TaxTMI 
TaxTMI 
2023 (9) TMI 1212
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....ether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance of Rs. 1,08,74,843/- by holding that such expenses were revenue in nature? 2. Whether on the facts and circumstances of the case and in law, the ld.CIT(A) erred in deleting the notional interest disalloweds 36(1)(ii) of the Act ignoring the fact that the assessee has defited the rest on loans and not charge any interest on loans given? 3. The appellant prays that the order of the Ld. CIT(A) on the grounds be set aside and that of the Assessing officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." Cross objections by the assessee to the appeal filed by the Revenue: "Based on the facts and circumstances of the case, Group M Media India Private Limited (hereinafter referred to as 'Group M India') craves leave to prefer cross objections to the appeal filed by the Department (ITA No.3088/M/19) against the order passed by the Hon'ble Commissioner of Income Tax [Learned CIT(A)'), Mumbai under Section 250 of the Income-tax Act, 1961. (hereinafter ref....
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....n the computation of income under section 40(a)(i) of the Income Tax Act, 1961 (for short 'the Act') and balance amount has been incurred in respect of annual maintenance cost and license fee which is payable annually, the AO proceeded to disallow the expenses under section 37(1) of the Act by treating the same as capital in nature and thereby added the same to the total income of the assessee. The AO also observed that the assessee has taken secured and unsecured loan by paying average interest @10.19% on the same. The AO also observed that the assessee has advanced loan to the supplier to the tune of Rs. 49,68,47,605/- and received the advances from clients to the tune of Rs. 18,35,23,580/- (total advance given to supplier comes to Rs. 31,33,24,026/-) on which no interest is charged by the assessee). The AO called upon the assessee to justify as to why the interest may not be disallowed on such advances/interest free loans given to suppliers since the assessee was paying interest on loans taken. Declining the contentions raised by the assessee the AO proceeded to hold that the assessee has used interest bearing funds for giving loans and deposits to the associated concerns withou....
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....to Rs. 1,52,906/- (Rs. 9,93,889 x), Accordingly, I confirm disallowance Rs. 1,52,906/- out of the expenditure relatable to the invoice raised by WPP 2005 LTT. 4.4.4 The debit notes raised by Group M Worldwide Inc includes one debit note of Rs. 34,09,931/- for enablement of remote access. The period covered by the debit note is 24.04.2013 to 24.04.2014. Therefore, the expenditure relatable to the period from 01.04.2014 to 24.04.2014 is not allowable. The expenditure relatable to the period 01.04.2014 to 24.04.2014 works out to Rs. 2,24,215/- (Rs. 34,09,931/-). Accordingly, I confirm 365 disallowance Rs. 2,24,215/- out of the expenditure relatable to the debit note raised by Group M Worldwide Inc for enablement of remote access. 4.4.5 As regards the other expenses, I find that they are in the nature of annual maintenance charges and other expenditure of periodic nature. Therefore, I hold that those expenses are allowable as revenue expenditure. Accordingly, I direct the AO to delete the disallowance of remaining expenditure of Rs. 1,08,74,843 / (Rs. 1,12,51,964/ minus Rs. 1,52,906/- minus Rs. 2,24,215/-)." 8. We have perused the order passed by the Ld. CIT(A). It....
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....rfere into the impugned findings returned by the Ld. CIT(A). So ground No.1 is determined against the Revenue. Ground No. 2 11. The AO has computed the notional interest of Rs. 3,19,18,958/- @ 10.19% being average cost of borrowing of Rs. 31,33,24,026/- under section 36(10)(iii) of the Act on the ground that the assessee has used interest bearing fund for giving loans and deposits to the associated concerns without interest and for giving advances to its supplier which resulted in excess interest burden on the assessee. 12. The Ld. CIT(A) however, deleted the disallowance made by the AO which is under challenge before the Tribunal. 13. The Ld. D.R. for the Revenue challenging the impugned deletion relied upon the order passed by the AO, however, on the other hand, the Ld. A.R. for the assessee relied upon the order passed by the Ld. CIT(A) and contended that the assessee was having sufficient interest free funds at its disposal and further relied upon Reliance Utilities and Power Ltd. 313 ITR 340 by returning following findings: "5.4.1 I have considered the rival contentions. I find from the balance sheet that the total interest free funds in the form of share ....
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....e far less than interest free funds available with the assessee in the form of share capital reserves and surplus, by applying the decision rendered by the Hon'ble Bombay High Court in case of Reliance Utilities and Power Ltd. (supra) made by the AO is not sustainable in the eyes of law. So the Ld. CIT(A) has rightly deleted the disallowance. Hence, ground No.2 raised by the Revenue is hereby dismissed. Cross objections No. 1 & 2 of Assessee 15. During the course of argument the Ld. A.R. for the assessee has not pressed these cross objections, hence the same are dismissed. Cross objections No. 3 of Assessee 16. The assessee by filing application for raising additional ground in its cross objection that "Refund of excess Dividend Distribution Tax ('DDT') paid - The Learned AO and CIT(A) ought to have appreciated that dividend paid by Group M India to its Singapore shareholder, Group M Asia Pacific Holdings Pte Limited, is liable to tax as per the beneficial tax rate of 10% under Article 10(2) of the India - Singapore Tax Treaty, and thereby, ought to have held that the DDT paid by Group M India in excess of the 10% tax rate should be refunded to Group M India" on....