowance was rejected as the AO had recorded satisfaction before applying Rule 8D. The contention to exclude non-income yielding investments post an amendment to Rule 8D was also dismissed. The Tribunal held that the application of Rule 8D should not be automatic, and the disallowance should be computed based on the assessee's accounts. The matter was remanded back to the AO for fresh adjudication. The ground was partly allowed for statistical purposes.2. Treatment of one-time membership entrance fees:This issue was decided against the assessee based on previous Tribunal orders. Ground No. 2 was dismissed.3. Treatment of repairs and maintenance expenses:The AO treated expenses on repairs and maintenance as capital expenditure, allowing depreciation. The Tribunal examined the nature of expenses, such as installation of a tennis court and repairs to the boundary wall, and concluded that these were repair and renovation expenses, not capital expenditure. Relying on a previous Tribunal decision, the Tribunal directed the AO to treat these expenses as revenue expenditure and reverse the depreciation granted. This ground was allowed.In conclusion, the appeal was partly allowed based on the above orders. The judgment was delivered on 1st October 2021 by the Appellate Tribunal ITAT Mumbai, with separate opinions by the members C.N. Prasad and Manoj Kumar Aggarwal. The legal representatives for the appellant and respondents were Madhur Agarwal and Brajendra Kumar, respectively.
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