TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 1522
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....y grounds of appeal at or before the time of hearing." 2. The Appellant, DCIT, Circle 7(1), New Delhi. (hereinafter referred to as 'the Revenue') by filing the present appeal i.e. ITA No. 2567/Del/2016, sought to set aside the impugned order dated 12.02.2016 qua Assessment Year 2011-12 passed by Ld. CIT(A)-3, Delhi-110092 on the grounds that:- "1. Ld. CIT(A) erred in law and on facts of the case deleting the addition of Rs. 6,19,050/- made by the AO on account of Prior Period Expenses. 2. Ld. CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 27,00,000/- made by the AO on account of School Running Expenses. 3. Ld. CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 3,46,46,421/- made by the AO on account of Club Membership Fees. 4. Ld. CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 69,46,01,000/- made by the AO on account of interest u/s 14A r.w. Rule 8D(2)(iii) of the Income Tax Act, 1961. 5. The appellant craves leave, modify, add or forego any grounds (s) or appeal at any time before or during the hearing of this appeal." 3. Since both the aforesaid Cross Appeals have been emanated from....
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....horities below in the light of the facts and circumstances of the case. Revenue's Appeal in ITA No. 2567/Del/2016 Ground no. 1 8. So far as the question of addition of Rs. 6,19,0 50/- as Prior Period Expenses made by the AO is concerned. Undisputedly, the assessee company has been following mercantile system of accounting, which is allowable only when the liability to pay the same stands crystallized. Moreover, when the assessee has not claimed the expenses in question while computing the total income, the same cannot be disallowed by the AO. So, when the assessee has not claimed deduction on account of prior period expenses, the same cannot be disallowed by the AO, hence, Ld. CIT(A) has rightly deleted the same. So, Ground no. 1 determines against the Revenue. Ground no. 2 9. So far as the question of deletion of addition of Rs. 27,00,000/- made by the AO on account of School Running Expenses is concerned, undisputedly, the children of employees of the assessee are studying in the school situated on the land purchased by the assessee company. When we examine school running expenses, in the light of the global concept of business it includes care and concern for the society....
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....me to the conclusion that there was a fixed, tenure or a period during which the said members were permitted and allowed to enjoy the benefits and facilities. As regards the non-refundable upfront payment it was observed and held that it entailed and secured use of facilities for the period specified. The assessee, therefore, had to provide and incur expenses for providing the said facilities. The Tribunal has followed the decision of this Court in CIT Vs. Dinesh Kumar Goel (2011) 331 ITR 10. In the said case, this High Court has referred to the concept of income, and the principles of accountancy. In the said case, the respondent- assessee was running a coaching institute and was receiving upfront fee for providing coaching, which was spread over one year or two years. Keeping in view the factual position, Tribunal has rightly appreciated and applied the law as elucidated in the case of Dinesh Kumar Goel (supra). We do not think any substantial question of law arises." 25.4 It is further noted that SLP of Revenue against order of Hon'ble High Court has been dismissed by Hon'ble Supreme Court as per copy of order placed on record. Keeping in mind the facts of the case and resp....
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....section 14A read with Rule 8D, the Assessing Officer was required to record his dissatisfaction that the computation made by the assessee u/s 14A is not correct, however, when we examine the Assessment Order, nowhere dissatisfaction has been recorded by the AO nor any reason have been given as to how the computation made by the assessee, making suo moto disallowance of expenses of Rs. 8,21,883/-, is not correct nor the AO has disputed the fact that the assessee was having own sufficient interest free funds available with it to make the investment in the year under assessment. 16. When the assessee was having sufficient interest free own funds to the tune of Rs. 2,95,937/- lacs no disallowance can be made under Rule 8D(2)(ii) as the assessee has not incurred any expenses on account of payment of interest. 17. Hon'ble High Court of Bombay in case cited as CIT-2, Mumbai vs. HDFC Bank Ltd. - (2014) 49 taxmann.com 335 (Bombay) while dealing with the identical issue held that when the assessee's own funds and other non-interest bearing funds were more than investment in tax free securities, no dis allowance on account of interest payment under section 14A can be made. 18. Furthermore,....
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....produced para 3.3.6 of the assessment order where, again, no reasons have been provided but only a conclusion has been reached that the AO was "satisfied that the Assessee had incurred expenses to manage its investments which may yield exempt income, and Assessee grossly failed to calculate such expenses in a reasonable manner to ascertain the true and correct picture of its income and expenses." 40. Consequently on the aspect of administrative expenses being disallowed, since there was a failure by the AO to comply with the mandatory requirement of Section 14 A (2) of the Act read with Rule 8D (1 ) (a) of the Rules and record his satisfaction as required thereunder, the question of applying Rule 8D (2) (iii) of the Rules did not arise. The question framed in ITA 549 of 2015 is answered accordingly." 20. Following the decision rendered by Hon'ble Apex Court in Godrej & Boyce Manufacture Company Ltd. (supra) and Hon'ble Delhi High Court in ITT Media Ltd. (supra), we are of the considered view that the finding returned by AO as well as Ld. CIT(A) that some kind of expenditure necessarily has to be incurred who earned the dividend income are not sustainable when the AO/ CIT(A) are....