2014 (1) TMI 1709

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....round No. 10 is on claim of carried forward loss. Ground No. 11 is on levy of interest u/s 234B. Assessee filed Paper Book containing pages 81 and additional evidence from pages 82 to 121. 3. We have heard the learned counsel and learned DR. 4. As regards the issue of disallowance u/s 40A, it is observed that Assessee claimed Rs. 1,00,92,636/- being fund management fees paid to Caspian Advisors Pvt. Ltd (fund manager Company). Observing that the said amount was paid in excess by Rs. 5,88,108/- from the terms of agreement, as the fund manager holds more than 20% equity shares in the assessee company and is also a trustee of Bellwether Microfinance Trust created by Assessee company, the AO held that there was no justification for payment of....

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....usiness, the appellant had not brought out any reliable evidence to show that the parties are not related to each other and the transaction was made in a professional manner. On the contrary, the AO had gone through the agreement for payment of fund management fee and pointed that there is excess payment of Rs. 5,88,108/- and also worked out the reasonable payment that can be allowed for the services rendered by the fund manager after taking into various criteria. The appellant had not contended or brought out anything new on this issue but is claiming that payment is reasonable. Therefore, I am not inclined to go against the detailed reasoning brought by the AO and accordingly, the disallowance made is sustained." 4.3 Referring to the obs....

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.... 37(1)). We are of the opinion that AO is unable to come to a decision under what provision he has to disallow (whatever may be the justification), and with a predetermined view, AO proceeded with disallowance of the claim. 4.6 As seen from the paper book Assessee company entered into an agreement to pay fund management fees at 3.5% on equity or equity linked investments on cost basis, 2.25% on debt investments on principle and 1% on all other investments. There are other conditions also and was subjected to minimum payment of Rs. 8 million (Rs. 80 lakhs) per annum. Vide Annexure 9 to the submissions to AO (Page 54) Assessee justified the payment and supported by various calculations made. On perusing the order of AO, we are of the opinion....

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....,760/- and claimed the same as exempt u/s 10(35) of the Act and also receipt of Rs. 36,16,741/- being dividend referred to section 115-0 of the Act claimed as exempt u/s 10(34) of the Act. During assessment proceedings, Assessee was asked to furnish the details of expenditure incurred in relation to earning of the above exempted incomes. After considering the reply of Assessee, AO invoked the provisions of section 14A r.w.s Rule 8D and worked out the expenditure relatable to earning of the above exempted income and disallowed the same. 5.2 Before the CIT(A), it was contended that Rule 8D is applicable from assessment year 2008-09 and not relevant for the subject assessment year and relied on the decisions in the cases of Chem Invest Ltd. V....