TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 248
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....[hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2018-19, wherein assessee's appeal has been partly allowed. 2. The brief facts, according to the material on record are that the appellant assessee is a leading stock exchange of the country, which has been incorporated to facilitate, promote, assist, regulate and manage in the public interest, dealings in security of all kinds and to provide specialised, advanced and automated and modern facilities for trading, clearing and settlement of securities with a high standard of integrity and honor and ensure trading in the transparent, fair and open manner. Assessee e-filled it's return of income on 29.10.2018, declaring total income of Rs. 1426135040/- under normal provisions of the Act and deemed total income of Rs. 4866353858/- u/s. 115JB of the Act on 31.03.2019. Assessee filed revised return, declaring a total income of Rs. 1426135110/- under normal provisions of the Act and a deemed total income of Rs. 4866353858/- u/s. 115JB of the Act. The case was selected for complete scrutiny under CASS. Statutory notices u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. Assessee submitted details....
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....w, the Learned CIT(A), NFAC was justified in not following the previous orders passed by Hon'ble Income Tax Appellate Tribunal (TAT) for AYs 2007-08 to 2009-10 which were upheld by Hon'ble Bombay High Court as well as orders passed by Commissioner of Income Tax (Appeals) for AYs 2011-12 to 2015-16 relying on the decisions of Hon'ble ITAT in the appellant's own case on the same facts. d) Whether on the facts of the case and in law, the Learned CIT(A), NFAC was justified in rejecting the fact, that the appellant had worked out the disallowance u/s.14A by adopting a rational, objective and scientific method and therefore provisions of section 14A(2)/(3) of Income Tax Act, 1961 are not applicable. Your appellant submits that the method adopted by the appellant is valid method accepted by appellate authorities in the past. 2) Without prejudice to the above grounds, the Learned CIT(A), NFAC failed to consider Ground no 5 "Without prejudice to the above, Adjustments of expenses of Rs. 17,83,25,426/- u/s 14A while calculating book profit u/s 115]B of the Income Tax Act, 1961." 3) The Learned CIT(A), NFAC erred in directing the assessing officer to recalculate the Inte....
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....is. Learned assessing officer was, however not satisfied and observed vide paras 5.3 and 5.4 of the assessment order dated 10.09.2021 as under: "5.3 It is pertinent to mention here that assessee has not maintained separate accounts for investments vis-à-vis the sources. For bifurcation of indirect expenses, the assessee has simply used proportionate floor area occupied by the treasury section, salary paid to employees of treasury section and exempt income, which is incorrect and unscientific. The expenditure cannot be bifurcated on the basis of floor area, salary paid to employees of treasury section and exempt income. Their treasury is not an isolated unit and even the common areas will be used by the treasury. So, the method adopted by the assessee is not a rational/logical basis and the accuracy of the same cannot be ascertained. It is an ad-hoc estimation and correctness of the same is doubtful / unscientific. 5.4 In view of the above discussion, the working of disallowance made by the assessee is not found to be satisfactory. The expenditure incurred cannot be exactly ascertained from the books of accounts and the submissions made. Thus, the calculation mechanism pr....
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....e, but, we do not find such objection acceptable for the following reasons. On going through the submissions made by assessee before the first appellate authority as well as the grounds raised before us, we are of the opinion that the issue raised emanates from the assessment order as well as the order of the learned Commissioner (Appeals) and is covered under ground no.1, raised before us. Having held so, we will now examine whether the Assessing Officer has validly invoked the provisions of section 14A. It is the contention of the learned Counsel for the assessee that in terms with section 14A(2), the Assessing Officer must record a satisfaction that claim of expenditure by the assessee with reference to its books of account for earning exempt income is not correct. Though, recording of satisfaction as provided in sub-section (2) was brought to statute by Finance Act, 2006, w.e.f. 1 April 2007, and applicable for assessment year 2007-08, but, as held by Hon'ble Delhi High Court, in Maxopp Investment Ltd. (supra), even prior to introduction of sub-section (2) to section 14A, the Assessing Officer is required to record his satisfaction regarding correctness of assessee's cl....
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.... be had to the decision of the Tribunal, Mumbai Bench, in Voltas Ltd. (supra). In view of the aforesaid, we do not see any reason to uphold the disallowance of indirect expenses made by the Assessing Officer by applying a provisions of rule 8D(2)(iii). However, there is no dispute to the fact that the assessee did incur certain expenses towards earning the exempt income. In fact, the assessee has also accepted this factual position and has submitted a working before the Assessing Officer computing the disallowance under section 14A of the Act at Rs. 15,95,064. The judicial precedents on the issue including the decision of the Hon'ble Jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. (supra) are also unanimous while holding that though rule 8D would not apply prior to assessment year 2008-09, but a reasonable disallowance can be made under section 14A. After considering the facts of the present case, we are of the opinion that the disallowance made by the assessee under section 14A amounting to Rs. 15,95,064, is reasonable. We, therefore, direct the Assessing Officer to restrict the disallowance to that amount. In view of our decision as above, the issue raised by the as....
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....at the learned assessing officer, did not approve assessee's method of calculating the allocated expenditure for earning exempt income by taking into consideration the area occupied by the treasury department etc. The facts of the case decided vide order dated 15.10.2019 by Hon'ble Bombay High Court in ITA No. 1017/2017 against aforesaid ITAT order for A.Y. 2008-09, are similar. Hon'ble High Court found the said non-satisfaction recorded by the learned assessing officer, as not tenable u/s. 14A(2) of the Act and dismissed revenue's appeal. 14. In view of the aforesaid, order passed by the co-ordinate bench of this Tribunal in assessee's own case and approved by Hon'ble Jurisdictional Bombay High Court, vide above referred order dated 15.10.2019, we hold that the suo-moto disallowance of Rs. 1,44,72,705/- made by assessee u/s. 14A of the Act is reasonable. Learned assessing officer is directed to restrict the disallowances to that extent only. The aforesaid first point is determined in favour of the assessee and against the revenue accordingly. 15. The second point of determination, is with regard to the adjustments of disallowance of Rs. 17,83,25,426/-, worked out u/s. 14A of the....
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...., answered the above referred question in favour of assessee by holding that "the computation under clause (f) of explanation 1 to section 115JB (2) is to be made without resorting to the computation as contemplated u/s. 14A r/w rule 8D of the Income Tax Rules 1962." Similarly, coordinate bench of ITAT Mumbai in ITA no. 1028/MUM/2017, Deputy Commissioner of Income Tax-3(3)(1) V Radha Madhav Investments Limited, for A.Y. 2013-14, vide para 5.8 of the order dated 27.07.2018 held as under: "5.8 So far as adjustment of disallowance u/s 14A in computation of book profit u/s 115JB is concerned, we find that the matter stood squarely in assessee's favour by the cited judgment of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [82 Taxmann.com 415]. Upon perusal of the same, we find that Special Bench, after considering two contrary decision of Hon'ble Delhi High Court titled as CIT Vs. Goetze (India) Ltd. [2014 361 ITR 505] & PCIT Vs. Bhushan Steel Ltd. [ITA 593/2015 dated 29/09/2015], took the view favorable to the assessee in terms of ratio of decision of Hon'ble Supreme Court rendered in CIT Vs. Vegetable Products Limited [1973 88 ITR 192]. ....
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....s existence despite the fact that set aside fund cannot be allowed as deductible business expenditure unless it was actually spent during the year for the purpose of business. 4. The Ld. CIT(A) erred in holding that the AO had not brought into record any instances which could indicate that the subscriptions to the above clubs were meant for personal purposes of directors or shareholders of the assessee despite the fact that AO has raised the point and giving findings that it is not specified or clarified as to how these amounts were incurred in connection with its business activities. 5. The Ld. CIT(A) erred in holding that the AO had not brought into record any instances which could indicate that the subscriptions to the above clubs were meant for personal purposes of directors or shareholders of the assessee despite the fact that AO has raised the point that no corresponding instances were cited by the assessee to prove how these expenditure contributed to the augmentation of its business. 20. On the basis of aforesaid grounds, the following points are to be determined under the revenue's appeal: i) Whether learned CIT(A) has erred in deleting the disallowance of Rs. 3,83,....
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....ck to ISF. III. Miscellaneous i. If a stock exchange or a depository is wound up or derecognized or exits, then the balance in the IPF and/or ISF lying un-utilised with the stock exchange and depository shall be transferred to Investor Protection and Education Fund of SEBI in terms of SEBI (Investor Protection and Education Fund) Regulations, 2009. The funds shall be utilised for purposes of Investor education, awareness, research, etc 6.4 A perusal of the above circular makes it clear that the appellant is required to contribute 20% of its revenue from a particular source to the above referred fund. This is mandatory on the part of the appellant by virtue of an overriding title caste upon by the regulatory body SEBI. The circular also enumerates the manner in which those funds are to be utilized which primarily for the promotion of investor education and investor awareness program through seminars, lectures, workshops, publications, training programs etc. for enhancing securities market literacy. This circular further mentions that if the appellant is wound up or derecognized then the balance in the above fund lying unutilized would be transferred to a similar fund of SEBI. ....