TaxTMI 
TaxTMI 
2022 (2) TMI 31
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....llant is in the business of investments promotion, and the receipt of dividend income is incidental to the appellant's business and therefore disallowance u/s.14A r.w Rule 8D is not attracted. 4. The CIT(A) erred in confirming the disallowance U/S.14A r.w Rule 8D (2)(i) of Lead Management fees of Rs. 13,00,300/- paid to DSP Merill Lynch Ltd and Escrow Management fee of Rs. 1,20,00,000/- paid to Standard Chartered Bank which were related to open offer issued for shares of Shriram City Union Finance Limited and advisory fees paid for restructuring of Rs. 2,48,175/-. 5. The CIT(A) erred in not appreciating the fact that in the case of our group company viz., Shriram Capital Limited, which is also in the business of investment promotion, the ITAT in their order in ITA Nos. 638,639 & 640 / Mds/2012 dated 04.02.2013 for the assessment year 2005-06, 2007-08 & 2008- 09 has deleted the additions of interest and facilitation fees. 6. The CIT(A) erred in not appreciating the fact that in the appellant's case for the assessment year 2009-10, the Hon'ble ITAT in their orders in ITA No.1477/Mds/2013 dated 10.04.2014 has confirmed the CIT(A) order deleting b....
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.... u/s. 14A 4.1 The assessee being resident corporate assessee is stated to be engaged in dealing in shares and stocks etc. The assessee is in the business of investment and it has invested in various other Shriram Group of entities. These investments are stated to be out of commercial expediency and to strengthen the capital and liquidity base of group entities as a whole. The assessee earned exempt dividend income of Rs. 334.37 Lacs and offered suo-moto disallowance of Rs. 51,220/- in the computation of income and submitted that no further disallowance would be warranted u/s 14A. 4.2 However, Ld. AO rejected assessee's submissions that the investment in subsidiaries would not attract disallowance u/s 14A. Referring to CBDT circular No.05/2014 dated 11.02.2014, Ld. AO repeated disallowance of Rs. 135.48 Lacs in terms of Rule 8D(2)(i) which comprised-off of advisory fees of Rs. 2.48 Lacs, lead management fees of Rs. 13 Lacs and Escrow management fees of Rs. 120 Lacs paid by the assessee. The Ld. AO has also repeated disallowance u/r 8D(2)(iii) for Rs. 6.84 Lacs. No disallowance was made u/r 8D(2)(ii). 4.3 During appellate proceedings, reiterating the business profile of the ....
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....able having regards to the accounts of the assessee as per the mandate of Sec.14A. This jurisdictional requirement was not satisfied by Ld. AO in the present case and Ld.AO straightway proceeded to compute disallowance as per Rule 8D. The application of Rule 8D, in our considered opinion, was not mechanical or automatic. 6. The Hon'ble Apex Court in the cited case of Godrej & Boyce Manufacturing Co. Ltd. V/s DCIT (2017 394 ITR 449) held that subsections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It ....
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.... Taxman 705) was held to be applicable. Therefore, the loss was termed as loss of capital and not capital loss and therefore, the claim was held not allowable. 8.3 During appellate proceedings, the assessee relied on the decision of Hon'ble Delhi High Court in the case of CIT V/s Chand Ratan Bagri (329 ITR 356) which held that loss on forfeiture of amount paid towards convertible warrants was deductible as Short Term Capital Loss. Similar was stated to be the ratio of decision of Hon'ble Karnataka High Court in the case of DCIT V/s BPL Sanyo Finance Limited (312 ITR 63) which held that the assessee would be deemed to have acquired a right in shares even if call monies of the full value of the share has not been paid. The extinguishment of any right as per Sec.2(47) would cover every possible transaction resulting in the destruction, annihilation, extinction, termination cessation or cancellation, by satisfaction or otherwise, of all or any of the bundle of rights whether qualitative or quantitative, which the assessee has in capital asset, whether or not such an asset is corporeal or incorporeal. Upon forfeiture, the assessee's right in the share stood extinguished and the loss ....