TaxTMI 
TaxTMI 
2018 (8) TMI 760
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....on order dated 08.04.2016 passed by the learned Tribunal in ITA No.857/Ahd/2012 for AY 200809, the Revenue has preferred the Tax Appeal No.808/2018 with the following proposed questions of law. "[A] Whether the Income Tax Appellate Tribunal is right in law and on facts in deleting disallowance u/s. 40A(2)(b) on account of excess remuneration to directors of Rs. 3,21,96,765/? [B] Whether the Income Tax Appellate Tribunal is right in law and on facts in deleting the disallowance u/s. 14A of Rs. 14,57,995/out of the total disallowance of Rs. 31,17,765/? [C] Whether the Appellate Tribunal is right in law and on facts in holding that the assessee's profit earned on the sale fo shares shall be treated as capital gain instead of business income?" [2.1] Feeling aggrieved and dissatisfied with the impugned common order dated 08.04.2016 passed by the learned Tribunal in ITA No.1213/Ahd/2012 for AY 200809, the Revenue has preferred the Tax Appeal No.809/2018 with the following proposed questions of law. "[A] Whether the Appellate Tribunal is right in law and on facts in deleting disallowance u/s. 40A(2)(b) on account of excess remuneration to directors o....
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.... order dated 14.09.2017 passed by the learned Tribunal in ITA No.953/Ahd/2015 for AY 201011, the Revenue has preferred the Tax Appeal No.251/2018 with the following proposed questions of law. "[A] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs. 3,81,99,984/on account of disallowance of Directors Remuneration u/s. 40A(2)(b) of the Act? [B] Whether the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs. 2,05,61,969/made u/s 145A of the Act?" [2.6] Feeling aggrieved and dissatisfied with the impugned common order dated 14.09.2017 passed by the learned Tribunal in ITA No.708/Ahd/2015 for AY 201112, the Revenue has preferred the Tax Appeal No.252/2018 with the following proposed questions of law. "[A] Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance made u/s. 14A r.w. Rule 8D? [B] Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance of Rs. 4,37,73,636/made on account of Directors Remuneration u/s 40A(2)(b) of the Act?" [2.7] Feeling aggrieved and dissatisfied with the impugned common order dated ....
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....vised return was filed on 17.03.2009 declaring the total income at Rs. 23,23,95,910/. That during the course of the assessment proceedings, it was noticed by the Assessing Officer that there is an extraordinary increase in the salary paid to the Directors (from Rs. 94,97,449/paid in the FY 200304 to Rs. 4,00,31,600/paid in the year 2007-08 in the case of Director Shri K.H. Jhaveri) and (from Rs. 4,50,000/paid in FY 200506 to Rs. 60,01,750/paid in FY 200708 in the case of Director Shri Abhishek K. Jhaveri). Therefore, vide notice dated 13.09.2010, the assessee was requested to furnish justification. Vide letter dated 29.09.2010 the assessee submitted the justification. However, the Assessing Officer was not satisfied with the said justification for the increase in the renumeration of Directors and granting of 10% increase in renumeration every year, the Assessing Officer determined the renumeration at Rs. 1,32,96,429/in the case of Director Shri K.H. Jhaveri and determined at Rs. 5,40,000/in the case of Director Shri Abhishek K. Jhaveri. Consequently, the Assessing Officer made the disallowance under Section 40A(2)(b) of Rs. 2,67,35,171/out of the renumeration of Shri K. H. Jhaveri ....
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.... relevant accounting standards the value of the purchases of the raw materials value of the sales and closing stock are shown as CENVAT etc. as per the accounting method being followed. However, the Assessing Officer was not satisfied with the same and held that as per the provision of Section 145A, the value of the closing stock shown by the assessee is required to be further increased by the amount of taxes paid on the raw material lying in the closing stock. Accordingly, the Assessing Officer held that the value of the closing stock of the assessee is to be increase by Rs. 47,41,915/being the taxes paid attributable to the raw material lying in the closing stock. Consequently, the Assessing Officer framed the assessment and assessed the income of the assessee at Rs. 32,97,03,690/. [4.4] Feeling aggrieved and dissatisfied with the assessment order and making above disallowances more particularly under Section 40A(2)(b) and section 14A, treating the income from sale of shares as business income making addition under Section 145A of the IT Act, the assessee preferred the appeal before the learned CIT(A). The learned CIT(A) partly allowed the appeal and confirmed the disallowa....
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....aw and on facts in deleting disallowance u/s. 40A(2)(b) on account of excess remuneration to directors of Rs. 3,21,96,765/? [B] Whether the Income Tax Appellate Tribunal is right in law and on facts in deleting the disallowance u/s. 14A of Rs. 14,57,995/out of the total disallowance of Rs. 31,17,765/? [C] Whether the Appellate Tribunal is right in law and on facts in holding that the assessee's profit earned on the sale fo shares shall be treated as capital gain instead of business income?" Tax Appeal No.809/2018 "[A] Whether the Appellate Tribunal is right in law and on facts in deleting disallowance u/s. 40A(2)(b) on account of excess remuneration to directors of Rs. 1,40,99,171/? [B] Whether the Income Tax Appellate Tribunal has substantially erred in deleting the addition made u/s 145A of the Income Tax Act, 1961?" Similar orders are passed by the learned Tribunal with respect to other assessment orders deleting the disallowance under Section 40A(2)(b) on account of excess renumeration to Directors; deleting the disallowance under Section 14A and the addition under Section 145A of the IT Act. [5.0] Heard Shri Manish Bhatt, lear....
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.... Jhaveri, which was accepted. Therefore, looking to the increase in the profit and the business when in the subsequent year i.e. year in consideration the learned Tribunal accepted the renumeration paid to the Director as admissible, it cannot be said that the learned Tribunal has committed any error. The learned Tribunal has rightly observed that once the renumeration paid in the preceding year was accepted by the Revenue, the Assessing Officer was not justified in considering and/or comparing the renumeration paid in AY 2004-05. We are in complete agreement with the view taken by the learned Tribunal. No substantial question of law arise. [5.3] Under the circumstances, Tax Appeal Nos.808/2018 and 809/2018 for AY 200809, Tax Appeal No.810/2018 for AY 200910, Tax Appeal No.811/2018 for AY 200910, Tax Appeal No.250/2018 for AY 201011, Tax Appeal No.251/2018 for AY 200910, Tax Appeal No.252/2018 for AY 201112, Tax Appeal No.253/2018 for AY 201112 and Tax Appeal No.647/2018 for AY 201213 with respect to deleting the disallowance under Section 40A(2)(b) stand dismissed. [6.0] Now, so far as the deletion of the disallowance under Section 14A read with Rule 8D is concerned, while d....
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.... concluded against the Revenue in view of the three decisions of the Divisoin Bench of this Court. Under the circumstances, Tax Appeal / respective Tax Appeals qua deleting the disallowance under Section 14A read with Rule 8D deserves to be dismissed. [6.2] There is one additional issue in Tax Appeal No.810/2018 arising out of the ITA No.2617/Ahd/2012 for AY 200910 viz. deleting disallowance made by the AO on account of notional interest on delayed refund of security deposits. It is required to be noted that it has been found that no interest was due in the year under consideration - AY 200910. It has come on record and it is not disputed that infact the assessee had already received his security amount latest by 23.08.2007 relevant for AY 200809 only and not to the impugned AY 200910. Therefore, as rightly observed by the learned CIT(A) as well as the learned Tribunal the deemed interest could not have been made in the assessment year under consideration i.e. AY 2009-10. Under the circumstances, the learned Tribunal has rightly deleted the disallowance made on account of notional interest on delayed refund of security deposits. [7.0] In view of the above and for the reasons ....