AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 953
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....by the revenue. 3. According to the appellant, the following substantial questions of law have arise in this appeal:- (i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding the amount of Rs. 1,18,408/- spent on articles presented to dealers as an allowable business expenditure? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting expenses on foreign travel of Directors wives? (iii) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that interest from others and also from IDBI constitute profit of the business for the purpose of computing deduction under section 80HHC? (iv) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting the addition of Rs. 77,85,059/- made on account of advances of interest free loans to the associated concerns whereas the assessee company was paying huge interest on the borrowed? (v) Whether on the facts and in the circumstances of the case, the Income Tax Ap....
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....nd against the assessee in view of the judgment of the Division Bench of this Court dated 30.01.2015 in ITA No. 68 of 2001 in Commissioner of Income Tax (Central) v. M/s Highways Cycle Indus. Ltd. Ludhiana. It is clarified, however, that the assessee shall be entitled for any adjustment or benefit on account thereof. Re: Question No. (ii) "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting expenses on foreign travel of Directors wives?" 10. Mr. Klar, learned counsel appearing on behalf of the appellant- Department agreed that the traveling expenses of a Director's spouse may constitute business expenses if business expediency for the same is established. He, however, contended that the assessee had not produced any evidence to establish the same. 11. The assessee claimed an amount of Rs. 2,24,204/- as foreign traveling expenses in respect of its Directors' wives who traveled with the Directors while they were on business tours. The Assessing Officer noted that the assessee had given a note in the auditors report that this expenditure was incurred under the contractual obligations and under norm....
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....duction in respect of certain inter-corporate dividends:- 1. Where the gross total income of a domestic company in any previous year, includes any income by way of dividends from another domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of such domestic company, a deduction of an amount equal to:- i) ...... ..... ..... ...... ...... ...... ....... ii) In the case of any other domestic company, so much of the amount of income by way of dividends from another domestic company as does not exceed the amount of dividend distributed by the first mentioned domestic company on or before the due date. ...... ...... ..... ..... ...... ...... ...... ....... 80-AA. Computation of deduction under Section 80-M Where any deduction is required to be allowed under Section 80-M in respect of any income by way of dividends from a domestic company which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, the deduction under that section shall be computed with reference to the income by way of such div....
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....88 (SC) Question No.(iii) has to be answered in the favour of the Revenue." 19. The Assessing Officer enumerated under a table the management expenses incurred by the assessee debited under the head "Administrative expenses". The computation in this regard reads as under:- "The management expenses incurred by the assessee debited under the head administrative expenses (Annexure XVII) which relate to dividend income also are as under:- 1. Rent paid 5,41,300 2. Donation 1,13,844 3. Rates & Taxes 1,80,118 4. Director's Meeting fee 4,000 5. Audit fee 66,000 6. Directors' Remuneration 21,92,348 7. Fee in other capacity 20,000 8. Cost Auditors remuneration 25,000/- 9. Misc. expenses (i) Consultation 87,037 (ii) Management Consultation fee 30,000 1,17,037 Total: 32,59,658 Total Management expenses as worked out above are Rs. 32,59,658/- Proportionate management expenses incurred for earning dividend income are as under:- 32,59,658 x 6,59,96,415 = Rs.4,11,647/- 522598252 32,59,658 x ....
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....out any basis. In the computation of income, there is no bifurcation of expenses for the investment. The assessment order merely states; "Subject to above income of the assessee is computed as under:- Income returned by the assessee Before deduction under Chapter VIA ......................" Rs.11,54,50,241/- Additions are thereafter made and deductions as per Chapter VIA are noted. The assessment order does not indicate any bifurcation of the expenses for the investments. 23. The Tribunal thereafter held that section 80(M) does not authorize an Assessing Officer to estimate the expenditure and recompute the income by way of dividend for the purpose of deduction allowable under section 80(M) of the Act. 24. Where the assessee does not provide any bifurcation of the expenditure incurred in respect of its income, the Assessing Officer has no option but to estimate the expenditure and to recompute the income by way of dividend to arrive at the deduction that may be allowed under section 80M of the Act. Assuming that some portion of the expenditure is attributable to the dividend earned, the Assessing Officer must estimate the extent thereof.....
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....t would be difficult to envisage such a situation. In cases such as this, therefore, there would arise a justifiable presumption that some expenditure would be required for the purpose of earning dividend on such investments. The onus would then shift to the assessee to establish that no expenditure whatsoever was incurred for earning the dividend. The Assessing Officer was, therefore, justified in coming to the conclusion that the assessee had incurred expenditure towards earning the said dividend. The assessee has not furnished any material in this regard. As we observed earlier, the Assessing Officer must, therefore, estimate the same if he satisfied that some expenditure for earning the dividend had been incurred. 26. The manner in which the expenditure is computed by the Assessing Officer cannot be faulted. The only question is whether the management expenses incurred were correctly computed. For this purpose the Assessing Officer noted the management expenses incurred by the assessee under the head "administrative expenses (Annexure XVII) which relate to dividend income also are as under:-...................". He has then tabulated such expenses. We set out the table ea....