TaxTMI 
TaxTMI 
2018 (5) TMI 1377
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....4I of the IT Act? 3. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) is justified in restricting the disallowance u/s 14A to Rs. 90,103/- out of Rs. 3,00,11,791/- i.e. giving relief of Rs. 2,99,21,688/- to the assessee when Rule 8D was clearly applicable? 4. The order of the Ld. CIT(A) is erroneous and is not tenable on the fact and in law. 5. That the order of the Learned CIT(A) is erroneous and is not tenable on facts and in law. 6. That the grounds of appeal are without prejudiced to each other. 2. Briefly stated facts of the case are that the assessee company is engaged in the business of manufacture, sale and trading of automotive tyres and tubes and flaps. For the year under consideration i.e. assessment year 2009-10, the assessee filed return of income on 30/09/2009, declaring nil income. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the 'Act') was issued and complied with. The scrutiny assessment under section 143(3) of the Act was completed on 19/12/2011 after making certain additions/disallowances. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who partly allo....
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..... The relevant finding of the Tribunal is reproduced as under: "7. We have heard the rival contentions and perused the facts of the case. The total expenditure incurred is Rs. 64,06,041/- whereas the disallowance made by the Assessing Officer is to the extent of Rs. 25,13,385/- as mentioned in the Assessing Officer's order reproduced hereinabove. From a careful reading of the assessment order, it is evident that the Assessing Officer has not disallowed 100% expenditure and he had considered the maximum expenditure as genuine and having been incurred for the purpose of business u/s 37(1) of the Act, which means that the expenditure claimed by the assessee has been considered as excessive. Nowhere in the order of the Assessing Officer there is a whisper as to how' the expenditure is excessive and how the expenditure to the extent of Rs. 25,13,385/- is not having been incurred for the purpose of business u/s 37(1) of the Act or there is a personal expenditure. Making of estimation for disallowance under such circumstances and facts of the case is not permissible. Accordingly, we do not find any infirmity in the order of the Ld. CIT(A) who has relied upon the following decisions:....
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.... the finding of Ld. CIT(A) in deleting the disallowance of Rs. 21,90,000/-. The ground of the appeal is accordingly dismissed. 4. The ground No. 2 of the appeal relates to disallowance of Rs. 7,02,261/- made by the Assessing Officer under section 40(a)(ia) for non-reduction of tax at source under section 194C/194I of the Act on monthly maintenance charges paid to housing societies . 4.1 The Assessing Officer noted that the assessee is a member of various cooperative housing societies and made payments to those cooperative societies on account of reimbursement of common expenses, which were incurred by the Society for maintenance, lift, security charges and similar day-to-day expenses and municipal taxes paid to the government on behalf of its members. According to the Ld. Assessing Officer, these monthly charges levied by the Society on its member were under an implied contract, which attracts liability of deduction of tax at source (TDS) under section 194C or section 194I of the Act, and non-deduction of tax on such payment, made the assessee liable for disallowance of those expenses under section 40(a)(ia) of the Act. Accordingly, he disallowed the relevant expenditure of Rs. 7....
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....of contract between the parties for carrying out the 'work' as defined under that section. In the present case, the privity of contract for carrying out 'work', if any, exists between the contractor and the Society (ies) and not between the contractor and the members, including the appellant. In this context it is also observed that since the co-operative societies works on the principle of mutuality and on a principle of "no profit no loss" therefore, it can be said that the reimbursement of expenses by the members to the co-operative society is not in the nature of any payment to the cooperative society but is rather more in the nature of taking the money from one pocket and placing it in the another pocket. This is because it is the members of the society taken together who form the cooperative society and in such a situation the reimbursement made cannot be treated in the nature of payment by the member to the larger body which (that is the Co-operative Society) as it would in effect mean to be paying to oneself. In view of the above discussion in its totality, the ingredients of section 194C of the Act being is not fulfilled, Section 194C of the Act is not applicable. Simil....
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.... the payment in the hand of the recipient should be in the character of income, whereas in the instant case, it is merely reimbursement by the members to the society and, therefore, the payment in question is not liable for TDS. The Ld. CIT(A) in arriving the above conclusion has relied on the decision of the Tribunal in the case of Mistur Shipping Agency Private Limited (supra). 4.4 In our opinion, the Ld. CIT(A) has not committed any error in following the precedent available. The Ld. DR has not brought before us any contrary decision. In view of the above, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground of the appeal of the Revenue is dismissed. 5. The ground No. 3 of the appeal relates to restricting by the Ld. CIT(A) of disallowance under section 14A of the Act to Rs. 90,103/-as against disallowance of Rs. 3, 00, 11, 791/-made by the Assessing Officer. 5.1 The Assessing Officer observed income of Rs. 11,01,207/- from dividend claimed as exempt under section 10(34) of the Act, Rs. 64,921/- as interest from Unit Trust of India claimed as exempt under section 10(33) of the Act and Rs. 7,45,73,635....
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....m of the assessee that no expenditure was incurred for earning the exempt income. The Ld. DR in support of contention relied on the finding of the Hon'ble Delhi High Court in the case of Indiabulls Financial Services Ltd., 395 ITR 242 (Delhi). Accordingly, he submitted that the Assessing Officer was justified in invoking Rule 8D of the Rules. Further, the Ld. DR submitted that issue of no disallowance in case of strategic investment made for controlling stake has also been decided against the assessee in the case of Maxopp Investment Limited by the Hon'ble Supreme Court which has been reported in (2018) 91 taxman.com 154 (SC). 5.4 On the contrary, the Ld. counsel of the assessee relied on the order of the Ld. CIT(A) and submitted that in the immediately preceding assessment year also the Tribunal has restricted the disallowance under section 14A of the Act to the extent of demat charges paid by the assessee. 5.5 We have heard the rival submissions and perused the relevant material on record. There is no dispute on the facts related to quantum of exempted income earned by the assessee. There is no dispute on the fact that in the return of income filed, the assessee has not made an....