2019 (6) TMI 740

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....als) erred in passing the order in the manner he did. 2. The learned CIT (Appeals) grossly erred in confirming the additions made by the AO under Section 14A read with Rule 8D of the Rules although there was no specific expenditure incurred while earning the exempted income and also there was no nexus between the expenditure and exempted income that was established by the Appellant. 3. The learned CIT (Appeals) erred in confirming the provision that was made for long term retention bonus to the employees which was subsequently paid to the employees which was the part of the salary itself. 4. The learned CIT (Appeals) failed to consider that the provision made towards long term retention bonus of the employees is a part of their pay pa....

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.... u/s 115 JB of Rs. 23,97,38,525/-. The case was selected for scrutiny and notices u/s 143(2) and 142(1) were issue. In compliance, AR of the assessee appeared on various dates and furnished the relevant details, particulars and clarifications as called for. Since the assessee has International transactions, reference was made to the Transfer Pricing Officer (TPO) whereas the TPO by order dated 27/04/ 2012 made no adjustment to the arm's length price of the assessee. On the disputed issue, the Assessing Officer found that the assessee has received dividend income of Rs. 84,91,571/- and claimed as exempt. Whereas no expenses have been disallowed by the assessee for earning of such income. The AO, applied the provisions of section 14A r.w....

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....14A submitted that the CIT(A) has erred in confirming the addition made by the AO where no expenditure was incurred by the assessee and the application of rule 8D(2)(iii) was not properly considered. The learned AR further submitted that the CIT(A) has confirmed the addition made for long term retention bonus paid to the employees as part of salary and is an ascertained liability and therefore, it has to be allowed as business deduction and fall under the purview of section 43B of the Act. On the third disputed issue, the learned AR submitted that the CIT(A) has erred in confirming the addition in respect of rent equalization provision as the assessee has reversed the amount for rent equalization provision which was considered in the earlie....

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.... Vireet Investments(supra) where only dividend yielding investment has to be considered for the purpose of calculation of average value of investments under rule 8D(2)(iii). Accordingly, the ground of appeal of the assessee are allowed for statistical purposes. 7. On the second disputed issue with respect to disallowance of long-term retention bonus, the learned AR contention that bonus paid to employees has to be allowed. But on perusal of the assessment order, we found that the AO has considered the provision of long-term retention bonus as an ascertained liability and it was not paid before due date of filing of Return of income u/s 139(1) of the Act and disallowed apparently u/s 43B of the Act, which the learned AR concedes. In the c....