TaxTMI 
TaxTMI 
2024 (12) TMI 34
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.... assessment order dated13.12.2016 under section 143(3)of the Income Tax Act 1961 [hereinafter referred as 'the Act']. 2. The revenue has raised following grounds of appeal :- 1. "Whether ton the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,70,64,096/- made by the AO by making disallowance u/s 37 of the Income Tax Act, 1961, without appreciating the detailed reasons given by the AO in the Assessment Order." 2. "Whether on the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,70,64,096/- without appreciating that the AO has rightly apportioned the business expenses out of total expenses looking to the fact that out of total income of Rs....
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....before us. 5. The Ld.DR das submitted that the assessee company has received a dividend of Rs 272000000/-this income was taxable @15%u/s 115BBD of the Act without any deduction because the assessee has reflected the income from other sources. He has strongly supported the order of the AO. 6. The Ld AR of the assessee has submitted that AO has not doubted the expenses. He has submitted that disallowance has made only suspicion and conjectures basis by the AO. He has also submitted that the addition made by AO was rightly deleted by the Ld CIT(A). Reliance has placed on the following Judgments; 1. CIT V. R.D Ramnath Company (HUF) [2010] 1 taxmann.com 166 (Delhi). 2. Commissioner of Income -tax Vs. Anita Jain, ....
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....e of the Appellant. Hon'ble Delhi High Court in the case of CIT v. R.D. Ramnath Company (HUF), [2010] 1taxmann.com 166 (Delhi) on somewhat similar facts has held that estimated disallowance of 60% of salary & office expenses being based on surmises and conjectures cannot be sustained. Further in the case of CIT v. National Agricultural Co-op. Marketing Federation of India Ltd., [2011] 11 taxmann.com258(Del) disallowance of indirect expenses made on proportionate basis of total sales was not sustained. 5.6 Hon'ble Supreme Court in the case of S. A. Builders Ltd.v.CIT(Appeals), 288 ITR 001 (SC) and Sassoon J. David & Co. P. Ltd. vs. CIT,118 ITR 261 (SC)has held that all that section 37 requires is that the expenses should be ....
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....d have paid tax at maximum tax rate. There being no tax loss because of the higher rate of tax applicable to the directors, there is no tax arbitrage. This shows the bornafide of the appellant. 5,8 I am also in agreement with the AR that in the case of lull & dormancy where even there is no income and there is no indication of closure of business, expenses are allowable to retain the company and its assets with the hope of revival of business. In this case of the Appellant though there was decrease in business income in this year because of non-receipt of commission income, it is fact that there is much more business in subsequent years. Accordingly, I don't see any justification in disallowing almost entire business expenditur....
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....ign subsidiary on which tax is payable under section 115BBD. The said observations of the AO are misconceived and do not support her case. As per the provisions of the Act, tax u/s 1150 is not payable as the foreign dividend is not exempt. Tax payable on foreign dividend under normal provisions under section 1158BD being less than tax payable under MAT, tax has been paid under MAT which is more than the tax rate u/s 115BBD The ratio of allowable business expenses at 7% has been estimated by the AO with reference to income other than business income which is mainly dividend income. That means entire expenses disallowed at Rs. 2,71,49,018/- have been allocated to foreign dividend income. In the impugned order, no such expense has bee....
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....the case of M. V. Valioppan v. ITO [1988] 170 ITR 238 (Mad) has held that McDowell decision does not rule out Ignoring of genuine /real transactions being ignored merely on the ground that it results in reducing the tax burden. Where there is a commercial or a business purpose in a transaction which only means that a transaction has the result of reducing the tax burden as a result of or a real deprivation of income as in the case of a family partition, that transaction would be permissible attempt for reducing the tax burden In this case of the Appellant, I don't find that the Appellant has entered into any sham or colourable transaction. In fact there is no tax avoidance. Mode of business, business transactions and the nature....