TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 915
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....vidence. 2 (i) On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 1,04,67,285/- being interest on the investment made in the subsidiary company by invoking the provisions of section 40(A)(2)(b) of the Income tax Act. (ii) The learned CIT(A) erred in not appreciating the fact that the assessee could not prove the business expediency in making investment in shares of its subsidiary company and that the Assessing Officer has proved beyond doubt that the investment in shares of its subsidiary 'company has been made to give undue advantage to its subsidiary company. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 3,15,78,873/- made by the AO by invoking provisions of section 40(a)(ia) of the Act, without appreciating the fact that the assessee was paying commission to the dealers within the meaning of section 194H attracting the provisions of section 40(a)(ia) of the Act. 3. The facts of the case are the assessee is engaged in the business of manufacturing and otherwise dealing in worsted (woven blended) made primarily from wool, also engaged in manufacturin....
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.... the assessee was requested to explain as to why the proportionate interest expense should not be disallowed for interest free investments of borrowed funds in a subsidiary company. In response to said notice, assessee stated that ".......... the investment in equity in Dinesh Remedies Ltd. amounting to Rs. 1,57,41,000/- has been made out of the internal accruals of the company during the current financial year. No specific loan has been taken to invest in the said company. The fact that no income was earned during the year from the said investment in the particular year does not mean that no benefit shall accrue to the assessee company in the future. The investment has been made keeping in mind the prudent business practice. During the year under consideration, the company has outstanding balance of term loan amounting to Rs. 30,80,59,987/- of which Rs. 14,04,23,191/- was borrowed in current financial year. The said loan has been taken for purpose of purchasing machinery. Interest paid by the assessee company amounting to Rs. 1,68,50,9247- is towards the term loan taken in the earlier years as well as in the current year and the same be allowed as revenue expenditure u/.36(....
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....ove amounts Filter Fabrics : are on account of Special Schemes, where the dealers are required to lift, contain quantity as well/as quality of products of the company during the certain periods. The terms & conditions are fixed by the Company. If a particular dealer fulfill the terms & conditions, then he is paid at the end of certain period or year end on the basis of the total Turn Over by them. Though, in its submission during the course of assessment proceedings, it is stated as Special Discount, there is no such "connotations" used in its books of account and all these expenses along with commission paid are clubbed together under the head Selling & Other expenses. It may also be mentioned that in earlier assessment year, information u/s. 133 (6) were collected from some of the dealers and from their Accounts statement, it was seen that such amounts were shown as Yearly Incentive, Yearly Winter Incentive etc. and not shown as Cash Discount or Trade Discount. Therefore, it was noticed that these incentives were liable for TDS u/s 194 H of the Act. And further assessee was asked to show cause as to why the provision of section 40(a)(ia) of the Act should not be applied with rega....
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....or services rendered or for any services in the course of buying or selling goods in relation to any transaction relating to any assets, valuable, articles or thing. In our case the dealers are not at all acting on our behalf and are not at all rendering any services in course of buying or selling of goods in relation to any transaction. The discounts are in the nature of Rebate / Discount / Reduction in Mill's Price at which goods were supplied. They are strictly in the nature of Rebate and reducing our sales price. In view of this we have to respectfully submit that provisions of sec. 194H are not at all attracted and consequential provisions of Sec. 40a(ia) are also not attracted as there is no liability to deduct any T.D.S. Discount on Felt Sales: We supply the felt to various paper mills which are our corporate clients and Government companies. We allow rebate / discount on the felt sold to clients directly and we do not have any agents and/or brokers for booking of the orders for Felt sales and therefore the rebate rebate / discount allowed to customers is nothing but reduction in the sales price only. The Felts so supplied by us is totally consumed by our customers....
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....e and in law, Ld. . C.I.T. (A) erred in deleting the addition of Rs. 82,13,693 made u/s. 14A r.w. rule 8D without considering the facts that in a mixed system of accounting the identification of money employed towards exempted and non-exempted incomes cannot be made. 2.1 On the facts and in the circumstances of the case, and in law, Learned CIT(A) erred in directing the AO not to consider the investment made in HDFC Fixed mutual fund and HDFC cash management fund for the purpose of computation of disallowance out of interest paid as per sub clause (ii) to clause 2 of Rule 8D, but to consider these investments for making disallowances as per clause (iii) to clause 2 of Rule 8D without appreciating the fact that as per Rule 8D(ii)B the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year has to be taken for computing the disallowance under sub clause clause(ii) of clause (2) of Rule 8D. 2.2 On the facts and circumstances of the case, and in law, learned CIT(A) erred in directing for not considering the interest paid on term lo....
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....ause (ii) of clause (2) of Rule 8D. There is no provision in Rule 8D to exclude part of the interest for working out the disallowance u/s 14A. Ld. A.O. has discussed the issue at page no. 2 to 4 and ld. CIT(A) has discussed the issue at page no. 2 to 13. Since in assessee's own case for assessment year 2008-09 and 2009-10, disallowance u/s. 14A restricted to Rs. 20,000/- on lump sum basis and ld. CIT(A) in impugned year follows appellate order for assessment year 2008-09 & 2009-10 and accordingly disallowance in quantum appeals are restricted to Rs. 20,000/- by the ITAT . Accordingly, this became infructuous. 22. In the result, this appeal is dismissed as infructuous. ITA No. 3318/Ahd/2014 for A.Y. 2011-12 Revenue's appeal 23. In this case, Revenue has taken following grounds: 1. On the facts and in the circumstances of the case and in law, Ld. C.I.T. (A) erred in deleting the addition of ^ 89,82,597/- made U/S.14A r.w. rule 8D without considering the facts that in a mixed system of accounting the identification of money employed towards exempted and non-exempted incomes cannot be made. 2.1. On the facts and in the circumstances of the case, and in law, learned GIT(A) erred....
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.... of section 40(a)(ia) of the Act. 24. Facts have been narrated in connected ITA No. 77/Ahd/2014 and we need not to repeat the same for the sake of convenience. 25. So far ground nos. 1 & 2 are concerned in deleting the addition of Rs. 89,82,597/- made u/s. 14A read with Rule 8D. Ld. A.O. has discussed the issue at page nos. 2 to 6 and ld. CIT(A) has discussed the issue at page nos. 2 to 19. In this case, ld. CIT(A) follows assessment year 2008-09 & 2009-10 and decided matter in favour of assessee and a lump sum disallowance of Rs. 20,000/- in ITA No. 2313 & 2504/Ahd/2011 for Assessment Year 2008-09. Therefore, we dismiss this ground of appeal. 26. So far ground relating to deleting addition of Rs. 1,21,14,015/- being interest on the investment made in subsidiary company by invoking provisions of section 40A(2)(b)of the Act is concerned, ld. A.O. has discussed the issue at page nos.7 & 8 and ld. CIT(A) has discussed the issue at page nos. 19 to 23. In this case, ld. CIT(A) follows assessment years 2008-09 A& 2009-10 and Coordinate Bench decided the issue in favour of assessee in ITA No. 2313 & 2504/Ahd/2011 for Assessment Year 2008-09. Therefore we dismiss this ground of appeal.....
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....ts it is submitted that the same be held so now. 30. So far ground no. 1 is concerned with regard to confirming disallowance u/s. 14A read with Rule 8D of the Act is concerned, ld. A.O. has discussed at page nos. 2 to 6 and ld. CIT(A) has discussed the issue at page nos. 2 to 19. In this case, ld. CIT(A) follows assessment year 2008-09 & 2009-10. This issue has already decided in favour of assessee by the Co-ordinate Bench in ITA No. 2313 & 2504/Ahd/2011 for A.Y. 2008-09 and a lump sum disallowance of Rs. 20,000/- was made. Therefore, we allow this ground of appeal. ITA No. 2993/Ahd/2013 for A.Y. 2010-11 Assessee's appeal. 31. In this case, Assessee has taken following grounds: (1) The Learned Commissioner of Income Tax (Appeals) has erred in confirming disallowance U/S.14A of the I.T. Act read with Rule 8D. It is submitted that on the facts and circumstances of the case the details filed before you and CIT(A) it is, absolutely evident that the assessee has not invested any borrowed funds in any asset. The yield is exempted and not taxable income. In view of this it is submitted that there is no justification in confirming the disallowance u/s. 14A. (2) Without prejudice to....