TaxTMI 
TaxTMI 
2017 (9) TMI 654
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....d the following grounds:- "1. Ground No. I: Disallowance of business expenses of Rs. 23,67500 under Section 37 of the Income-tax Act 1.1 The Commissioner of Income-tax (Appeals)-17 ["the CIT(Appeals)"). Mumbai, on the facts and circumstances of the case and in law, erred in upholding the disallowance of Re 23,67,500 being the business expenses under section 37 of the Income-tax Act (the Act"). 1.2 The appellant submits that it has incurred business expenses of Rs. 23,67,500 (including Legal and professional fees of Rs. 961,738/- wholly and exclusively for its business and therefore, such expenses ought to be allowed as revenue expenses under section 37 of the Act. 1.3 The appellant prays that the assessing officer be directed to give appropriate direction in this matter to delete the disallowance of Rs. 23,67,500. 2 Ground No. 2: Denial of set-off of business loss incurred against Income from Other Sources earned during the some assessment year 2.1 On the facts and circumstances of the case and in law, the CIT(Appeals) erred in upholding the assessing officer view of not allowing set-off of business loss against the Income from ....
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....usiness. In the profit and loss account, the assessee has two credit entries namely interest on FD's of Rs. 40,62,396/- and dividend of Rs. 6,31,579/-. The said receipt was termed as income of other sources. The profit and loss account had no credit entry at all. The expenses were debited to P&L account to the tune of Rs. 38,36,775/-. Out of this, the assessee voluntarily disallowed the inadmissible expenditures to the tune of Rs. 14,69,275/- and balance of Rs. 23,67,500/- were shown as loss under the head of profits and gain of business or profession. This loss was set off against the income of Rs. 40,62,396/- being interest earned on bank FDs shown under the head income from other sources. The balance income of Rs. 16,94,900/- was offered to tax. Since, the assessee was not doing the business effectively therefore, the expenses to the tune of Rs. 23.67.500/- was disallowed. The assessee showed the exempt income to the tune of Rs. 6,31,579/- but did not show the expenses to earn the exempt income. Therefore, the provisions of Section 14A r.w.s. Rule 8D of the Act was applied in accordance with law. The expenses were restricted to the total expenses to the tune of Rs. 38,36,775/-. ....
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....he revenue. ISSUE NO.3:- 6. Under this issue the assessee has challenged the disallowance of expenses to the tune of Rs. 38,36,775/- incurred to earn the exempt income to the tune of Rs. 6,31,579/-. The Ld. representative of the assessee has argued that the assessee has invested this amount in subsidiary companies therefore, the said investment is not liable to be included while assessing the expenses to earn the exempt income, hence, the finding of the CIT(A) is wrong and is liable to be set aside. However, on the other hand, the Ld. representative of the department has refuted the said contention. It is not in dispute that the assessee company invested in subsidiary companies. The appellant is an investment company. Moreover the assessee company was having dividend income to the tune of Rs. 6,35,579/- and the expenses to incur the exempt income has been assessed to the tune of Rs. 38,36,775/- which is more than the dividend income. Anyhow the strategic investment is not liable to be included to assess the expenses to earn the dividend income in view of the provision under section 14A read with rule 8D.In this regard we also find support of law in (2014) 46 Taxman.com 18 ITA....
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....r the shares were in dematerialized form or not, dividend would have been earned by the appellant, 2.3 The appellant prays for due relief 3. Ground No. 3: without prejudice to Ground No. I, disallowance under section 144 of Me Act be restricted to the amount of dividend earned. 3.1 The CFIXA), on the facts and circumstances of the case, ought to have disallowed under section 14A. an amount not exceeding the amount of dividend earned of its 30,87,694. 3.2 The appellant prays for due relief. 4 Ground No. 4: without prejudice to Ground Nos. 1,2,3, a sum of Rs. 32,40,1115 be allowed as revenue expenses under section 31 of the Act 4.1 The CIT(A), on the facts and circumstances of the case, erred in upholding disallowance of Rs. 32.40178 on the premise that none of the expenses have been incurred for the business. 4.2 The appellant submits that it has incurred business expenses of Rs. 32,40,178 wholly and exclusively for its business and therefore such expenses ought to be allowed as revenue expenses under section 37 of the Act 4.3 The appellant prays that the AU, be directed to give appropriate direction in this mat....