2016 (3) TMI 75

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....n the following grounds: "1. Commissioner of Income Tax (A) has erred in conforming the disallowing of Rs. 1,85,10,887/- made by the Assessing Officer u/s 14A read with rule 8 though the company has not spent the said amount to earn exempt income. 2. Commissioner of Income Tax (A) has erred in concurring with the Assessing , Officer in treating the legal expenses of Rs. 1,85,10,887/- as of capital nature/ and not allowing as business expenses u/s.37(1) of the Income Tax Act 1961. ' 3. Without prejudice to Grounds of Appeal No.1 and No.2 the legal expenses as incurred by assessee company should have allowed as expenses to earn capital gain and Commissioner of Income Tax (A) earned in not treating said expenses ....

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..../- per share, thereby leading to a significant increase in capital gains income of the assessee company for Rs. 17.05 Crores, approximately. For fighting this legal battle, the assessee company availed the benefit of professional services of M/s AZB & Partners and paid fee for the leagal services availed by it. The fee so paid was claimed as legal expenses. But AO disallowed these expenses by invoking the provisions of section 14A on the ground that expenses were incurred to safeguard the investment-interest of the assessee and that investment would yield an exempt income in the form of dividend income. 3.2. Being aggrieved, the assessee filed an appeal before Ld. CIT(A), where no relief was given and disallowance made by the AO was conf....

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.... & Partners have in letter dated 31.03.2009 required the appellant to make payment of this bill- which clearly show that this expenditure relates to the appellant. Hence, to this extent only- the plea of the appellant is accepted." 3.6. From the perusal of the above, it is clear that genuineness of the expenses is no more in doubt. It is also not in doubt that impugned expenses relate to the assessee. The aforesaid findings have not been challenged by the Revenue by way of appeal or Cross Objections. Thus, admitted position is that the expenses pertain to the assessee and these are genuine. Under these facts and circumstances, limited question that remains to be decided by us is that whether the assessee can claim benefit of these expens....