TaxTMI 
TaxTMI 
2013 (9) TMI 604
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....rse of assessment proceedings, the Assessing Officer made certain dis-allowances/additions in the income returned by the assessee. Aggrieved against the assessment order dated 31-12-2010, the assessee preferred an appeal before the CIT(Appeals). The CIT(Appeals) after going through the documents on record, Remand Report filed by the Assessing Officer and the submissions made by the assessee, partly allowed the appeal of the assessee vide order dated 11-05-2012. Now, both the assessee and the Revenue have come in appeal before the Tribunal assailing the order of CIT(Appeals). The assessee has raised the following grounds of appeal in ITA No. 1503/Mds/2012 before the Tribunal: 1(a) That on the facts and in the circumstances of the case, the ld. CIT(Appeals) erred in holding that the revised Rule 8D, which was introduced on 24th March, 2008 and was not in existence at the beginning of the relevant previous year should be applied for computing disallowance u/s. 14A of the I.T. Act for Assessment Year 2008-09, i.e., the year under appeal. 1(b) That on the facts and in the circumstances of the case, the ld. CIT(Appeals) erred in computing Rs. 34,20,735/- as disallowa....
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.... 3.2 The CIT(Appeals) ought to have appreciated that examination of bank statements filed during the remand proceedings showed that there had been transfer of funds to account No. CA 64795 of M/s. Island Hotel Maharaj Ltd., from the cash credit of the assessee bearing No. CC 201411 which is sufficient to prove that the funds have gone from cash credit account only for which the assessee pays substantial interest. 3.3 It is submitted that the decision of Madras High Court in the case of K. Somasundaram vs. CIT (238 ITR 939) was rendered in the context of allowance of interest paid on borrowed funds wherein it was held that the borrowed funds were to be utilized for the purpose of business or profession and if there was diversion of funds then no allowance of interest can be made which is applicable to the facts of this case. 3.4 It is submitted that the decision of Punjab & Haryana Court in the case of CIT Vs. Abhishek Industries Ltd. (286 ITR 1) is applicable to the facts of this case; 4. The ld. CIT(Appeals) is erred in restricting the disallowance u/s. 14A to Rs. 34.20 lakhs while computing the book profit u/s. 115JB; 4.1 It is submitted th....
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....efore, the provisions of Section 14A are not attracted. The ld. AR further contended that the CIT(Appeals) has erred in holding that Rs. 34.20 Lakhs computed under deeming provision of Section 14A r.w.r. 8D should be added back in computing the book profits under MAT provisions. The ld. AR further submitted that the CIT(Appeals) after coming to the conclusion that the Assessing Officer has wrongly made addition on account of - i) Notional loss on currency swap; ii) MAT credit entitlement u/s. 115JAA; iii) Carry forward of un-absorbed loss/depreciation; and iv) Claim towards tax credit available against TDS/TCS certificates has remitted the issues back to the Assessing Officer. The CIT(Appeals) ought to have allowed the appeal of the assessee on these issue after setting aside the findings of Assessing Officer. 5. On the other hand, Shri S. Jayaraman, appearing on behalf of the Revenue submitted that the CIT(Appeals) has erred in restricting the dis-allowance u/s. 14A from Rs. 4.32 Crores to 34.20 Lakhs. The ld. DR contended that the Assessing Officer has categorically pointed out that the assessee has taken a fresh secured loan of Rs. 22.22 Crores. During the relevant assessm....
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....Appeals). We are of the considered opinion that the investments made by the assessee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the hotel industry. A perusal of the order of the CIT(Appeals) shows that out of total investment of Rs. 64,18,19,775/-, Rs. 63,31,25,715/- is invested in wholly owned subsidiary. This fact supports the case of the assessee that the assessee is not into the business of investment and the investments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore, the investment made by the assessee in its subsidiary are not to be reckoned for dis-allowance u/s. 14A r.w.r. 8D. The Assessing Officer is directed to re-compute the average value of investment under the provisions of Rule 8D after deleting investments made by the assessee in subsidiary company. Accordingly, this ground of appeal of the assessee is partly allowed and that of the Revenue is dismissed. The findings of the CIT(Appeals) on the issue are a....
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....do not find any error in the findings of the CIT(Appeals). The CIT(Appeals) has merely remitted these issues back to the Assessing Officer to verify the veracity of the claim of the assessee. If the assessee is found to be entitled to claim, the same shall be accorded to the assessee as per law. Therefore, this ground of appeal of the assessee is dismissed. The fifth ground of appeal of the assessee is general in nature therefore, needs no adjudication. In view of the above observations, the appeal of the assessee i.e., 1503/Mds/2012 relevant to AY. 2008-09 is partly allowed. 10. Now, we take up the appeal of the Revenue i.e., ITA No. 1624/Mds/2012. Ground No. 1 and 6 in the appeal of the Revenue are general in nature, therefore, the same are not taken up for adjudication. 11. Ground No.2 of the appeal of the Revenue relates to disallowance made u/s. 40(a)(i) on the overseas payments amounting to Rs. 12.29 Lakhs made by the assessee. The said payments have been made by the assessee towards Data Processing Fee, Medical Insurance, Travelling, e-Survey, Admin Fee, E-mail report charge etc., The payments have been made either towards reimbursement of expenses or for rendering ....