TaxTMI 
TaxTMI 
2021 (5) TMI 684
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee are with regard to disallowance made u/s. 14A of the Act r.w.r. 8D(2) of the Rules. 2.1. We have heard rival submissions and perused the materials available on record. We find that assessee is primarily an investment company with focus on new business opportunities. Vide order dated 18/12/2007 of Hon'ble Bombay High Court, the assessee company, BHIL in short (earlier known as M/s. Bajaj Auto Ltd., (BAL)) was demerged with effect from closing hours of 31/03/2007 (the appointed date). As per the scheme of demerger, approved by Hon'ble High Court, the manufacturing undertaking was demerged into Bajaj Holding & Investment Ltd. (Now known as Bajaj Auto Ltd.), the strategic business undertaking (including financial services & wind mills) was demerged into Bajaj Finserve Ltd. The Erstwhile Bajaj Auto Ltd. i.e. the present assessee company, was renamed as Bajaj Holdings & Investment Ltd. and it retained the investment activities. 2.2. We find that during the relevant assessment year, the assessee had earned Rs. 51,85,31,679/- as dividend from domestic companies and Rs. 1,50,49,575/- as dividend from mutual funds which was claimed as exempt u/s. 10(34) and 10(35) of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urn of income, the disallowance u/s. 14A of the Act r.w.r. 8D(2) of the rules should be restricted to Rs. 3,89,63,187/-. Aggrieved, the assessee alone is in appeal before us. 2.6. We find that the assessee had made suo-moto disallowance of Rs. 10 lakhs in the return of income u/s. 14A of the Act. The basis of working out the said disallowance is as under:- Statement showing disallowance u/s.14A on a reasonable basis Amount (Rs.) Total Expenditure 57,597,446.38 Less Expenditure not connected with investment activity Auditors Remuneration 1,300,000.00 KPMG International audit fees and expenses 1,009,965.00 Other consultancy and certification fees 190,779.00 Demerger Expenses Account 17,368,276.90 Annual report printing and CD expenses 13,161,796.02 Advt- financial results 8,829,766.00 Shareholders and board meeting expenses 114,838.12 Listing fees 176,900.00 Charges paid for Maintenance of Bajaj Bhawan i.e Air Conditioning, Service Charges Board Room 1,750,372.00 Loss on Sale of Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 51.85 crores. Hence it would be just and fair to identify the specific expenditure that had been attributed for the purpose of earning exempt income by some rational basis. Accordingly, we summarily disregard the disallowance made by the ld. CIT(A) in the instant case. As seen from the aforesaid table of incurrence of expenditure, the total suo motu disallowance made by the assessee was Rs. 10 lakhs. But we find that the assessee had left out certain common expenses which, in our considered opinion, should be included for the purpose of working out the disallowance. These common expenses are as under:- Sr.No. Particulars Amount (in Rs.) A Auditors Remuneration 1,300,000.00 B KPMG International audit fees and expenses 1,009,965.00 C Other consultancy and certification fees 190,779.00 D Annual report printing and CD expenses 13,161,796.02 E Shareholders and board meeting expenses 114,838.12 F Listing fees 176,900.00 2.9. These expenses should also be considered in the total expenditure considered by the assessee for working out the disallowance in the ratio of exempt income to total income. We hold ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e letter dated 09/08/2017 and 04/10/2018. All these additional grounds were never raised before lower authorities and are raised for the first time before us. The facts relevant for adjudication of these additional grounds are already on record. Moreover these are legal issues and hence, they are admitted by us and taken up for adjudication. 5. The first additional ground raised by the assessee vide letter dated 09/08/2017 is with regard to disallowance u/s. 14A of the Act r.w.r. 8D(2) of the Rules while computing book profits u/s. 115JB of the Act. 5.1. We have heard rival submissions and perused the materials available on record. We find that the Special Bench of Delhi Tribunal in the case of ACIT vs. Vireet Investments reported in 165 ITD 27 had held that the computation mechanism provided under Rule 8D(2) of the Rules cannot be made applicable for working out the disallowance under Clause(f) of Explanation 1 to Section 115JB (2) of the Act. However, the actual expenses incurred thereon which are attributable to earning of exempt income need to be disallowed under the same clause (f). While deciding the issue of disallowance u/s. 14A of the Act under normal provisions of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars. Accordingly, the additional ground No. 2 raised by the assessee vide letter dated 09/08/2017 is allowed for statistical purposes. 7. The additional ground No. 3 raised by the assessee vide letter dated 09/08/2017 was stated to be not pressed by the ld. AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly dismissed as not pressed. 8. The additional ground raised by the assessee vide letter dated 04/10/2018 is with regard to claim of deduction in respect of education cess paid by the assessee. 8.1. We have heard rival submissions and perused the materials available on record. We find that this issue is no longer res-integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Sesa-Goa Ltd., vs. JCIT reported in 117 Taxmann.com 96 dated 28/02/2020 wherein, the Hon'ble Jurisdictional High Court had allowed deduction towards payment of education cess to the assessee. Respectfully following the same, the additional ground raised by the assessee vide letter dated 04/10/2018 is allowed. 9. In the result, the appeal of the assessee for A.Y. 2008-09 in ITA No. 4224/Mum/2012 is partly allowed for s....