TaxTMI 
TaxTMI 
2018 (1) TMI 1573
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....the same assessee the same were clubbed, heard together and are being disposed of by this common order for the sake of convenience. ITA No. 371/Mum/2010 (Assessment Year: 2005-06) Brief facts of the case are that the assessee engaged in the business of running hotels, which operates its own hotel as well as hotels owned by others, filed its return of income for the assessment year under consideration declaring the total income of Rs. 51,26,70,391/-. The return was processed u/s 143 (1) of the Act. Subsequently, the assessee filed revised return declaring income of Rs. 49,96,78,100/-. Since, the case was selected for scrutiny notice u/s 142 (1), calling for the information and explanation on the various issues were served on the assessee. In response thereof details were submitted by the assessee. The AO after taking into consideration the submissions of the assessee in the light of the details furnished determined the total income of the assessee at Rs. 87,55,70,420/- making following disallowances/additions: a. Adjustment u/s 92CA (3) of the Act Rs. 12,66,57,377/- b. Disallowance out of interest on account of advances given to group companies without int....
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....red in relation to exempt income. 4. On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has legally erred in upholding the action of the Assessing Officer in rejectings the Appellants contention that the investments which are of strategic in nature should not be considered for disallowance u/s 14A as the object is to acquire the control and dividend in such cases is incidental. 5. Without prejudice to Ground No. 1 and in the alternative and on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has legally erred in upholding the action of the Assessing Officer in not considering the working for calculation of disallowance u/s 14A and applying Rule 8D mechanically. 4. The sole ground of appeal pertains to disallowance of Rs. 6,74,22,061/- u/s 14A of the Act. The Ld. counsel for the assessee submitted that the Ld. CIT (A) has erred in upholding the action of the AO in sustaining the disallowance of Rs. 6,74,22,061/- ignoring that the appellant has made suo moto disallowance of Rs. 1,48,05,348/- u/s 14A of the Act. The Ld. CIT (A) has further ignored the fact that no admi....
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....odrej and Boyce Mfg. Company Ltd. 328 ITR 81 (Bom), the Hon'ble Bombay High Court has held that the provisions of rule 8D are not retrospective in nature and shall apply w.e.f. A.Y. 2008-09. Hence, in the light of the aforesaid decisions and in view of the fact that the suo moto disallowance made by the assessee was allowed by the department in the year 2004-05, we are of the considered view that the suo moto disallowance made by the AO in the assessment year under consideration, which is 10% of the exempt dividend income is reasonable. We therefore, set aside the order of the Ld. CIT (A) and direct the AO to delete the disallowance confirmed by the Ld. CIT (A) and accept the suo moto disallowance made by the assessee u/s 14A of the Act. We accordingly allow the sole ground of appeal of the assessee. ITA No. 841/MUM/2010 (Assessment Year: 2005-06) Vide ITA No. 841/Mum/2010, the revenue has challenged the impugned order on the following effective grounds: 1. "The order of the CIT (A) is opposed to law and facts of the case. 2. (a) On the facts and in the circumstance of the case and in law the Ld. CIT (A) erred in deleting the disallowance of interest of Rs. ....
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....tion of Rs. 126080369/- being adjustment on account of interest charged on loan given by the assessee to its associate enterprise M/s TIHK being not a arm's length. (b) On the facts and in the circumstances of the case and in law the CIT (A) erred in ignoring the fact that the Deptt. has filed appeals to the ITAT against the CIT (A)'s orders for the A.Ys. 2003-04 & 2004-05. 8. (a) On the facts and in the circumstance of the case and in law the Ld. CIT (A) erred in deleting the addition of Rs. 577008/- made by the A.O. on account of non charging of guarantee fee by the assessee from its AE's by providing letter of comfort to the bank's for the loans granted to the AE's and thus providing a benevolent advantage to the AE's. (b) On the facts and in the circumstances of the case and in law the CIT (A) erred in ignoring the fact that the Deptt. has filed appeals to the ITAT against the CIT (A)'s orders for the A.Ys. 2003-04 & 2004-05. 9. For these and other grounds that may be urged at the time of hearing, the decision of the CIT (A) may be set aside and that of the AO restored." 2. Ground No. 1 of the Department's appeal is general in nature hence....
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....nch in assessee's own case for the A.Ys. 2003-04 and 2004-05, we respectfully following the decision of the coordinate Bench partly allow this ground of appeal and set aside the impugned order passed by the Ld. CIT (A) in respect of advance given to M/s Taida Trading and Industries Ltd. and uphold the order deleting the disallowance made by AO in respect of advance given to M/s KTC Hotels Ltd. AO is directed to compute the disallowance of interest in terms of the said order. 6. Ground No. 3 pertains to disallowance of interest on share application money pending allotment. The Ld. DR relying on the assessment order submitted that the AO has disallowed interest only share application money in earlier years in view of the facts that it is not for the share application but the borrowed funds were diverted for non-business purposes. Hence, the findings of the Ld. CIT (A) are liable to be set aside. 7. On the other hand, the Ld. counsel for the assessee submitted that this issue has been decided by the ITAT in favour of the assessee in the assessee's own case for the A.Ys. 2003-04 and 2004-05. Therefore, there is no merit in the ground of appeal of the revenue. 8. We notice that....
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....Ld. DR. 12. We notice that the coordinate Bench has decided this issue in favour of the assessee in the assessee's own case for the A.Y. 1992-93 aforesaid by following the decision of the ITAT in the case of PIEM Hotels Ltd. for the A.Ys. 1991-92, 1995-96, 1993-94, 1986-87, 1988-89 to 1990-91 and 1994-95. Apart from the decision of the coordinate Bench the Ld. counsel for the assessee relied upon the decision of the Hon'ble Rajasthan High Court rendered in CIT vs. Lake Place Hotels and Motel Pvt. Ltd. 258 ITR 562 (Raj.). Since, this issue has already been decided in favour of the assessee, we respectfully following the decision of the coordinate Bench uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue. 13. Ground No. 5 pertains to expenditure on replacement of linen the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has wrongly deleted the expenditure of Rs. 3,65,88,495/- incurred on replacement of linen as the expenditure give enduring benefits to the assessee and the same cannot be treated as revenue expenditure. 14. On the other hand, the Ld. counsel for the assessee submitted that since the ITAT has decided this....
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.... the relevant previous year. However, as submitted on behalf of the assessee before the learned CIT (Appeals) as well as before us, only the monetary items are required to be reported/recognized at the exchange rate prevailing on the last date of the relevant transaction. As per the classification made in AS-11, monetary items mainly include amounts held on current account, such as, cash receivables, payables etc. while non-monetary items include amounts held on capital account, such as, fixed assets, investment in shares etc. In the present case, the shareholders deposit represented the amount held by the assessee on capital account inasmuch as it was convertible into equity shares within a period of 10 years and if not so converted, it was liable to be refunded to the assessee company only after a period of 10 years. In our opinion, the said amount thus was in the nature of non-monetary item which was required to be reported/recognized at the exchange rate prevailing on the date of relevant transaction even as per AS-11 as rightly held by the learned CIT (Appeals). We, therefore, find no infirmity in the impugned orders of the learned CIT (Appeals) deleting the additions made by ....
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..... 5th June, 2013 in ITA No. 254/Mum/2013 wherein it was held, following the decision of Delhi Bench of this Tribunal in the case of Cotton Natural (I) P. Ltd. Vs. DCIT, that the CUP method is the most appropriate method to determine the arm's length rate of interest of the international transaction involving lending of money by the assessee company in foreign currency to its AE and LIBOR being inter-bank rate fixed for the international transaction has to be adopted as arm's length rate. Respectfully following this decision of the co-ordinate Bench of this Tribunal, we uphold the impugned order of the ld. CIT (A) deleting the addition made by the A.O./TPO in respect of international transaction involving interest charged by the assessee on outstanding interest from its AE." 23. Since, this issue has already been decided in favour of the assessee in the assessee's own case for the A.Y. 2003-04 and 2004-05 aforesaid by the ITAT holding that the LIBOR is acceptable arm's length interest rate, we respectfully following the decision of the coordinate Bench decide this issue in favour of the assessee and dismiss this ground of appeal of the revenue. 24. Ground No. 8 pertains to non....
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....ppeals) ['CIT (A)'] has legally erred in not adjudicating the following without prejudice ground on loss arising on account of foreign exchange difference in respect of shareholder's deposits placed with a subsidiary company: "8. Without prejudice to Ground No. 7 above, and on the facts and in the circumstances of the case, the Addl. CIT has legally erred in not allowing the foreign exchange fluctuation loss of Rs. 27,365,120 being difference of rate of foreign exchange on deposit placed with the Appellant's wholly owned subsidiary viz. Taj International (Hong Kong) Limited due to appreciation of the rupee, though there was no change in facts compared to earlier years." 2. On the facts and in the circumstances of the case, the Learned CIT (A) has legally erred in not adjudicating the following without prejudice grounds on allowability of depreciation on expenses incurred for replacement of carpet and linen: "5. Without prejudice to and in the alternative to ground nos. 3 and 4 above, and on the facts and in the circumstances of the case the Addl. CIT has legally erred in granting depreciation on replacement of linen and carpets at the rate applicable to f....