TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1860
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.... fully justifiable. 1.1 Commissioner of Income 'Fax (Appeals) has also not appreciated the fact that certain class of assets may not earn income in a certain year viz., investment in unlisted equities and foreign investments and that this fact will not hamper the allowability of the expenditure incurred to manage and maintain the portfolio. Since some of the income may be exempt under the Income Tax Act, the assessee has voluntarily disallowed expenditure to an extent of income not includible in total income as computed below: Investments Amount in Rs. Investments as on 01/04/2013 40,73,02,270 Investments as on 31/03/2014 52,91,94,474 Average Investments 46,82,48,372 0.5% of Average Investments u/s 14A (foreign securities and unlisted securities from which no income has been earned has been excluded) 23,41,242 1.2 The above amount of Rs. 23,41,242/- is the amount computed under section 14A of the Income Tax Act, 1961. While claiming the deduction u/s 57, the above amount has been reduced as under: Total Direct Expenses 50,72,474 Less : 0.5% of average investment 23,41,242 Expense claimed under section 57 27,31,232 Amount restricted to the income under....
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....ering the same. Regarding the details of expenses incurred and claim in the present year, he submitted that on page no. 2 of the assessment order, the AO has reproduced the details of expenses incurred and claim by the assessee of Rs. 50,72,474/- out of which the AO has made disallowance of Rs. 23,41,242/- u/s. 14A to the extent of 0.5% of average investments and out of the balance expenses of Rs. 27,31,232/,- the AO has held that claim of the expenses has been restricted to Rs. 18,60,702/- which is equal to the total income under the head 'Other sources' before such deduction. He also submitted that the assessee is also having investment in foreign equities and in this regard, he submitted that on pages 31 and 32 of the paper book is the details of investment in First State Regional China Fund of Rs. 1,30,10,170/- and in Fidelity Latin America Fund of Rs. 67,68,750/-. He submitted that the investment in foreign funds or foreign equity is yielding taxable income and therefore, deduction should be allowed u/s. 57(3) against this taxable income under the head income from other sources. The ld. DR of revenue supported the orders of authorities below. He also submitted that the issue i....
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....March 28, 2019 against the order under section 250 passed by the learned Commissioner of Income-tax (Appeals), Bengaluru - 2 dated January 16, 2019. The only issue in the said appeal, is the disallowance of expenses under section 57 of Income Tax Act, 1961 of Rs. 18,60,702/- claimed in his return of income. 2. During the year under consideration, the appellant incurred an expenditure of Rs. 50,72,474/- out of which a sum of Rs. 23,41,242/- was excluded in terms of section 14A. The balance amount claimable works out to Rs. 27,31,232/. The claim for deduction under section 57 was however restricted to Rs. 18,60,702/ representing the total income from other sources. The details of expenses incurred during the year ended March 31, 2014 is as under: Nature of Expenses Amount PMS charges 1,326,690 Salaries & bonus 1,708,280 Professional Charges 1,328,748 Vehicle Maintenance 276,186 Travel expenses 11,064 Computer Maintenance 51,778 Printing & Stationary 4,060 Telephone Charges 164,911 Bank Charges 200,757 Total 50,72,474 Less: Disallowance under section 14A 23,41,242 Net amount claimable under section 57 27,31,232 Claim restricted to amount of income under o....
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....nal evidence, it is seen that this is made by the assessee in view of the Tribunal order in own case for Assessment Year 2012-13 and hence, we admit the additional evidence. Having been admitted the additional evidence, we now examine as to whether such additional evidence filed by the assessee is rendering any help to assessee in the present case. As per the additional evidence filed, we find that as per page no. 125 of the paper book is the details of expenses claimed to be allowable u/s. 57 of Rs. 50,72,474/- and this detail is already reproduced by us above from the assessment order and therefore, this not a new evidence and not relevant for the present discussion. On page nos. 126 to 128 of the paper book is the ledger account copy of Brokerage, PMS & Other Charges in which an amount of Rs. 13,26,690/- is debited during the present year. As per the narration available in this ledger account, it is seen that it is debited on account of management fees for various quarters, brokerage for various quarters and custodian fees for various quarters. This is not the case of the assessee by filing any specific detail that such brokerage, PMS and other charges is paid in respect of fore....
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....g of income taxable under the head 'Income from other sources' and therefore, even after considering the additional evidence, these expenses of Professional charges also cannot be held to be allowable u/s. 57(iii) of the IT Act. Hence, it is held that these three expenses i.e. PMS charges, Salaries and bonus and Professional charges are not allowable u/s. 57(iii) of the IT Act and the remaining expenses is very small and less than the amount of expenses already allowed by the AO of Rs. 18,60,702/- because out of Rs. 27,31,232/-, the AO has allowed deduction of Rs. 18,60,702/- being the amount equal to the total income declared by the assessee under the head 'Income from other sources'. Hence, even after considering the additional evidence filed by the assessee, we find that assessee does not get any help from the said additional evidence. 9. Now we reproduce the relevant para nos. 8, 9 and 12 from the earlier Tribunal order in assessee's own case for Assessment Year 2012-13. These paras are as under. "8. As per the provisions of section 57(iii) of IT Act, any expenditure not being in the nature of capital expenditure laid out or expended wholly and exclusively for the purpose of ....