TaxTMI 
TaxTMI 
2016 (10) TMI 805
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.... any expenditure to earning of tax free income and that the appellant had made composite use of funds. 2) The learned CIT (A) erred in confirming the disallowance of commission of Rs. 41,95,784/- paid to director without considering any submission made by the appellant. 3) The learned CIT (A) erred in confirming the disallowance of transport charges of '467500/- paid to Shri Ganesh Lifters based merely on the basis of disallowance in the previous years and without any independent verification of facts by the AO. 4) The learned CIT (A) erred in disallowing expenditure of Rs. 5 Lakhs in connection with agency and cargo clearance against the disallowance of Rs. 1,86,879/- made the Assessing Officer by mere copy paste of disallowance in A.Y. 1997-98. 5) The learned CIT (A) erred in confirming the disallowance of foreign travel expense of Rs. 10,45,4831- without having regards to the facts and circumstance of the case. 6) The learned CIT(A) erred in confirming the disallowance of medical expense of the director Rs. 60,438/- considering the same as personal expense without having regard to the contractual obligation of provision of medical expenditure to the director." 3. Assess....
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.... sum of Rs. 22,04742/- as expenses attributable to earning of exempt income under section 14A r.w.r 8D. We also find that the assessee has hired one portfolio manager to handle portfolio management as the assessee is in the business of logistic operation and was not carrying on share activities. The assessee made payment to the portfolio manager and allocated the PMS charges between Long Term Capital Gains, Short Term Capital Gains and dividend income proportionately. The ld. AR submitted before us that in terms of section 14A(2) the AO has to record his satisfaction or dissatisfaction with respect to correctness of the claim of the assessee in respect of expenditure in relation to the exempt income as Rule 8D has no blind application. We find that in this cases the AO has mechanically applied the provision of rule 8D without recording any satisfaction making the disallowance. In our opinion, the application of rule 8D is not correct. The case of the assessee also find strong support from the case of Hero Cycles Ltd(supra), in which it has been held that it is not necessary that some expenses might have been incurred relating to exempt income directly or indirectly which must be di....
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....e against profits only. Thus, the nexus of rendering of services and payment of commission was very co-related in the instant case and the same has not been properly considered by lower authorities. Assessing Officer mainly relied on the decision of Special Bench in case of Dalal Broacha Stock Broking Pvt. Ltd. vs. ACIT (2011) 131 ITD 36 (Mum-SB). In case of Dalal Broacha Stock Broking Pvt. Ltd. (supra), all the three Directors had been paid uniformally commission of Rs. 40lacs which is 10% of profits subject to maximum limit of Rs. 40lacs. In case of assessee, only one working Director out of four Directors had been paid commission as @ 5% of the gross total receipts. In case of Dalal Broacha Stock Broking Pvt. Ltd. (supra), Tribunal came to conclusion that no evidence on record was available to support the fact that the Directors had rendered any extra services for the payment of huge commission or remuneration. So, it was held that justification of firm has no merit in absence of service rendered but in case of assessee, the rendering of services by the said Director had been accepted by the lower authorities. In case before us, the whole-time Director had immensely contributed ....
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....claim has to be decided in its facts and circumstances. Therefore, we restore this issue to Assessing Officer with direction to decide as per fact and law and after taking into consideration, the read service rendered by the said transporter to the assessee and also taking into consideration the earlier precedent and Assessing Officer can allow the claim in the facts and circumstances of the year under consideration and assessee has been rendered services of transporter of actual basis. 6. Next issue is with regard to disallowance of expenditure of Rs. 5 laks in connection with agency and cargo clearance against the disallowance of Rs. 1,86,879/-. In appeal, CIT(A) enhanced the disallowance for consolidated amount of Rs. 5lacs. No notice of enhancement was given. Books of accounts had not been rejected. According to Assessing Officer, in fact this disallowance has been made on the basis of order of ITAT for A.Y.1997-98. The stand of assessee before us has been that each year is independent year. No res judicata was applied to the assessee and each year has been decided in its facts and circumstances. 6.1 We find that books of accounts had not been rejected and no notice of enhanc....
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....d has been rendered by assessee before lower authorities. So, same has rightly been disallowed by lower authorities. Same is upheld. 9. As a result, appeal filed by assessee for A.Y. 2009-10 is partly allowed. 10. In ITA No.6367/Mum/2013 for A.Y. 2010-11, assessee has filed appeal on following grounds: "1. Disallowance u/s. 36(1)(ii) - Rs. 49,15,431/- i) The ld. CIT(A) erred in confirming the disallowance without appreciating that the Appellant after complying to the enabling conditions of Sec. 36(1)(ii) had paid commission to one of its directors in particular against his full time rendering of services; thus the disallowance is uncalled for as the said payment is not an appropriation of profits or a payment in lieu of dividend but purely a charge of against profits. ii) Without prejudice to above, any payment made even to a director with substantial holding purely in terms of his appointment against the services rendered by him is outside the scope of Sec. 36(1)(ii); thus the same cannot be attributed as distribution of dividend or profits in the guise of commission; as the payment has direct nexus to the services rendered, Sec. 36(1)(ii) has no role to play and the disallow....