TaxTMI 
TaxTMI 
2022 (7) TMI 1086
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....e provisions of section 14A of the Act, read with Rule 8D(2)(ii) of the Income Tax Rules, 1962. For this, assessee has raised following grounds:- 2. The Commissioner of Income tax (Appeals) erred in confirming the disallowance of Rs.4,85,997/- u/s.14A by applying Rule 8D. 2.1 The Commissioner of Income tax (Appeals) ought to have appreciated that if there are interest free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest free funds available. 2.2 The Commissioner of Income tax (Appeals) ought to have appreciated that only the surplus funds with the assessee is utilized for making investments in Mutual funds. The administrative and interest expenditures were incurred only with reference to the business activities of the assessee and are in no way attributable to the investment activities. 2.3 The Commissioner of Income tax (Appeals) ought to have appreciated that in the present case the accounts of the assessee clearly evidence the fact that no expenditure was incurred by the assessee for earning the income by way of dividend, which does not for....
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....ded any finding that the interest bearing funds have been invested in the instruments giving rise to exempt income. Once the AO has not established that the interest bearing funds have gone into these investments which give exempt income, no disallowance can be made in case the assessee has more interest free funds available with it and claims that the investment is out of those funds which give rise to exempt income. The presumption in view of Hon'ble Bombay High Court in the case of HDFC Ltd., supra clearly goes in favour of the assessee. Hence, respectfully following Hon'ble Bombay High Court's decision, we allow this ground of assessee's appeal. 3. The next issue in this appeal of assessee is as regards to the order of CIT(A) disallowing the carbon credit and adding to the returned income of the assessee amounting to Rs.39,21,338/-. For this assessee has raised following grounds:- 3. The Commissioner of Income tax (Appeals) erred in confirming the disallowance of Carbon credit amounting to Rs.39,21,338/- 3.1 The Commissioner of Income tax (Appeals) ought to have held that carbon credit earned is in the capital field and hence a capital receipt not subject to tax. 3.2 Wit....
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....ng in para 37 to 39 as under:- 37.Further, it was pointed out that under our fiscal jurisprudence, we may regard the Appellate Authorities as exercising quasi judicial functions in the same sense, as a tax officer does. But, even so, the proceedings before them lack the basic elements of adversary proceedings. It, therefore, follows that the discussion and the scope of the appellate jurisdiction of the Tribunal and the other authorities under the tax code cannot be pursued by drawing a parallel to civil litigation with particular reference to appeal from decrees, and the like. Further, it was pointed out that in the case of Mahalakshmi Textile Mills Ltd., the Hon'ble Supreme Court observed that the Tribunal is not precluded from adjusting the tax liabilities of the assessee in the light of its findings merely because, the findings are inconsistent with the case pleaded by the assessee. The decision of the Hon'ble Full Bench of this Court in the case of State of Tamil Nadu vs. Arulmurugan & Co., [(1982) 51 STC 381] was referred to wherein, it was held that the Appellate Authorities perform precisely the same functions, as the assessing authority. The above decision and the finding....
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....r to be noted is that Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision and Mr.V.S.Jayakumar, learned counsel for the assessee would submit that the assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim under Section 80IA of the Act and merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. The submission, made by Mr.V.S.Jayakumar, learned counsel for the appellant, in this regard, is well found and accepted. 3.3 The ld.Senior DR heavily relied on the assessment order and the order of CIT(A) and stated that once the assessee has credited the receipts in the profit & loss account, now he cannot go back and he has to claim this only through revised return for which now the time limit has expired. 3.4 After hearing rival contentions and going through the facts of the case, this issue is fully covered in favour of assessee and against Reven....
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....wever the fact remains that the foreign currency loans were taken for capital expenditure purpose therefore the provisions of sec 43A are clearly applicable to the amount claimed by the Assessee. Hence the AO has rightly disallowed sum Rs.10,56,75,723/- under sec 43A of the Act. Assessee's appeal on this issue is accordingly dismissed. Aggrieved, now assessee is in appeal before the Tribunal. 4.2 W have heard rival contentions and gone through facts and circumstances of the case. We noted that it is disputable fact that the details of forex forward charges are before the AO which are filed by assessee before us now as Annexure A in its paper-book pages 1 to 3. The ld.counsel for the assessee argued that neither the AO nor the CIT(A) has gone into these details but observed that "it is also seen that the foreign currency loan were taken for capital expenditure purposes". The ld.counsel for the assessee fairly stated that the matter can go back to the file of the AO to examine the nature of expenditure and to verify the details of expenses and then decide accordingly. He stated that even the CIT(A) has not gone into the details. 4.3 After hearing both the sides and going throu....
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....the purpose of business and accordingly he disallowed the expenses at Rs.3.71 crores. Aggrieved, assessee preferred appeal before CIT(A). 6.2 The CIT(A) after hearing the assessee noted that the assessee's business is of manufacturing and printing papers for which substantial amount water is required in the process and it generates hazardous, which has to be treated by a few and treatment plant. The treated water is used for irrigation by the farmers. To mitigate the hardships faced by the villagers, the assessee has to protect the general interest of the community in order to run its business. He noted that to main cordial relationship with the affected communities, the assessee owes the civil duty to provide various facilities namely laying off roads, other basic infrastructure facility and other community development expenses. These expenses are incurred to run its business smoothly. Therefore, the CIT(A) held that these CSR expenses are incurred for commercial expediency, in order to improve the image of the company and to facilitate carrying on the business. He relied on the decision of Hon'ble Karnataka High Court in the case of CIT vs. Infosys Technology Ltd., 360 ITR 714 a....
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....td., supra. 6.4 We have heard rival contentions and gone through the facts and circumstances of the case. We noted that this issue stand covered in favour of assessee and against Revenue by the decision of Hon'ble Karnataka High Court in the case of Infosys Technologies Ltd., supra wherein the Hon'ble Karnataka High Court has observed in para 25 as under:- 25. Therefore in the instant case, admittedly the assessee is having their establishment at Bannerghata Circle. Nearly about 500 employees are working in the said Unit. There was severe traffic congestion. Employees had to wait for longer time to reach the office. It seriously affected the business of the assessee, resulting in delay in completing the project. In order to facilitate its employees to reach their establishment safely and early, the assessee has installed traffic signals at Bannerghata Circle. Though it is the responsibility of the State and in particular, the Police Department either to install the traffic signal or control the traffic, the fact remains that in the absence of traffic signal or traffic police being positioned at Circles, the traffic congestion is a regular phenomenon. It seriously affects the fre....
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....12.2016. 8.1 The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in disallowing expenses relatable to exempt income by invoking the provisions of section 14A of the Act, read with Rule 8D(2)(ii) of the Income Tax Rules, 1962 amounting to Rs.4,06,526/-. 8.2 Brief facts are that the AO noted from the investment port folio of the assessee as on 31.03.2014 and the computation of income that the assessee has earned dividend income of Rs.6,02,992/- and claimed the same as exempt u/s.10(34) of the Act. The assessee has suo-motto quantified the disallowance u/s.14A r.w.rule 8D(2)(iii) i.e., administrative expenses at Rs.57,023/-. The AO by applying formula prescribed under Rule 8D(2)(ii) of the Rules also made disallowance under Rule 8D(2)(ii) i.e., interest disallowance at Rs.4,06,526/-. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of AO. Aggrieved, assessee is in appeal before the Tribunal. 8.3 Now before us, the ld.counsel for the assessee stated that he is interested in arguing only the disallowance of interest under Rule 8D(2)(iiii) i.e., amounting to Rs.4,06,526/-. The ld.counsel fo....
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....ction 40(a)(ia) of the Act. For this, assessee has raised following grounds:- 3. The Commissioner of Income tax (Appeals) erred in confirming the disallowance of Rs.1,18,37,355/- being Commission paid to non residents u/s.40(a)(ia) of the Act on the ground that assessee has not complied with the provisions of Section 195 of the Act. 3.1 The Commissioner of Income tax (Appeals) ought to have found that similar disallowance made in the earlier assessment years 2006-07, 2007- 08 has been deleted by the Hon'ble Income Tax Appellate Tribunal vide Order in ITA No.554/Mds/2011 dt 30.06.2011 & ITA No.555/Mds/2011 dated 02-12-2011. 3.2 The Commissioner of Income tax (Appeals) ought to have appreciated that The commission was paid for procurement of export orders and the foreign agent has not rendered any services. 9.1 Brief facts are that the assessee company has paid commission of Rs.1,18,37,355/- to Jupiter Trading Company, Colombo, Srilanka. The AO noted that since the commission paid to a non-resident, assessee has to deduct TDS u/s.195 of the Act. The assessee has not deducted any TDS, hence invoking the provisions of section 40(a)(i) of the Act made disallowance of commissi....
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....rs. Amendment harped on by the Revenue in Section 9(1) of the Act may be substitution of Explanation coming under sub-section (2) of Sec.9 by Finance Act, 2010 with retrospective effect on 01.06.1976. This is the only amendment made in Sec.9 by Finance Act, 2010. Such substituted explanation reads as under:- "Explanation- For the removal of doubts, it is hereby declared that for the purposes of this section, income of a non-resident shall be deemed to accrue or arise in India under clause(v) or clause (vi) or clause(vii) of sub-section(1) and shall be included in the total income of the nonresident, whether or not, - (i) the non-resident has a residence or place of business or business connection in India; or (ii) the non-resident has rendered services in India." Here in the case before us, there is nothing on record shown by the Revenue for coming to a conclusion that the concerned non-resident agents had rendered any services in India or had a residence or place of business or business connection in India. Assessee having found that income of the non-residents were not chargeable to tax in India was justified in making the remittances without any deduction of tax at sourc....