TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 281
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.... in respect of Rs. 364000 disallowed by the erstwhile assessing officer u/s 14A of the Income Tax Act, 1961 read together with Rule 8D of the income Tax rules 1962, towards interest and financial charges which was added the same to the income returned in the ROI. 4. The Honourable Commissioner of Income Tax (Appeals)-10 erred in passing an order disallowing deferred employee compensaction Rs. 2059963 which are basically employee remuneration costs incurred and added the same to the Income returned in the ROI filed to the detriment of the assessee on grounds that the same is not an allowable expenditure as per the previsions of the Income Tax Act, 1961 in the absence of details. 5. Due to the above reasons, and adding back of corporate dividend tax paid by the assessee, the taxable income was erroneously computed at Rs. 116928240 instead of Rs. 114445780 as filed in the return of income. The Honourable Commissioner of Income Tax (Appeals)-10 however allowed the appeal of the appellant in respect of such Corporate dividend tax of Rs. 4549002 pending verification by the assessing officer. 6. The assessee urges for an interm stay on the demand unjustly raised to the extent of Rs.....
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....re the ITAT. 4. The learned Authorised Representative submitted that the assessee company has incurred expenditure is a revenue expenditure which was incurred in increase in the capital of the company. In respect of disallowance made u/s. 14A by the Assessing Officer, he submitted that the assessee had sufficient reserves and surplus which was invested towards earning of the exempt income and dividend income was directly credited into the bank account of the assessee, therefore, there was no expenditure incurred. Further in respect of deferred employee compensation of Rs. 20,59,963/-, he submitted that 2,02,000 options were allotted to the employees of the company under the employees stock option scheme as per SEBI guidelines at Rs. 26 per option. Intrinsic / discount price @ Rs. 36.95 of option is accounted as deferred employee compensation and amortised on straight line basis over the resting period on the basis of the option exercised whichever is earlier. The same amounts to be taxed in the hands of the employee as a pre-requisite and duly tax has been deducted at source. He submitted that the details of the Form No.16 and computation of income submitted before Your honour f....
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....ter hearing both the parties, we are of the view that the CIT(A) has restricted the disallowance to the extent of dividend income of Rs. 57,60,120/-. In Cross Objections No. 09/Hyd/2020, the objection of the assessee is that CIT(A) has wrongly decided the issue and restricted the disallowance to the extent of exempt income earned by the assessee. While going through the calculation of disallowance made by the AO, the AO has taken the value of average investments of Rs. 174.87 crores, but, the contention of the assessee in the cross objections, the assessee has not received any exempt income from its subsidiaries. As per our thoughtful consideration, the disallowance u/s 14A rwr 8D(2)(ii) and (iii) the value of investments should be considered only on the investments from which the assessee has earned exempt income. In this connection, we rely on the decision of the coordinate bench of this Tribunal in the case of Transport Corporation of India Ltd. in ITA No. 117/Hyd/2016, order dated 21/09/2016, wherein the coordinate bench has held as under: "11. Considered the submissions of both the counsels and perused the material facts on record. The AR submitted that the assessee has su....
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....etermine the disallowance. 11.2 Similarly, for the administrative expenses, 0.5% of average investments from which the exempt income is received should be considered instead of average of the total investments. 11.3 considering the above discussion, we direct the AO to recalculate the disallowance as per rule 8D as per the above guidance. Accordingly, ground raised by assessee is allowed." 13.2 We direct the AO to recalculate the disallowance as per rule 8D as per the above guidance. We further direct the AO if the disallowance u/s 14A is higher in the recalculation made by the AO, the same shall be restricted to the extent of exempt income earned by the assessee as per the case law Joint Investment Pvt. Ltd. Vs. CIT 372 ITR 694 (Del.). 13.3. Further, the revenue has raised a ground regarding the dividend income of Rs. 57,60,120/- should be treated as income from other sources is also not correct. On the one hand, the Assessing Officer himself has treated it as a dividend income which is exempt and on other hand, he has treated as daily dividend income and taxed under the income from other sources. While recalculating disallowance u/s 14A, we have restricted the disallowanc....