TaxTMI 
TaxTMI 
2016 (4) TMI 1358
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt order u/s. 143(3) of the Act, dated 30.12.2013 for the Assessment Year 2007-08 on the following grounds: "i. The Learned CIT (A) has erred on facts and law, in deleting the disallowance of Rs. 41,85,747/- under section 14A r.w. Rule 8D, without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. ii. The Learned CIT(A) has erred on facts and law, in deleting the disallowance of Rs. 41,85,747/- under section 14A r.w. Rule 8D, ignoring the fact that disallowance under section 14A as per rule 8D is justified and also rule 8D provides uniform method for computing disallowance. iii. The Learned CIT(A) has erred on facts and in law in deleting the disallowance of expenditure amounting to Rs. 5,77,19,942/- under section 40a(ia) of the Income-tax Act, without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. iv. The Ld.CIT (A)'s order is contrary in law and on facts and deserves to be set aside. v. The appellant prays that the order of CIT (A) on the above grounds be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be considered for disallowance u/s.14A. The AO has held that no direct expenses or indirect interest expenses were attributable to investment activity. Only the administrative and managerial expenses were attributable to the management of such investments. As per Schedule IV of Balance sheet, the appellant had the following investments in Indian Companies. Name of Company 31.03.2007 31.03.2006 Tayon Technologies Ltd. 2,57,00,000 Nil Apna Loan.com India P. Ltd 7,427 4,78,15,800 Travel Jini.com Ltd 6,03,00,253 6,03,00,243 Bill Junction Payment Ltd. 5,02,52,136 5,02,52,136 Total 13,62,59,816 15,83,68,189 The above details shows that there was new investment during the year of Rs. 2.57 crores. The investments in shares of Apna Loan.com were sold during the year. In respect of other two companies, there was no movement in opening and closing balance. Thus, the movement in shares was in respect of the two companies. This movement was not significant to attract the management and administrative expenses to the extent as determined by the AO. Considering the very small movement, that too in the shares of only two companies, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s per the details given below: (a) Product Development Expenses Rs. 25,17,796/- (b) Legal and Professional fee Rs. 53,17,642/- (c) Bandwidth Charges Rs. 2,84,95,861/- (d) Other payments under the head provisions of Rs. 1,13,27,879/- (e) Software Purchases of Rs. 92,10,820/- Total Rs. 5,77,19,942/- 5.2. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A) wherein detailed submissions were made to argue that these payments are not liable for deduction of tax at source with its. The Ld. CIT(A) accepted the submissions of the assessee and deleted the disallowance to its substantial extent. 5.3. During the course of hearing before us Ld. DR at the very outset stated that in this case proper analysis were not done since complete information, evidences and submissions were not provided at the assessment stage with respect to determination of chargeability of tax upon the income in the hands of the recipients. Before Ld. CIT(A) also although detailed discussions were made but since then there has been a lot of the development in the position of law. It was submitted that in assessee's own case in the preceding year i.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted that now this issue can be decided before the Tribunal since proper discussion has been made by Ld CIT(A) in this year. 5.6. We have considered the submissions of the Ld. Counsel, but we are not able to accept the same fully at this stage. We shall like to refrain from creating any consistency in the decision of same issues arising in different years. Moreover, we find that lot of legal development has already taken place for deciding these issues, as has been contended by the Ld. Counsel also. Therefore, for the purpose of maintaining consistency, we find it appropriate to send this issue back to the file of the AO for re-examination of complete facts and deciding all these issues afresh after giving adequate opportunity of hearing to the assessee. The AO shall inter-alia take into account following submissions of the assessee before deciding this issue as per law and facts: (1) The liability of the assessee in deduction of tax at source cannot arises unless the AO holds that income in the hands of the payee is chargeable to tax in India, especially in view of judgment of Hon'ble Supreme Court in the case of GE India Technology Centre P. Ltd V/s. CIT and Another (2010) 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds may be treated as partly allowed for statistical purposes. 8. Ground No.3: This ground deals with disallowance u/s 14A made by the AO at Rs. 42,49,997/- which was reduced of Rs. 5,00,000/- by Ld. CIT(A). It is noted that no detail has been filed by the assessee. It is further noted that Ld. CIT(A) has followed his own order of A.Y. 2007-08. In our view, the facts are identical to A.Y. 2007-08. It is informed by both the parties no dividend income has been received during the year. The other facts are also claimed to be identical. Thus, following our order for A.Y. 2007-08, we uphold the order of Ld. CIT(A). Thus, this ground is dismissed. 9. Ground No.4: This ground is general and dismissed. We shall take Revenue's Appeal in ITA No.4663/Mum/2013 for A.Y. 2009-10 10. Ground Nos. 1 to 3: These grounds deal with disallowance u/s 40(a)(i) on account of various remittances. It is noted that Ld. CIT(A) has followed his own order for A.Y. 2007-08. Since we have sent these issues back to the file of the AO for A.Y. 2007-08, therefore in this year also we find it appropriate to send these issues back to the file of the AO with the directions as were given for A.Y. 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate proceedings, the appellant has satisfactorily explained that the provisions were made in respect of expenses actually incurred during the year but the bills/invoices of which remained to be received from the parties during the year. In view of this position, the A.O's finding does not appear to be correct that the provisions was made on estimate basis and the said provisions were not pertaining to expenditure actually incurred during the year. The appellant had satisfactorily explained that the expenses were incurred during the year itself. The bills for all expenses were not received during the year. Since, the purchases were made or the services were received during the year itself in respect of such expenses, therefore, these provisions represent the expenses pertaining to the year under consideration. The liability for such expense was crystalised during the year itself, though such liability was not quantifiable at the end of the year. In view of the Supreme Court decision in the case of Bharat Earth Movers (supra) and various other decisions of High Courts, the expenses pertaining to such crystalised liability were required to be allowed as deduction. In absence of ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the excess amount of provisions has been written back. Thus, factually, there is no loss to revenue. Under these circumstances we find that no interference is called for in the order of Ld. CIT(A), and therefore, same is upheld. Thus, Ground no.4 is dismissed. 12. Ground no.5 is general and therefore dismissed. We shall take up Revenue's Appeal in ITA No. 5438/Mum/2013 for A.Y. 2002-03. 13. Ground Nos. 1 to 4: In these grounds, Revenue has raised the issue of deletion of disallowance which was made by the AO u/s 40(a)(i) on account of failure in deduction of tax on various foreign remittances. It is noted that Ld. CIT(A) has followed his own order for A.Y. 2007-08 while passing the impugned order. We have sent these issues back to the file of the AO in A.Y. 2007-08 and therefore, we find it appropriate to send these issues back to the file of the AO with similar directions as were given in A.Y. 2007-08. Thus, these grounds may be treated as partly allowed for statistical purposes. 14. Ground Nos.5 & 6 are general and therefore dismissed. We shall take up Revenue's Appeal in ITA No. 5439/Mum/2013 for A.Y. 2003-04 15. Ground Nos. 1 & 2: In these grounds the Revenue has r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not very relevant should be abandoned, therefore expenditure on such projects were written off. It was further submitted that these expenses were of nature of salary, professional fee etc., which were otherwise revenue in nature incurred in the normal course of business. It was further submitted that these expenses were incurred not for the purpose of establishing any new business but were incurred on the projects for improving existing business. It was further submitted that these expenses do not bring into existence of any new asset which would give any benefit enduring nature. The assessee also relied upon the various judgments in support of his proposition that such expenses are allowable in nature. The AO was not satisfied with the reply and he disallowed the expenses as capital in nature. 20.2. Being aggrieved, the assessee filed the appeal before the Ld. CIT(A) and reiterated its submissions before him. But Ld. CIT(A) did not agree with the submissions of the assessee and relying upon the judgment of Hon'ble Jharkhand High Court in the case of CIT vs. Tata Robins Fraser Ltd 78 DTR 22 held that the said these expenses cannot be allowed to the assessee. Relevant para of hi....