TaxTMI 
TaxTMI 
2020 (11) TMI 64
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.... year loss of Rs. 157,157,446/-. The said return of income was processed under section 143(1) of the Act accepting its returned income. Later on, the case was selected for scrutiny and notice u/s 143(2) of the Act dated 08.08.2013 was issued and duly served on the assessee. Subsequently, notice u/s 142(1) of the Act alongwith questionnaire and served on the assessee. In response, AR of the assessee attended and filed the relevant information as called for. After considering the submission of assessee, AO completed the assessment order u/s 143(3) of the Act after making the various disallowances/additions. 4. Aggrieved with the above order, assessee preferred an appeal before Ld CIT(A) and made before him a detail submission. Ld. CIT(A) after considering the submission of assessee, partly allowed the appeal of assessee. 5. Aggrieved with the above order, assessee and revenue are in appeal before us. 6. With regard to disallowance u/s 14A of the Act, Ld. AR appearing on behalf of the assessee brought to our notice para 8 of AO and para 6.2 of order of Ld. CIT(A) and submitted before us that this ground is squarely covered by the order of Coordinate Bench of Hon'ble ITAT in I....
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....as under:- 1. Admittedly the Ld. AO has not recorded any satisfaction before rejecting the claim of the assessee. While making disallowance u/s 14A, the Assessing Officer has to record his objective satisfaction and give a clear cut finding as to how the disallowance computed by the Assessee is not correct. Without such exercise, no disallowance u/s 14A can be sustained. 2. Where the Assessee had owned / interest free funds more than the amount of investments made the presumption is that the investments were made out of such owned / interest free funds and not borrowed funds. In such a situation, no disallowance u/s 14A r.w.r. 8D (2) (ii) could be made. Ref: CIT v/s Reliance Utilities and Power Ltd. - [(2009) 313 ITR 340 (Bom)] and CIT v/s HDFC Bank Ltd. -[(2014) 366 ITR 0505 (Bom)] 3. Almost entire investments made by the Assessee are in subsidiary companies / group concerns with which the assessee had entered into joint venture / strategic alliance for strategic business purposes in order to promote the Assessee's business and also help the Assessee gain certain market share in the business so as to streamline the operations of the group as a whole.....
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....t monitoring even though it is made within the group concern. Sometimes, the method applied as per rule 8D(2)(iii) gives absurd result, like the disallowance is more than the actual administrative expenses. Therefore, we are directing AO to determine the total administrative expenses and also determine the total income earned by assessee including taxable and exempt income, apply the ratio of income to determine the administrative expenses and can be apportioned to exempt income. Simultaneously, calculate 0.5% of the investment as per rule 8D(2)(iii) of the rule, in applying the rules, he should consider only those investments which has actually earned dividend /exempt income. Then compare the both method of calculation and in order to apply provision of section 14A, he should consider the amount calculated above said two methods whichever is less. Accordingly, ground no. 1 raised by assessee is allowed for statistical purposes. 13. With regard to disallowance u/s 40(a)(ia) of the Act on account of non-deduction of TDS on credit card commission charged by bank on credit card transactions, Ld. AR appearing on behalf of the assessee brought to our notice para 7 of AO and para 6....
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....o the A.Y. 2010-11 for which we have already given our finding in the said above order. Accordingly the disallowance made by the Assessing Officer cannot be sustained and the Order of the CIT(Appeals) deleting the aforesaid disallowance, is upheld. Accordingly these grounds stands dismissed. 15. On the other hand, Ld. DR fairly conceded that this ground is covered by the order of ITAT. 16. Considered the rival submission and material placed on record. We find from the records that the identical ground raised in the present appeal has already been decided by the Coordinate Bench of ITAT in ITA No. 5594/Mum/2013 & 5476/Mum/2013 for AY 2010-11 and ITA No. 1826 & 1435/Mum/2015 for AY 2011-12 in assessee's own case. 17. Therefore, respectfully following the above decision of Coordinate Bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, ground no. 2 to 3 filed by the revenue are dismissed. 18. With regard to addition of amount forfeited by assessee on share warrants u/s 43(5) of the Act, Ld. AR appearing on behalf of the assessee brought to our notice para 6 of AO and ....
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....re of the receipt it is abundantly clear that the amount which has been received is in the nature of capital receipts. Several judicial pronouncements were relied upon by the Ld. Counsel of the assessee and the Ld. CIT(A) for the proposition that receipt on account of forfeiture has to be considered only as a capital receipt which are as under. a. Multan Electric upply Co. Ltd. - [(1945) 13 ITR 457 (Lah)] b. Asiatic Oxygen Ltd. V/s. Dy. CIT - [(1994) 49 ITD 355 (Cal)] c. Prism Cement Ltd. V/s. JCIT - [(2006) 101 ITD 103 (Mum)] d. DepakFertilisers and Petrochemicals Copn. Ltd. V/s. DCIT - [(2009) 116 ITD 372 (Mum)] e. DCIT V/s. Brijlaxmi Leasing & Finance Ltd. - [(2009) 118 ITD 546 (Ahd)] f. Graviss Hospitality Ltd. V/s. Dy. CIT - [(2015) 53 taxmann.com 63 (Mum - Trib.)] g. Sunita Gupta Share Borkers Limited vs. ACIT in ITA No.4188/Del/2010 vide order dated 7.12.2011. The above case laws amply support the proposition that amount received as a capital receipt toward financial instruments like warrants, share capital etc. cannot be treated as revenue receipts. Since the assessee company is not in the business of s....
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....e decision of Coordinate Bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, the ground no 4 to 7 raised by revenue are dismissed. 22. In the net result, the appeal filed by the assessee is allowed for statistical purposes and the appeal filed by the revenue is dismissed. 23. It is pertinent to mention here that this order is pronounced after a period of 90 days from the date of conclusion of the hearing. In this regard, we place reliance on the decision of co-ordinate bench of this Tribunal in the case of JSW Ltd in ITA Nos. 6264 & 6103/Mum/2018 dated 14.5.2020, wherein this issue has been addressed in detail allowing time to pronounce the order beyond 90 days from the date of conclusion of hearing by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent are as under:- 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronoun....
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....he ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruptio....
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....rpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suomotu by Hon'ble jurisdictional High Court and Hon'ble Supreme....