TaxTMI 
TaxTMI 
2016 (1) TMI 615
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.... erred in confirming the disallowance under section 14A of the Act under Rule 8D(2)(iii) of the Act. 2. For that no expenses having been incurred for the purpose of earning the dividend income and there being no proximate and dominant nexus with the investment in shares of EIH Limited which was made in the earlier years and not in the year under consideration, the CIT(A) erred in confirming the disallowance as made by the AO. 3. For that the disallowance under Rule 8D(iii) of the Income Tax Rule 1962 (rules) at ½% of the average value of holding of investment is illegal, without jurisdiction and authority of law. The disallowance as confirmed by CIT(A) under Rule 8D(iii) of the Rules is beyond the disallowance permitted under section 14A of the Act and no such disallowance could be made on a notional basis which is not with reference to any expenditure incurred whether directly or indirectly." 3. Briefly stated facts are that the assessee claimed to have following exempted income: Share of profit in partnership firm Rs. 55,932/- Dividend from mutual funds Rs. 8,70,776/- Dividend on shares Rs.169,445,830/- Total Rs.170,372,538/- ....
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....mself that the claim of expenditure made by assessee is incurred before invoking this provision. The AO has simply given a finding that some expenditure might have been incurred for earning this exempted income thereby Rule 8D of the Rules was invoked. There is no satisfaction recorded by the AO for invoking Rule 8D of the Rules despite the fact that the assessee has disclosed huge expenditure for earning of exempted income and the same was disallowed himself, the correctness of which is not in doubt. The assessee has enclosed details of investment made in group concerns and subsidiary companies in its paper book at page 8 and details of dividend income earned at page 13. In view of the above facts and circumstances, we are of the view that the AO has not recorded any satisfaction about the correctness or otherwise of the accounts of the assessee wherein the assessee himself has made disallowance of expenses relatable to earning of exempted income and secondly, we are also of the view that the primary object of investment of assessee is for holding controlling stake in group concerns and not for earning of income out of that investment. In both the eventualities, no disallowance ca....
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....Court. On this, Ld. CIT DR has not objected to the same. Accordingly, we set aside this issue to the file of the AO to await the decision of Hon'ble Supreme Court and decide the issue accordingly. This issue of assessee's appeal is remitted back to the file of AO and allowed for statistical purposes." On query from the bench, Ld. Sr. DR could not controvert the above submission of the assessee by producing any contrary material in this regard. Hence, following the decision cited supra, we set aside this issue to the file of AO to await the decision of Hon'ble Supreme court and decide the issue accordingly. Therefore, this issue of assessee's appeal is remitted back to the file of AO and allowed for statistical purposes. 7. The next common issue in both the appeals of assessee and revenue is as regards to proportionate disallowance of legal and professional fees and auditor's remuneration. For this, assessee has raised following ground nos. 5 and 6 and revenue has raised following ground no. 2: "Assessee's ground Nos. 5 & 6: 5. For that the CIT(A) erred in holding that the proportionate legal and professional fees and Auditor's rem....
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.... working of the appellant as I find that the appellant in its working as per annexure-II, did not consider at all the legal and professional fees and also the auditors' remuneration. I do not agree with the appellant that these two items of expenditure have no nexus with the earning of foreign management fees from Mena House Oberoi, Egypt. Accordingly, I consider a part of the legal and professional fees and the auditor's remuneration and rework the proportionate expenditure relatable to foreign earning. A detailed working is provided in the Annexure-A to this order. Therefore, as per the detailed working, I direct the AO to consider the amount of Rs. 46,43,429/- as relatable to tax free foreign income from Egypt and add back Rs. 46,43,429/- to the business income of the appellant instead of Rs. 90,51,130/- as considered in the assessment order. Thus, this ground of appeal is partly allowed." Aggrieved, revenue is now in appeal before Tribunal. 9. We have heard rival submissions and gone through facts and circumstances of the case. Before us Ld. Counsel for the assessee only contested the expenses on account of legal and professional fee at Rs. 14,73,581/- an....
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....i Investment Pvt. Ltd., that sister concern is in the business of money lending and qua that NDFC certificate was produced before the AO. In respect to advance received from Oberoi Hotels Pvt. Ltd. it was claimed that the assessee is not shareholder of the aforesaid company in term of the provisions of section 2(22)(e) of the Act but AO treated both the advances as deemed dividend u/s. 2(22)(e) of the act. Aggrieved assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of the AO exactly on similar facts. Aggrieved now, assessee is in second appeal before Tribunal. 12. At the time of hearing before us, Ld. Counsel for the assessee submitted that the issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 vide order dated 15.10.2015, wherein the Tribunal vide para 14 to 16 has held as under: "14. We have heard rival submissions and gone through facts and circumstances of the case. We find from the findings of CIT(A) that he has admitted the additional evidence submitted before him in the shape of NBFC certificate of Oberoi Investment Pvt. Ltd. and remanded the matter back to the file of the AO. Now before....
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.... any contrary material in this regard. Hence, following the decision cited supra, we set aside this issue to the file of AO to examine afresh and decide the same. Accordingly, this issue of appeal of assessee is set aside to the file of AO and allowed for statistical purposes. 13. The next issue in this appeal of revenue is against the order of CIT(A) in allowing ALV of the house property by rejecting the expected rent and accepting the actual rent received by the assessee. For this, revenue has raised following ground no. 1: "1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's appeal regarding the ALV of the house property by rejecting the expected rent and accepting the actual rent received by the assessee." 14. At the time of hearing before us, we find that the issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 vide order dated 15.10.2015, wherein the Tribunal vide para 23 has held as under: "23. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO erred in determining an arbitrary annual valu....