TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2779
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....02 crores. During the assessment proceedings he AO found that the assessee's investment in shares and securities as on the balance sheet date was at Rs. 9631.12 lacs as against the previous year's closing balance of Rs. 7,433.93 lacs, that it had received dividend income of Rs. 1.06 lacs.He held that the assessee had earned exempt income that it had incurred expenses and same were related to earning of exempt income that they were not allowable within the meaning of provisions of section 14A of the Act. He further noted that the assessee had disallowed Rs. 63,523/- paid as STT in its return of income. He held that the disallowance made by the assessee was not satisfactory if quantum of investment made and the dividend received were considered. During the assessment proceedings he asked the assessee to explain as to why disallowance u/s. 14A r.w. Rule 8D of the Income tax Rules, 1962(Rules)should not be made. It was argued that no expenses were incurred in relation to income not includible in total income hat the dividend received were taxable in the hands of share holders hat the company distributing dividend had to pay dividend distribution tax u/s. 115-O of the Act, that it had i....
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....AA. 2.3. We have heard the rival submissions and perused the material before us. We find that the assessee had received dividend of Rs. 1.06 lakhs during the year hat the AO and FAA had applied the provisions of section 14A of the Act r.w. Rule 8D hat the arguments of strategic investment and availability of funds were not dealt with. If the shares were not purchased from the borrowed funds then there was no justification in making disallowance of interest expenditure. The provisions of section 14A were brought in to Act to prevent the mischief of claiming expenses against the exempt income. But that does not mean that whenever an assessee claims exempt income automatic disallowance has to be made. The AO and the FAA have without considering the relevant facts made the disallowance. In the matter of HDFC Bank Ltd.(supra)the Hon'ble jurisdictional High Court thas held as under: "We have considered the rival contentions and perused the relevant material on record. There is no dispute on the point that the assessee's share capital, profit reserves and surplus as well as the balance in the current account is more than the investment in the tax-free securities. It is also an accept....
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....y of the assessee,dtd.16.11.2011 he AO held that the directors' sitting fee was in the nature of professional fee paid, that the assessee was required to deduct tax at source in accordance with the provision of section 194J of the Act that it had failed to comply with the provisions of Chapter XVII-B of the Act. Finally the disallowed the claim made by the assessee. 3.1. During the appellate proceedings he assessee argued that section 194J had been amended by the finance Bill 2012 hat the amendment was effective from 1.5.2012 and that it was not applicable for the year under consideration. The FAA held that payments made as directors' sitting-fee fell within the definition of professional fee hat the assessee was required to deduct tax at source. He confirmed the order of the AO. 3.2. Before us the Authorised Representative (AR) argued that provisions of section 194J were not applicable to sitting fee paid to directors, that the disallowance made by the AO and confirmed by the FAA was unwarranted. He relied upon the cases of Glaxo smith k line Pharmaceuticals Ltd.(ITA.7069-72/Mum/2012)and Bharat Forge Limited(154TTJ649).The DR supported the order of the FAA. 3.3. We have hear....
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....on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01-07-2012. We, therefore, find force in the submission of the learned counsel for the assessee that no tax is required to be deducted u/s.194J out of such director's sitting fees for the A.Y. 2007-08. In this view of the matter, the order of the CIT(A) is set-aside and the ground raised by the assessee on the issue of TDS on sitting fees paid to Directors is allowed. Respectfully following the above,we decide ground no.8 in favour of the assessee. 4. Next effective ground of appeal (Ground of appeal C to E) deals with bad debts. During the assessment proceedings the AO found that the assessee had written off bad debts of Rs. 57.73 lacs. He directed it to justify the claim made by it. After considering the submissions of the assessee dated 2.12.2011 and 13.12.2011 he AO held that the claim of bad debts written off comprised of deposits given to MSRTC, BEST Undertaking, New Delhi Municipal Council and advance to one of its subsidiary, that what was receivable from those partie....
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....per Book 162) and stated that case of the assessee was covered by the decision of Hon'ble Supreme Court delivered in the case of TRF Ltd.(323ITR397).DR supported the order of the FAA. 4.3.We have heard the rival submissions and perused the material. We find that the assessee had claimed bad debts of Rs. 57.73 lacs only in the books of accounts and the AO and the FAA had not considered the amounts added back by it that it had written off only net amount receivable from BEST Undertaking. In our opinion he assessee is the right person to decide as to whether a particular amount has become bad or not. The AO/FAA cannot decide the issue referring to the entity from whom money is to be recived. If the assessee had in its books of accounts written off an amount he revenue authorities cannot disallow in light of the judgment of the Hon'ble Apex Court delivered in the case of TFR Ltd.(supra).The Hon'ble Court has held as under: "After the amendment of section 36(1)(vii) of the Income-tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable : ....
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....s and that it was not for any loan or advance hat the above fact was mentioned in the note to accounts at Pt. No. 14B hat the sole intention of the advance was investment purpose and business expediency, that the advances were not made from the interest bearing funds of the assessee. However, the AO was not convinced and calculated the disallowance as under : Date Debit Credit Daily Balance Interest 01/04/2008 17,18,00,000 17,18,00,000 37,84,306 05/06/2008 91,00,000 18,09,00,000 59,474 30/06/2008 9,00,000 18,18,00,000 0.00 30/12/2008 30,00,000 30,00,000 986 21/01/2009 25,00,000 5,00,000 164 24/01/2009 5,00,000 0.00 Total(Rs.) 38,44,930 6.1.During the appellate proceedings he FAA held that the assessee had advanced interest bearing loan to FITPL for purchase of shares of Radio-Midday(West), that the interest cost had to be added to the cost of acquisition of shares that the corresponding interest expenditure o....