2020 (11) TMI 613

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....1.2019 in the ITA 1696/Ahd/2017 for the A.Y.2012-13. 2. The Revenue has proposed the following questions for the consideration of this Court; "(A) Whether the Appellate Tribunal has erred in law and on facts in confirming the decision of CIT (A) restricting the disallowance of Rs. 3,77,14,400/- made u/s.14A r.w. Rule 8D to the extent of exempt income, i.e. Rs. 7,38,000/- (B) Whether the Appellate Tribunal has erred in law and on facts in directing the Assessing Officer to allow the expenditure of Rs. 29,78,601/- (39,71,468 less 9,92,867) incurred on account of professional and legal fees by holding the same as revenue in character?" 3. We have heard Ms. Mauna Bhatt, the learned senior standing counsel appearing for t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....) 66 taxmann.com 356 (Guj). The aforesaid judicial fiat was reiterated b y the Hon'ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. C IT reported in 372 ITR 692 (Delhi) wherein Hon'ble Delhi High Court has categorically ruled that disallowance under s.14A of the Act cannot exceed the amount of tax exempt income. Notably, the SLP filed against the decision of Hon'ble Madras High Court in Chettinad Logistics (supra) has been dismissed b y Hon'ble Supreme Court in CIT vs. Chettinad Logistics (P.) Ltd. (2018) 95 taxmann.com 250 (SC). Hence, in conformity with the judicial precedents, we find substantial merit in the conclusion drawn b y the CIT(A) for limiting the disallowance to the extent of exempt income. H....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... has relied upon decision of Majestic Auto Limited (supra), KJS India Pvt. Limit ed (supra) and argued that such expenditure is revenue expenditure. In alternate argument, Appellant has stated that even though Assessing Officer has treated such expenditure as capital expenditure and observed that depreciation is allowable @25%, same was not allowed in computation of total income. On careful consideration of entire facts it is observed that professional fees paid by Appellant are for existing business and not incurred for analyzing the market for new line of business or is not for diversification of its business. By incurring such expenditure, Appellant is constantly getting updates regarding market survey carried out for existing p....