AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 1396
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....llowed by the AO which was confirmed by the Ld.CIT(A) under the provisions of section 14A r.w.r. 8D of Income Tax Rule. 3. The facts in brief are that the assessee in the present case is a limited company and engaged in the business of printing and publishing newspaper. The assessee in the year under consideration has earned dividend income of Rs. 5,14,38,645/- and other tax free income of Rs. 3,814/- only which were claimed as exempted u/s 10 of the Act. The assessee against such exempted income has made the disallowance of Rs. 11,98,579/- under the provision of section 14A of the Act. 3.1 However the AO was of the view that the disallowance needs to be made u/s 14A of the Act as per the formula provided under Rule 8D of Income Tax Rules. Accordingly, the AO worked out the amount of disallowance under Rule 8D as detailed under: Sr.No. Particulars Amount(in Rs.) 1. Direct Expenses Nil 2. Interest Expenses 79,774/- 3. Administrative Expenses 56,25,286/- Rs.57,05,060/- 3.2 Thus the AO made the disallowance of Rs. 45,06,481/- after reducing the amount already disallowed by the assessee for Rs. 11,98,579/- and added to....
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....8,579.00 was made. Accordingly it was contended that it was the duty of the AO to point out the defect in the suo moto disallowance made by the assessee in its computation of income before resorting to Rule 8D of the Income tax Rules. 10. However, the Ld. DR in contended that the AO has rejected the disallowance made by the assessee which is discernible from the assessment order. Thus it is implied that the AO has recorded the satisfaction as required under section 14A r.w.r. 8D of Income Tax Rule. 11. Both the Ld. AR and DR before us vehemently supported the order of the authorities below to the extent favourable to them. 12. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant case relates to the disallowances made by the AO under section 14A read with rule 8D of Income Tax Rules. The assessee in the year under consideration has shown the amount of exempted income amounting to Rs. 5,14,42,459.00 only. But the assessee claimed that it has not incurred any expenditure against such income either in the form of interest or administrative expenses. However the assessee, to avoid the litigation with the....
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....ee is allowed. 14. Now coming to ITA No. 307/AHD/2018 for AY 2011-12, the Revenue has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.4,91,30,449/- on business development expenditure. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.79,774/- u/s.14A of the Act on the ground that the assessee has large capital, ignoring the fact that the funds of the assessee were mixed. 3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) ought to have upheld the order of the AO. 4. It is therefore, prayed that the order of the Ld.CIT(A) be set aside and that of the A.O be restored to the above extent. 15. The first issue raised by the assessee is that the Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 4,91,30,449/- on account of business development expenditure. 16. The assessee in the year under consideration claimed that it has launched various scheme in order to retain its custom....
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....Appellant's own case for A.Y. 2005-06 to 2009-10 in ITA No.637-639/Ahd/2011 and others, has deleted the addition made by AO and held as under: - '5. The Id. AO has disallowed the business development expenses and treated them as capital expenditure for following Asst. Years:- Asst. Year Amount 2005-06 25,96,09,700/- 2006-07 22,25,22,761/- 2007-08 19,56,96,676/- 2008-09 19,32,98,364/- 2009-10 9,89,60,372/- 6. The Id. DR supported the orders of Assessing Officer. 7. At the outset Id. AR of the assessee submitted that similar grounds relating to business development expenditure being business expenses and not capital expenditure had been decided by the Tribunal in assessee's own case in ITA No.479/Ahd/2005 for Asst. Year 2001-02 and others, vide order dated 19.11.2010. 8. We have heard the rival contentions and perused the material on record. We find that the issue relating to business development expenses to be treated as business expenditure and not capital expenditure, has been dealt and decided by the Coordinate Bench in ITA No.479/Ahd/2005 for Asst. Year 2001-02 and others, vide order dated 19.11.....
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.... as capital expenditure. The other reason given by the AO that there is no direct corelation between the amount of expenditure end number of subscribers, is also irrelevant for deciding the nature of expenditure or the allowability of the expenditure. For an expenditure being allowable, it is not necessary that the expenditure must have yielded immediate or quantifiable benefit to the assessee. In respect of the other argument of the revenue that expenditure was incurred gratuitously and not exclusively for the purposes of business, we find that it is not in dispute that the expenditure was incurred for giving benefit or gift to the subscribers of daily newspaper who paid the entire subscription of the year in advance. Thus, we find that the expenditure had a close nexus with the business of the asssssee. No material was brought on record by the revenue to show that the expenditure in question was incurred for any other purpose except business consideration by the assessee. It is not the case of the revenue that the recipients Asst. Years: 2005-06, 2006-07, 2007-08 & others of benefit were relatives of the assessee. Further, in our considered view, a business expenditure for being ....
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....es are ad idem that this tribunal's order in assessee's own case for AYs 2005-06 to 2009-10(supra) follows yet another decision in its case pertaining to AY 2001-02 holding identical business development expenditure to be Revenue in nature. Ld.Departmental Representative fails to point out any distinction on the conclusion under challenge. The Revenue fails in its first substantive ground. 22.1 Respectfully following the same, we don't find any reason to interfere in the order of the ld. CIT-A. Accordingly, we dismiss the ground of appeal of the Revenue. 23. The 2nd issue raised by the Revenue is that the ld. CIT-A erred in deletion the addition made by the AO for Rs. 79,774.00 representing the interest expenditure under section 14A r.w.r. 8D of Income Tax Rule. 23.1 At the outset, we note that the issue raised by the Revenue has already been dismissed by us along with the appeal of the assessee bearing ITA No. 131/AHD/2018 for the AY 2011-12. For the detailed discussion, please refer the relevant Paragraph No. 12 of this order. Thus we dismiss the ground of appeal of the Revenue. 24. In the result, the appeal of the Revenue is dismissed. Now coming the appeal ....
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....ds of appeal but the issue revolves to the amount of Rs. 1,08,90,377/- representing the expenditure disallowed by the AO which was confirmed by the Ld.CIT(A). 32. At the outset we note that similar ground was raised by the assessee in his own case bearing ITA No. 131/Ahd/2018 corresponding to A.Y. 2011-12 which has been decided in favour of assessee vide paragraph No. 12 of this order. For the detailed discussion, please refer the above mentioned paragraph number of this order. Accordingly, we hold that finding given in above paragraph with regard to ITA No. 131/Rjt/2018 will mutatis mutandis apply here in this case also. 33. In the result, the appeal of the assessee is allowed. Coming to the appeal of the Revenue bearing ITA No. 309/Ahd/2018 for A.Y. 2013-14. 34. The Revenue has raised the followings grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.4,65,56,208/- on business development expenditure. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the disallowance....
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....the funds of the assessee were mixed. 3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) ought to have upheld the order of the AO. 4. It is therefore, prayed that the order of the Ld.CIT(A) be set aside and that of the A.O be restored to the above extent. 41. At the outset we note that similar grounds 1 and 2 were raised by the Revenue bearing ITA No. 307/Ahd/2018 corresponding to A.Y. 2011-12 which has been decided in favour of assessee vide paragraph No. 12 & 22 of this order. For the detailed discussion please refer the above mentioned paragraph numbers of this order. Accordingly, we hold that finding given in above paragraphs with regard to ITA No.307/Ahd/2018 will mutatis mutandis apply here in this case also. 42. In the result, the appeal of Revenue is dismissed. Now coming the appeal of the assessee bearing ITA No.741/Ahd/2018 for A.Y. 2015-16. 43. The issue raised by the assessee is that Ld.CIT(A) erred in confirming disallowance of Rs. 1,26,63,477/- made by the made by the Assessing Officer u/s 14A of the Act. 44. At the outset we note that similar ground was raised by the assessee in his own case bearing I....