TaxTMI 
TaxTMI 
2021 (5) TMI 964
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....Delhi u/s 250/143(3) of the Act is bad in law and wrong on facts. 2. That on facts, in the circumstances of the case and in law, the Learned C1T(A) erred in upholding disallowance of Rs. 13,20,000/- u/s 14A read with Rule 8D(2)(iii) worked out @ 0.5% of average value of investments in UT1 Bonds yielding tax free income. 3. That on facts, in the circumstances of the case and in law, the Learned CIT(A) erred in upholding the disallowance of Rs. 9,99,158/- incurred towards Corporate Social Responsibility admissible as business expenditure. 4. That on facts, in the circumstances of the case and in law, the Learned CIT(A) erred in upholding the disallowance of Rs. 6,00,000/- claimed u/s 35 AC incurred towards CSR claimed as business expenditure. 4.1 Without prejudice the deduction u/s 80G was also not allowed purported in the absence of receipt evidencing the payment ignoring the fact the payment was made through account payee cheque. 5. That on facts, in the circumstances of the case and in law, the Learned CIT(A) erred in Chairman and Managing Director ignoring the fact that the claim for TDS of Rs. 3,65,51,193/- made in the return of income was based upon, amongst others, t....
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....s demonstrated in 26AS. Thus, AO and the assessee both our aggrieved and hence they have filed these cross appeals. 7. We first take up the appeal of the learned assessing officer where the solitary issue is with respect to the deletion of the disallowance u/s 14 A of the act of interest expenditure. The learned assessing officer worked out the disallowance u/s 14 A of the act of Rs. 1 74 7 lakhs whereas the learned and CIT - A confirmed the disallowance only to the extent of Rs. 1,320,000. Therefore, the AO is in appeal before us. 8. During the year, assessee has earned exempt income of Rs. 5940911/-as interest on tax-free bonds of Unit Trust of India. The assessee in the return of income has suo moto disallowed Rs. 2 lakhs u/s 14 A of the act. The AO questioned why disallowances should not be made u/s 14A of the Act. The assessee submitted that it has not incurred any expenditure in relation to above-mentioned exempt income. The assessee submitted that it has huge interest free fund available to make investment in the above bonds. It was further stated that the investment were made in past years i.e. Financial Year 2002-03 and therefore there is no interest expenditure incurre....
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.... ld DR supported the order of the LD AO with respect to the addition on account of interest whereas he supported that the ld CIT (A) has at least correctly upheld the disallowance of administrative expenditure of Rs. 13.20 lakhs. He further stated that the AO has given detailed reason for invoking Rule 8D after recording proper satisfactions and failure of the assessee to give details of suo motto disallowances of Rs. 2 lakhs. 11. The AR firstly stated that the assessee has disallowed Rs. 2 lakhs suo motto u/s 14A but the ld AO failed to record any satisfaction as to the correctness of the claim of the assessee. He submitted that the assessee has categorically stated before the ld AO that it has not incurred any expenditure on account of interest as well as other administrative expenses. In absence of any such satisfaction it is mandatorily u/s 14A(2) of the Act confirmed the disallowances by the ld CIT(A) also do not stand. He relied upon the decision of the Hon'ble Delhi High Court in 370 ITR 338, Hon'ble Gujarat High Court in 300 CTR 286 and the order of the coordinate bench in ITA No. 167/Del/2016 in DCIT vs DLF Private Limited. He also submitted that the decision of the co-o....
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....t free funds available with it which is mentioned in para 4.1.2 of the order that the assessee has higher capital and reserve and surplus of Rs. 1123.30 against investment of only Rs. 240 crores. Therefore, we do not find any infirmity in the order of the ld CIT (A) in deleting the disallowances on account of interest as per clause No. 8D(2)(i) and (ii). 14. Coming to the issue of administrative and managerial expenditure attributable to the exempt income @0.5% of the average of investment we do not find any infirmity in the confirming the disallowance of Rs. 13.20 lakhs because the assessee itself has disallowed a sum of Rs. 2 lakhs for which no bifurcation is available. Therefore, only alternative is left is to apply the percentage prescribed under that Rule. The stand of the assessee that it has not incurred any expenditure is devoid of any merit as assessee itself has disallowed a sum of Rs. 2 Lakhs. In view of this, solitary ground of appeal of ld AO and ground No. 2 of the appeal of the assessee are dismissed. 15. Ground No. 3 of the appeal of the assessee is against the confirmation of disallowance of Rs. 9,99,158/- incurred towards corporate social responsibility expendit....
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.... above sum u/s 80G (5) of the Act as well as also not allowing the same as an expenditure u/s 37(1) of the Act. 19. Ground No. 4 is with respect to the disallowance of Rs. 6 lakhs claimed u/s 35AC of the Act. 20. The brief fact shows that the assessee has donated Rs. 6 lakhs to Himalaya School Society. According to the assessee, it is allowable as deduction u/s 35AC of the Act. However, the assessee failed to furnish the certificate required under that section and therefore, deduction were denied. Naturally when the assessee does not have a requisite certificate u/s 35AC2(b) in the prescribed format, deduction u/s 35AC is correctly disallowed. Alternatively, assessee submitted that Himalaya School Society has been granted relief u/s 80G of the Act and therefore, such deduction should be allowed to the assessee after deduction u/s 35AC is not allowed. This contention was also negated in view of the fact necessary details could not be produced before the lower authorities. However, before us the assessee has submitted that all the receipt of donation of Himalaya School Society wherein, donation of Rs. 6 lakhs is given and it was acknowledged vide receipt No. 142 dated 22.09.2008. ....