TaxTMI 
TaxTMI 
2021 (10) TMI 619
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....nvolved in assessee's appeal is relating to part disallowance of legal expenses and service tax paid thereon. Whereas, in ground 1 of its appeal, revenue has challenged partial relief granted by learned Commissioner (Appeals) on the very same issue. 3. Briefly the facts are, the assessee is a resident company and is registered as a non banking financial company (NBFC) with RBI. Basically, the assessee has been categorized as an investment company. Be that as it may, for the assessment year under dispute, assessee filed its return of income on 24-09-2015 declaring loss of Rs. 98,34,692/-. In course of assessment proceedings, the assessing officer noticed that the assessee has claimed deduction of legal expenses amounting to Rs. 1,35,89,61....
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....have possessory right. Therefore, assessee's claim that the properties are in the nature of stock-in-trade, cannot be accepted. Learned Commissioner (Appeals) agreed with the assessing officer that the legal expenses incurred by the assessee in respect of the aforesaid two properties are capital in nature. However, as far as the balance amount of legal expenses relating to some other properties as well as the service tax component on legal fees in respect of which the assessee has already received compensation and is in further dispute for enhanced compensation, and the legal expenses incurred in respect of power of attorney granted to Dr. P.S. Prasad, learned Commissioner (Appeals) allowed as revenue expenditure. 4. The learned authoriz....
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.... 4. CIT vs Airlines Hotel (P) Ltd (2012) 346 ITR 33(Bom) 5. Hiranandani Akruti JV vs DCIT ITA No.5678/Mum/2015 order dated 3 October, 2017 6. DCIT vs B Kumar Gowda (2017) 396 ITR 386 (Kar) 5. Strongly relying upon the observations of the assessing officer, learned departmental representative submitted, the subject properties were never in the possession of the assessee. He submitted, when the assessee is neither the owner of the properties nor was in possession, the properties cannot be treated as stock-in-trade of the assessee. He submitted, in any case, what the assessee had acquired is an interest in capital asset. Therefore, any expenditure incurred to acquire or improve upon the title of such capital asset ....
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....the assessment stage itself the subject properties have not only treated as stock in trade in the books of account, but has been accepted by the department. On perusal of order dated 31-08-1994 of learned Commissioner (Appeals)-II, Bombay for assessment years 1990-91 and 1991-92, we find that the first appellate authority has very clearly and categorically held that the immovable properties located at Hyderabad are stock-in-trade of the assessee. The aforesaid decision of learned first appellate authority has also been approved by the Tribunal while dismissing revenue's appeal in WTA Nos.1255 and 1256/Bom/1994 dated 19-11-1996. Thus, once the immovable properties located at Hyderabad have been held as stock-in-trade, they cannot be treated ....
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.... of dividend amounting to Rs. 34,30,88,643/-. Whereas, the assessee has suo motu disallowed an amount of Rs. 7,84,584/- under section 14A of the Act. Being of the view that the assessee has not computed the disallowance in terms of Rule 8D, the assessing officer proceeded to compute disallowance by applying rule 8D and worked out a disallowance of Rs. 1,43,59,665/- under rule 8D(2)(iii). Since, the assessee has already disallowed an amount of Rs. 7,84,584/-, the assessing officer made a net disallowance of Rs. 1,35,75,081/-. Assessee contested the aforesaid disallowance before learned Commissioner (Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) obse....
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....essment year 2006-07, we are unable to accept such contention. Firstly, in assessment year 2006-07, rule 8D was not applicable. Secondly, the assessee itself has computed the disallowance at Rs. 7.84 lakhs. In fact, in assessee's own case for subsequent assessment years, i.e. assessment years 2009-10, 2011-12, 2012-13 and 2013-14, the Tribunal has consistently held that the disallowance under section 14A r.w.r. 8D should be restricted to suo motu disallowance made by the assessee. In view of the aforesaid, we do not find any infirmity in the decision of learned Commissioner (Appeals) on the issue. Accordingly, ground 2 in revenue's appeal and grounds 4,5 and 6 in cross objection are dismissed. 13. As regards ground 3 of revenue's appeal ....