TaxTMI 
TaxTMI 
2015 (11) TMI 1823
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....elating to Lap Finance & Consultancy Pvt. Ltd. on identical issue both in the assessee's appeal and the Revenue's appeal were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts and issues in ITA Nos.1522/PN/2013 & 1524/PN/2013 to adjudicate the issues raised in the cross appeals. 3. Further, the issue raised in the case of the other assessee M/s. A.P. Holdings Pvt. Ltd., relating to assessment years 2008-09 and 2010-11 are on similar issue, which is also raised in the case of assessee's appeal i.e. of Lap Finance & Consultancy Pvt. Ltd., hence, the same is being disposed off by way of this consolidated order. 4. We shall take up the appeals in ITA Nos.1522/PN/2013 and 1524/PN/2013. 5. The assessee in ITA No.1522/PN/2013 has raised the following grounds of appeal :- 1. In the facts and circumstances of the case and in law, the learned C.I.T.[A] has grossly erred in confirming the disallowance of Rs. 18,83,404.00 made by the learned Assessing Officer u / s 14 A of the I.T. Act 1961 r.w. Rule 8 of I.T. Rules 1962 . The said disallowance being patently illegal, bad in law, arbitrary, perver....
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.... Assessing Officer at Rs. 6,00,333.00. The said finding being arbitrary, perverse and devoid of merits the same may please be vacated. 8. The appellant submits that during the appellate proceedings the appellant never conceded that certain amount of expenditure such as remuneration to Directors, Salary. Traveling, legal fees, audit fees is required to be apportioned against the Profits of Wind Mill and all the statements, averments and contentions of the learned C.I.T.[A] in this regard in Para 4.3 of his impugned order being false and factually incorrect the same may please be deleted. 9. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal. 6. The Revenue in ITA No.1524/PN/2013 has raised the following grounds of appeal :- 1. The order of the learned Commissioner of Income tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income tax (Appeals) grossly erred in allowing to the assessee deduction of Rs. 8,75,979/- under section 80IA(4) of the Income tax Act, 1961 on account of profit earn....
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.... 1961 r.w. Rule 8 of I.T . Rules 1962. The disallowance made u/s 14A of the I.T. Act 1961 may please be deleted. 3. The learned C.I.T.[A] has miserably failed to appreciate that the appellant had not incurred any administrative expenses for earning the tax free dividend income, which was being directly credited in bank accounts and furthermore there was no additional investment made during the year warranting any administrative expenditure. The disallowance made u/s 14A of the I.T. Act 1961 may please be deleted. 4. The learned Assessing Officer having failed to discharge the initial burden cast upon him u/s 14A of the I.T. Act 1961, the disallowance made by him u/s 14 A of the I.T. Act 1961 being legally unsustainable, the learned C.IT.[A] ought to have deleted the said disallowance. 5. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal. ITA No.1522/PN/2013 8. The issue in the ground of appeal Nos.1 to 5 raised by the assessee is against the disallowance under section 14A of the Act. 9. Briefly, in the facts of the present case, the assessee was....
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....ssessment order. 10. In appeal before the CIT(A), the learned Authorized Representative for the assessee placed reliance on the ratio laid down by the Pune Bench of Tribunal in Mahavir Steel Industries Vs. ACIT (ITA Nos.1512/PN/2008 and 1222/PN/2010 ) and the Hon'ble Bombay High Court in K. Raheja Corporation Pvt. Ltd. (ITA No.1260/2009) for the proposition that where both interest free as well as borrowed funds were available for investment, unless the Assessing Officer bring out some evidences on record that the borrowed funds were utilized for making investment, no disallowance under section 14A of the Act could be made. The assessee further pointed out that the percentage of interest free funds available was to the extent of 90% of the total funds available and only 10% of the funds were borrowed funds. The CIT(A) noted that the entire arguments of the assessee were based on attribution of interest expenditure to the earning of exempt income. However, the approach of the assessee was found to be not acceptable, in turn relying on the observations of the Hon'ble Bombay High Court in Godrej & Boyce Vs. DCIT reported in 328 ITR 81 (Bom). The CIT(A) further noted that the Hon'ble ....
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....learned Authorized Representative for the assessee stressed that the presumption was that the investment was made out of own funds. The learned Authorized Representative for the assessee stressed that the computation of Assessing Officer as far as interest computation was concerned, was incorrect. Reliance was placed on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. HDFC Bank Ltd. in Income Tax Appeal No.330 of 2012, order dated 23.07.2014. The learned Authorized Representative for the assessee further pointed out that on shares held as stock in trade, no disallowance under section 14A of the Act is warranted out of interest expenditure, in turn relying on the decision of Pune Bench of Tribunal in Kasat Securities Pvt. Ltd. Vs. ACIT in ITA No.922/PN/2011, relating to assessment year 2006-07, order dated 25.06.2013. The third objection of the learned Authorized Representative for the assessee was that where the Assessing Officer is not recorded his satisfaction that the books of account were incorrect, there was no merit in the said disallowance. Reliance was placed on the ratio laid down by the Hon'ble Delhi High Court in Maxopp Investment Ltd. Vs. CIT (2012) 347 I....
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....o income, which does not form part of the total income under the Act. Under section 14A(3) of the Act, it is provided that the provisions of subsection (2) shall also apply in relation to a case wherein, the assessee claims that no expenditure has been incurred by him in relation to the income which does not form part of the total income. In view of the above provisions of the Act, it is incumbent upon the Assessing Officer first to be satisfied that the claim made by the assessee as to whether any expenditure has been incurred or not, in relation to the income which does not form part of the total income under the Act, is correct. The perusal of the assessment order in the case of assessee, very clearly reflects that the Assessing Officer vide para 3.1 had noted the fact that the assessee had declared the exempt income, but had not debited any expenses in the books of account against the said exempted income. In view thereof, the assessee was requested to explain the reasons for the same and as to why the provisions of section 14A of the Act read with Rule 8D of the Rules should not be invoked. In view of the same, we find no merit in the plea of the assessee in this regard. The s....
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....se in ITA Nos.1716 to 17 18/PN/2012 relating to assessment years 2004-05, 2005-06 and 2008-09, vide order dated 30.12.2013 had first adjudicated the appeal relating to assessment year 2008-09 and had decided the issue of disallowance of Rs. 9,91,140/- under section 14A of the Act. The claim of the assessee in that year was that no expenditure was debited to Profit & Loss Account in relation to the said income and even the interest expenditure of Rs. 31,56,718/- debited to the Profit & Loss Account was not for funds utilized for the impugned investments. The Tribunal after considering the factual aspects of the case, held as under:- "17. We have carefully considered the rival submissions. In the present case, only one limb of the disallowance pertaining to the interest expenditure is sought to be assailed by the assessee. The defence of the assessee is that the interest expenditure debited to the P&L Account is not relatable to the funds utilized to acquire shares/mutual funds, which have yielded the impugned exempt income. Factually, the aforesaid was asserted before the Assessing Officer, as is evident from the submissions of the assessee dated 09.12.2010 which have been reprod....
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....09 i.e. whether any interest bearing funds were utilized for making the aforesaid investments in the preceding year are to be applied simplicitor. In view of the binding preceding being available in assessee's own case with regard to the investments, which admittedly were not made in the instant assessment year, but were brought forward from the earlier years, then disallowance if any worked out in the preceding year is to be applied for the year under consideration also since the funds have been deployed in the earlier years and not in the current year. Accordingly, we direct the Assessing Officer to compute the disallowance, if any, in the hands of the assessee in line with working of the disallowance under section 14A(2) of the Act read with Rule 8D(ii) of the Rules in the preceding year. Further, no bifurcation of investments and stock in trade was raised in earlier year, hence this plea is dismissed as investments are old. 16. Now, coming to the next aspect of disallowance under section 14A of the Act i.e. the administrative expenses relatable to earning of exempt income. The assessee in the preceding year was not aggrieved by the said disallowance made in the hands of assess....
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....idence, even the details of various destinations travelled by her were not furnished and in the absence of any evidence that foreign travel expenses were incurred for the business, the expenditure claimed by the assessee was disallowed as being not incurred for the business. 19. Before the CIT(A), the assessee furnished the break-up of the expenses and pointed out that the company was a finance and investment company, and made similar explanation as before the Assessing Officer. It was also pointed out by the assessee that the company had also incurred the air ticket expenses of Mrs.S.P. Pawar and no other expenses such as boarding, local travelling and accommodation expenses were incurred and claimed by the assessee. The CIT(A) noted that no details were filed before the Assessing Officer. The CIT(A) further noted that similar expenditure was disallowed in the earlier years by the Assessing Officer and upheld by the CIT(A). However, the Tribunal had allowed the appeal of the assessee to the extent of 50% of the expenses claimed to have been incurred on foreign travel for assessment year 2006-07 in assessee's own case in ITA No.1292/PN/2010, order dated 28.02.2012. The CIT(A) furt....
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....Bom). 20. The assessee is in appeal against the order of CIT(A) in this regard. 21. The learned Authorized Representative for the assessee pointed out that admittedly, there was no evidence available with the assessee of meeting any persons in the foreign country, but the assessee had only debited travelling expenses of the director and no other expenses. Further, reliance was placed on the ratio laid down by the Tribunal in assessee's own case in assessment years 2006-07 and 2008-09. 22. The learned Departmental Representative for the Revenue placed reliance on the order of CIT(A). 23. We have heard the rival contentions and perused the record. The claim of the assessee before us is two-folds that the foreign travel expenses incurred by the assessee on the foreign tour trip undertaken by the director Mrs. P.S. Pawar claimed at Rs. 10,09,253/- should be allowed in the entirety as the expenditure was incurred in order to tap the foreign market or to attract foreign investment, which was for the purpose of business and hence, allowable under section 37(1) of the Act. The second plea raised by the learned Authorized Representative for the assessee was that the Tribunal on similar ....
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....d by the assessee, the objection taken out by the Revenue that in support thereof, the assessee had not furnished any evidence to substantiate its claim, though could not be faulted, but at the same time, the nature and level of expenditure claimed by the assessee is also required to be appreciated and hence, 50% of the expenditure was allowed in the hands of the assessee. Further, in assessment year 2008-09, the expenses claimed by the assessee were Rs. 7,20,650/- and the Tribunal vide order dated 30.12.2013 allowed 50% of the claim of the said expenses, in turn following the earlier ratio. 25. The facts of the present case before us are at a variance. First of all, as mentioned by the Assessing Officer in the assessment order, the assessee is engaged only in the business of finance and investment, power generation and supply of power. Apparently, there is no business of promoters and builders carried on by the assessee during the year. In the initial year i.e. 2006-07, the assessee had explored the market for acquisition of properties and to find buyers for the proposed ownership scheme, whereas during the year under consideration, there is no such business carried on by the ass....
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....he case of the assessee, the matter in assessment year 2008-09 travelled to the Tribunal and the Tribunal upheld the order of Assessing Officer in computing disallowance by allocating the indirect expenses on the basis of turnover of respective businesses. The Tribunal upheld the order of lower authorities. However, directions were given to the Assessing Officer to re-calculate the computation of disallowance on the basis of working that may be furnished by the assessee. The said directions were given by the CIT(A) and were upheld by the Tribunal. Following the same parity of reasoning, we uphold the order of CIT(A) in this regard. However, in line with earlier directions, we direct the Assessing Officer to recompute the disallowance in line with directions of the Tribunal in assessment year 2008-09. The ground of appeal Nos.7 and 8 raised by the assessee are decided as indicated above. 29. The Revenue is aggrieved by the order of CIT(A) in allowing deduction under section 80IA(4) of the Act on account of profit earned from the business of windmill power business at Rs. 8,75,979/-. 30. Briefly, in the facts relating to the issue raised by the Revenue, the assessee was engaged in ....
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....d 2008-09. It is also not in dispute that the said decision of the Tribunal continues to hold the field as the same has not been altered by any authorities. The Tribunal had allowed the claim of the assessee by following the earlier decision of Pune Bench of Tribunal in Serum International Ltd. Vs. Addl.CIT in ITA Nos.290 to 292/PN/2010, dat ed 28.09.2011, wherein the issue had been decided following the ratio laid down by the Hon'ble Madras High Court in Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT, (2010) 38 DTR 57 (Mad). Before us also, no other contrary decision has been brought to our notice, therefore, in the above said background and in view of the identical issue having been decided in assessee's own case for assessment years 2006-07 and 200809 (supra), we find no merit in the grounds of appeal raised by the Revenue and the same are dismissed. The grounds of appeal raised by the Revenue are thus, dismissed. 33. The facts and issues in ITA Nos.1523/PN/2013 and 1525/PN/2013 are identical to the facts and issues in ITA Nos.1522/PN/2013 and 1524/PN/2013 and our decision in ITA Nos.1522/PN/2013 and 1524/PN/2013 shall apply mutatis mutandis to ITA Nos.1523/PN/2013 and 1525/PN....