TaxTMI 
TaxTMI 
2016 (8) TMI 726
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.... the assessee u/r 46A of the income-tax Rules, 1962. 4. The Ld. CIT (A) has erred in deleting the disallowance of Rs. 8,67,240/- made by the Assessing Officer under section 14A of the Income-tax Act. 1961. 5. The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal". 2. Briefly stated the facts of this case are : during the scrutiny proceedings, notice u/s 143 (2) and 142(1) of the Income-tax Act, 1961 (for short 'the Act') along with questionnaire was issued to the assessee for 25.02.2011 and in response thereto, Shri A.P. Shringi put in appearance as AR and filed details. Assessee company is into the business of manufacturing of printing and packaging Inks and it was called upon to explain to justify the claim of Rs. 6,21,95,582/- debited in the profit & loss account on account of management consultancy expenses and as to why the same should not be disallowed on the basis of reasoning recorded in the assessment order of Assessment Year 2008-09. Assessee filed reply dated 21.10.2011. AO, on the basis of findings recorded qua the claim of Rs. 6,21,95,582/- for AY 200....
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.... the current year of the licence and the assessee would not acquire any proprietary right in the information and technology assistance for which royalty payment has been made; that the assessee has filed the remittance certificate and TCR certificates to prove the genuineness of the royalty payment. 8. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 9. Undisputedly, AO made an addition of Rs. 6,21,95,582/- debited by the assessee in profit & loss account on account of management consultancy expenses merely by following the assessment order of AY 2008-09 and affirmed by the ld. CIT (A). However, when the matter was challenged before the ITAT, the order of CIT (A) qua the AY 2008-09 was set aside and restored the matter to the file of AO for de novo examination in the light of the observation made by the Tribunal. 10. It is also not in dispute that the AO passed fresh assessment order dated 31.01.2014 and decided the issue, as to the claim of Rs. 6,21,95,582/- debited in profit & loss account ....
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....275 (SC). The word 'dividend' means dividend as ordinarily understood under the Companies Act and also the head of payment or distribution specified therein - Hari Prasad Jayantilal & Co. v V.S. Gupta, ITO (1966) 59 ITR 794 (SC) 'Dividend' in its ordinary connotation means the sum paid to or received by a shareholder proportionate to his shareholding in a company out of the total sum distributed by a company being a share of its profits declared as distributable among the shareholders, is not impressed with the character of the profits from which it reaches the hands of the shareholders - CIT v Nalin Behari Lall Singha (1969) 74 ITR 849 (SC). The word 'profits' occurring in section 2(22) means profits in the commercial sense, that is to say the profits made by the company in the real and true sense of the term - P.K. Badiani v CIT (1976) 105 ITR 642 (SC) From a plain reading of Section 2(22)(e) it is seen that the payments made by the appellant to the three group concerns does not fall within the definition of dividend. One of the basic conditions of Sec. 2(22)(e) is that the payment by a company should be by way of advance of loan. The payments made....
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....the assessee has failed to explain if payment is capital or revenue in nature; that the genuineness of the actual payment has not been proved; that it is not proved that tax at source has been deducted or not, but CIT (A) has not preferred to call the remand report qua the said documents nor entertained the said documents on the basis of some request for additional evidence. However, it is admitted fact that the royalty payment made by the assessee company qua the AY 2008-09 and AY 2010-11 has already been allowed as revenue expenditure by the revenue authorities. In these circumstances, we find it expedient to restore the matter to the AO to decide afresh. AO to allow the royalty payment to the tune of Rs. 70,18,413/- after due verifications of the documents relied upon by the assessee. So, the ground no.2 is determined in favour of the revenue. GROUND NO.3 16. This ground is hereby determined against the revenue having not been pressed during the course of arguments. GROUND NO.4 17. Assessee has shown dividend income of Rs. 1,94,17,695/- of the profit & loss account. AO by invoking the provisions contained u/s 14A of the Act read with Rule 8D of the Rules computed the disallo....