TaxTMI 
TaxTMI 
2016 (10) TMI 1405
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....allowance on account of personal expenses amounting to Rs. 75,98,514/- in A.Y. 200405 and Rs. 20,45,249/- in A.Y. 2005-06. In the quantum appeal, learned CIT (A) upheld the disallowance of Rs. 37,01,714/- in A.Y. 2004-05 and Rs. 2,58,525/- in A.Y. 2005-06. 4. In further appeal filed by the assessee before the Tribunal, the Tribunal have upheld the addition of Rs. 6,17,594/- in A.Y. 2004-05 and Rs. 2,04,525/- in A.Y. 2005-06. It appears that learned CIT (A) has confirmed the penalty vide order dated 30.9.2014 prior to the quantum appeal being decided by the Tribunal vide order dated 17.6.2015. Thus, here we are only concerned with the penalty which pertains to quantum addition upheld by the Tribunal. Details of various additions made by the Assessing Officer and upheld by learned CIT(A)/Tribunal are as under :- Particulars Expense Disallowed by A.O. Expense Disallowed by CIT(A) Expenses Disallowed by ITAT Personal Expenses of A.R. Ruia Group 19,68,335 1,96,834 1,96,834 Personal Expenses of B.R. Ruia Group 23,61,443 2,36,144 2,36,144 Expenses for Mogra Shop 14,22,571 14,22,571 - Expenses for Penthouse 18,46,165 18,46,165 ....
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....tails supplied in the return must not be accurate not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271 (1) (c). A mere making of a claim. which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Thus, on the facts of the present case, penalty under section 271(1)(c) imposed by the Assessing Officer and confirmed by learned Commissioner (Appeals) is hereby deleted. Accordingly, we do not find any justification for imposition of penalty u/s. 271(1)(c) of the Act with regard to the addition upheld by the Tribunal for less than 10% of the alleged expenses, on estimate basis. 6. In the result, both the appeals of the assessee are allowed. ITA No. 48, 49,50,51,52,241 &242/Mum/2015 7. These are appeals of the assessee against the order of learned CIT (A) for A.Y. 2006-07 to 2010-11, in the matter of order pass....
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....ty Charges to the income from house property, ignoring the facts of this issue. The assessee prays that disallowance on account of allocation of security charges to the income from house property of Rs. 14,42,894 may kindly be deleted. Ground No. 6: Without prejudice to Ground 1& 2 above, on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the allocation done by AO an amount of Rs. 2 1,36,366 out of Other Miscellaneous Expenses to the income from house property, ignoring the facts of this issue. The assessee prays that disallowance on account of allocation of sum out of Other miscellaneous Expenses to the income from house property of Rs. 21,36,366 may kindly be deleted. Without prejudice to Ground 18& 2 above, on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the allocation done by AO of additional sum of Rs. 86,03,116 out of repairs and maintenance expenditure to the income from house property, ignoring the facts of this issue. The assessee prays that disallowance on account of allocation of Repairs and Maintenance expenses to the income from house prop....
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....f CIT(A). 12. It is clear from the order of AO dated 29.12.2010 framed u/s 153A read with section 143(3) that AO after considering all the aspects disallowed expenditure by observing that expenses were incurred for earning income from house property. 13. Assessment completed u/s 153A r.w.s. 143(3) on 29.12.2010 determining total income at Rs. 20,85,10,410/- as against the returned income of Rs. 18,51,02,165/-. Subsequently, the assessment was reopened by issue of notice u/s 148 of the Act dated 29.03.2012 on the ground that out of the total revenue receipts of Rs. 57,12,39,378/- the revenue receipt from rental income is Rs. 20,09,99,756/-. Thus the rental income to the total revenue works out to 35.18%. The AO observed that during the course of regular assessment for A.Y. 2009-10 came to light that assessee has shown the rental income separately in the computation under the head income from house property by which the assessee becomes eligible for deduction u/s 24 @ 30% of the A.L.V. and simultaneously in the P & L A/c the assessee debited expenses which are relatable to income from house property and allocation of such expenses has not been made resulting....
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.... "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:" 17. In view of the present facts and circumstances and on perusal of the reasons recorded for reopening the assessment as provided to the assessee on 06.02.2013, it is clear that the grounds/reasons for reopening do not indicate any failure on the part at the assessee to disclose fully and truly all material facts necessary for assessment nor do they indicate the presence of any "tangible material" to come to the conclusion that there is any escapement of income from assessment. Thus, no reopening of the assessment can be made in the assessee's case since the....
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....47 r.w.s. 148 of the Act, in our view, is incorrect and against the various court decisions discussed above. 21. From the order of the Assessing Officer framed u/s 153A read with section 143(3) we find that the A.O. vide assessment order dated 29.12.2010 had already allocated certain expenses as being attributable to rental Income. With respect to the test whether a particular expenditure pertains to business activity or rental activity, all the expenses had already been examined by the AO and thereafter an opinion was formed by him. In the original assessment proceeding the AO had disallowed the following expenditure considered as incurred for the House Property Income: i) Legal Professional Charges ii) Foreign Travel iii) Brokerage & Commission. Hence, the Assessing Officer had passed the said assessment order after considering the materials on record and after due application of mind. In view of the same, the A.O. is now of the different opinion that certain additional expenses need to be allocated to rental Income. Accordingly, the contention of the A.O. to reopen the assessment is merely based on the change of opinion over the same facts and fi....
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....,878/- for A.Y. 2008-09 respectively. Thus the rental income to the total revenue works out to 12.05% for AY 2007-08 and 22.54% for A.Y. 2008-09 respectively. During the course of regular assessment for A.Y. 2009-10 it came to light of the Assessing Officer that assessee has shown the rental income separately in the computation under the head income from house property by which the assessee becomes eligible for deduction u/s 24 @ 30% of the A.L.V. and simultaneously in the P & L A/c the assessee debited expenses which are relatable to income from house property and allocation of such expenses has not been made. 26. Assessing Officer held that during the year under consideration thus the ratio of 12.05% for A.Y. 2007-08 22.54% for A.Y. 2008-09 to the revenue is applicable and the proportionate expenditure is disallowable from the P & L A/c on account of salary/wages advertisement & sales promotion, security charges, miscellaneous expenses and maintenance to the extent of Rs. 1,78,54,493/- for the A.Y. 2007-08 and 6,30,143/- for the A.Y. 2008-09 respectively. The assessments u/s. 143(3) r.w.s. 147 of the Act was completed on 25.03.2013 determining total income Rs. 65,70,03,36....
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....ove mentioned ratios were allocated on proportionate basis to the house property income and were accordingly disallowed under each of the above heads except the disallowance under the head repairs and maintenance where in the A.O allocated only 10% of the expenses as relatable to business on the ground that the office space is only 10% of the total area and accordingly 90% of the expenses is disallowed being attributable to property income. The issues in these grounds are similar to ground taken in A.Y. 2009-10 in assessee's own case. The proportionate disallowance was confirmed by learned CIT (A) under these heads. Since the facts and circumstances are the same and for the reasons given in the appellant's own case in A.Y. 2009-10 upholding the proportionate disallowance, the disallowance made for A.Y. 2007-08 and A.Y. 2008-09 were confirmed by learned CIT(A). Assessee is in further appeal before us. 31. From the record we found that the return of income was filed by the assessee for the assessment year 2007-08 on 30.10.2007, declaring total income of Rs. 59,83,19,758/-. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) was served on the assessee. ....
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....House Property" by which the assessee becomes eligible for deduction u/s. 24 @ 30% of the Annual Lettable Value. Simultaneously in the Profit and Loss Account the assessee has debited expenses which are relatable to income from house property and as such allocation of such expenses has not been made resulting into Income escaping assessment. Thus, the conclusion of the A.O. for A.Y. 2009-10 cannot be made a base for reopening of the assessment of the earlier assessment years where the A.O. after due consideration of facts has consciously allowed such expenditure. Thus, the conclusion of the A. 0. for A.Y. 2009-10 is nothing but a change in the A.O.'s stand taken in earlier assessment years. 34. In the latest decision of the Supreme Court in the case of CIT v. Kelvinator (India) Ltd. dated January 18, 2010 reported in [2010], 320 ITR 561 affirming the two decisions of the Delhi High Courts - CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) and CIT v. Eicher Ltd. [2007] 294 ITR 310 (Delhi), it was held that the A.O. can reopen an assessment only on the basis of some tangible material to form reasons to believe that income had escaped assessment. A mere change of opinio....
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....t the order of CIT (A) dated 12.9.2014 for A.Y. 2009-10 in the matter of order passed by AO u/s. 143(3) of the Act. 40. With regard to addition of deemed rent under Section 23(1)( c), the facts in brief are that the assessee is the owner of the commercial premises situated at Lower Parel (phoenix Mills Compound) which is a combined complex / structure of various buildings which are separately identified for the business purposes. The areas are further divided into separate units which are provided on lease to various tenants. During the year certain properties of the assessee were vacant. The AO during the assessment proceedings required the assessee to provide details of the vacant premises if any. The assessee provided the details of the vacant property. As per the details provided the properties which were vacant during the entire year were as under: Sr. No. Property Area (Built up Sq.ft) Reason for vacancy 1 Boulevard 2,020 sq.ft The property was being used as a godown by the assessee during the year 2 Grand Galleria 817 sq.ft The property could not be let out as the same was under repairs during the year 3 Sky Zone 1 1,531 ....
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....n question were let out in the subsequent financial year 2009-10 as soon as the same were suitable for let out and competitive customers were available. It is therefore clear that such premises were intended to let out. 45. The provision of section 23(l)(c) of the Act clearly lays down that in case where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the ALV would be actual rent received or receivable by the owner in respect thereof. In this case, since the two properties were vacant for the whole year, in light of the said provisions, the appellant will be entitled to vacancy allowance. Accordingly, we do not find any merit in action of AO for making addition under Section 23(1)(c) of the Act. 46. Similar addition has also been made by the AO in the assessment year 2010-11 amounting to Rs. 28,84,560/-. Following the reasoning given by us for assessment year 2009-2010 hereinabove we do not find any justification for the addition so made on account of deemed rent. ....
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....ss Income) 83,57,858 5 License Fees and rental income (income from House Property) 53,05,30,216 49. As evident from the above table, the assessee had earned the income from business and profession amounting to Rs. 37,09,64,614/-. The same includes Rs. 83,50,855/- pertaining to Cloths business and Rs. 31,21,93,241 pertaining to other service charges as well as income from events. The aforesaid presence of income from cloth sales itself is evident of the fact that the action of AO in arbitrarily allocation of expenses is bad in law. The cloths business of the assessee was the main business of the assessee in the earlier years. It is also to be noted that assessee has incurred the various expenditure in relation to the cloth business also. Trading activities of garments which required specific employees, the assessee has suffered the huge losses in the said business in the past and' also incurred substantial expenditure on the same in the present. 50. From the record we also found that the assessee has offered service charges income of Rs. 31,21,98,241/- under the head "business and profession". The said service charges are earned by the assessee in form of Commo....
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....e a full basket of various services to its tenants under the contractual obligation. These services are integral part of assessee's business and accordingly the same are rendered on a cost plus-basis i.e. the assessee clearly earns profit in undertaking the said activity. The income from the said activity is termed as "Service charges" and is offered by assessee under the head "Income from Business" 54. From the record, we also found that the assessee incurs expenditure for all the services mentioned above and recovers the same from the tenants based on an agreed rate so as to recover its costs and earn profit on the same; the activities as stated above are treated as business of the assessee and the service charges net of the actual costs is offered as "Income from Business & Profession". Moreover, during the year under consideration, the assessee has organized various promotional events in its premises for which it receives income from events and the same is offered as "Business income". The relevant clauses of service charges Agreement which was submitted before lower authorities reads as under : "3) It is agreed and understood by the LICENSEE that in addition to the....
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....rs, distribution panels for the supply of electricity, provision of cables from the transformer house to the Licensed Premises, maintaining substation and engineers, staff and workforce for the same, transmission losses, stepping down costs from HT to LT, insurance for unforeseen circumstances and all recurring expenses for the above services and any service tax and duties thereon, the LICENSOR shall recover from the LICENSEE costs at the following rates: Power consumed in Units (KW) Amount in Rs. 0-25 Rs. 1.25 per unit 25-50 Rs. 1.50 per unit 50-100 Rs. 1.75 per unit Anything above 100 Rs. 2.00 per unit iv. Marketing and Promotion expenses per square foot of the Licensed Premises shall be paid by the LICENSEE as its contribution towards costs incurred by the LICENSOR towards promoting the Mall for the period commencing from June 1, 2008 to May 31, 2011 Rs. 5/- (Rupees Five only) per sq. ft on bunt up area, amounting to Rs. 11,865/- (Rupees Eleven Thousand Eight Hundred and Sixty Flue only) per month in advance subject to deduction of tax at source. Marketing and Promotional charges shall be payable from June 1, 2008 and shall become due ....
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.... LICENSEE shall be liable to pay such arrears together with interest thereon Q24% p.a. till the date of payment The computation shall be on the basis of 360 day year comprising twelve 30 day months. It is further agreed, if such arrears remain but standing beyond 60 days, then such non-payment shall constitute a Material Breach as defined in Clause VIII (i) below. It is also agreed that in case such arrears remain outstanding beyond 60 days, then the LICENSOR shall be at liberty to disconnect all services, including electricity and water supply to the Licensed Premises." 55. We have carefully gone through the relevant clauses of agreement. It is clear from the above clauses that as per the contractual obligation the assessee is required to incur lot many expenses which would be significantly higher than the expenses that would have been incurred if the assessee would stop its activities and be just a mere lessor. Thus the work of the assessee not gets over once building constructed and given on leases. The business of the assessee is managing and maintaining the mall so the footfall of the customer will always increase. The one of the phase of building called "Palladium....
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....lated by the learned AO on the basis of revenue was argued to be completely devoid of any merit and accordingly needs to be set aside. Revenue of the assessee may undergo change due to numerous internal as well as external factors but that will not and should not impact the allowability of its legitimately claimed expenses. For e.g. on the basis of facts stated above, how the AO can proceed to allocate security expenses which are completely recovered by the assessee in its CAM charges and offered as income under business head. Accordingly, the moot issue is that the assessee's business is a consolidated and interlinked one and hence disallowances made by allocating from one head to another would be completely devoid of merit. 59. Reliance was placed on the following judicial pronouncements in support of the contentions that no allocation can be made in case of a consolidated business:- * 56 ITR 77- CIT v/s Indian Bank (SC) * 242 ITR 250 - Rajasthan Warehousing Corpn Ltd v/s. CIT(SC) * 55 ITR 17 - CIT v/s Chugandas & Co. (SC) * 32 ITR 688 - United Commercial Bank v/s CIT(SC) * 82 ITR 452-CIT vs/ Maharashtra Sugar Mills (SC) 60. As p....
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....xpenses incurred u/s 37(1) of the Income Tax Act. 63. On the other hand learned D.R relied on the orders of the lower authorities and justified the view taken by AO for proportionately disallowing the expenses based on respective revenue receipt by assessee. 64. We have considered the rival contentions and found that disallowance of legal and professional expenses of Rs. 2,36,30,828/-, was made by AO out of a sum of Rs. 4,28,91,270/- claimed by assessee as Legal and Professional fees being incurred for business purposes. 65. The Assessing Officer disallowed out of total claim the payment made to M/s. Jones Lang Lasalle Meghraj Property Consultants Pvt. Ltd. amounting to Rs. 1,17,45,666/. Out of the other expenses of Rs. 3,11,45,604/-, Assessing Officer proportionately disallowed in the ration of 38.16%, which works out to Rs. 1,18,85,162/-. Thus out of total claim of expenses of Rs. 4,28,91,270/-, the Assessing Officer had disallowed a sum of Rs. 2,36,30,828/-. By the impugned order CIT (A) confirmed disallowance of Rs. 1,63,67,309 and deleted disallowance of Rs. 44,82,147/-. Against this order of CIT (A) both assessee and revenue are in appeal before us. 66. ....
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....s India.com 7,75,877 Fees for Tie up with the job portal 2. Catalyst consulting 3,36,494 Consultancy fees for Recruitment consultants 3. Rite Choice Consultants Pvt. Ltd., 1,50,000 Consultancy fees for Recruitment consultants 4. S & S Manpower Consultants 1,80,200 Consultancy fees for Recruitment consultants Total (B) 1,38,10,472 Other small items below 50,000 ( C) 16,30,951 Total (A+B+C) 3,11,45,604 68. As per the breakup available on record we find that the amount has been paid on ground of tax consultancy charges, company law matters, internal audit fees, advisory matters, consultancy in relation to indirect tax matters, legal fees for appearing and conducting filing vakalatnama suit No. 59/68 of 2008, legal fees for appearances on various law matters, legal fees for attending court matter, professional fee paid for appearing before the Commissioner of Central Excise, legal charges for various conference, professional charges for attending to clients representatives for various legal issues, payment made to Chartered Accountants, professional fees in connect....
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....lso disallowed salary and directors remuneration by allocating the same to the income from house property amounting to Rs. 1,80,04,502/-. 72. Rival contentions have been heard and record perused. From the record we found that the assessee in its Profit and Loss Account debited Rs. 5,48,98,019 as aggregate of staff cost and remuneration to directors. Out of the same, a sum of Rs. 77,16,410 was already disallowed by the assessee as unpaid gratuity and leave encashment. Out of the balance amount of Rs. 4,71,81,609, Ld.AO applied the proportion of 38.16% and accordingly disallowed a sum of Rs. 1,80,04,502 as being proportionately related to income from house property. 73. We have already observed hereinabove the basic structure as well as the income components of the appellant's business. The assessee receives rental income from these stores / shops and offers the same under the head "Income from House Property" and also service charges which is offered under the head of "business income". In regards to the employee cost of Rs. 5,48,98,019 we found that the said expenses consists of salaries paid to administration staff, operational staff, staff cost related to garment b....
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....correct. 76. In view of the above discussion, we found that the assessee has proved the entire gamut of the appellants business activities which is a composite one. Expenses on account of director remuneration are indivisible cost which cannot be linked to any particular activity of the assessee company. Directors of the company are managers who form the strategic vision of the company and they are responsible for the overall growth of the company. Their remuneration is incurred irrespective of nature of income earned by the assessee company. The said expenses cannot be said to be incurred for any particular activity of the assessee company. 77. We also found that the assessee has a combined financial and admin team. The major focus of the staffs was upon the actual recovery of common facility as per facility provided to the tenants. Practically what is required for the house property income is to recover the rent and account the same. For working the same, there is no requirement of highly qualified person the same can be done by the any lay man. Keeping in view these peculiar facts and circumstances of the case, we direct the AO to restrict the disallowance of staff cost to....
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.... expense as 38.16% allocable to Income from house property and on the other hand the learned AO considers entire 100% expense of repairs to building/machinery/others all allocable to income from house property. So the AO is of the view that no repairs are required for the earning service charges. How can the same even be contemplated? Just a cursory glance at the above reproduced portion of the lease agreement will reveal that the repair expense is absolutely essential to earn CAM charges. 83. We have carefully gone through the Lease agreement so placed in paperbook which clearly provides for common area maintenance to include regular cleaning of the common areas of Courtyard, including the said Mall and elevation of the building outside the Licensed Premises. Regular repairs and maintenance of the said mall. Thus, it is clear from various clauses of lease agreement that the assessee is responsible for-regular upkeep of the common areas of the mall. However, the assessee is not responsible for the repairs inside the leased premises i.e. the shop in the mall. It is the portion other than leased portion which is the responsibility of the assessee. And the assessee earns CAM charge....
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....rect link between the assessee's business activity of Common Area maintenance. In no way the same can be linked to the earning of income from house property. 87. Before parting with the matter it is also pertinent to note that while computing the total income, the assessee has suo-moto disallowed 70% of total repairs pertaining to the building repairs. Hence, the assessee disallowed the proportions of building repairs amounting to Rs. 9,95,951 being related to let out portions out of the total building repairs of Rs. 14,22,787. It is important to note that the same ratio is already accepted by the department in the earlier years and there was no addition made by the department on accounts of repair and maintenance. Even on the principle of the consistency, how can the assessing officer take a new view to disallow the repair and maintenance at 90%. In view of the above facts and circumstances, we direct the AO to restrict the disallowance of repairs of building to the extent of Rs. 9,95,951/- as offered by assessee. 88. Next grievance of the assessee, relates to disallowance of expenses under head advertisement/sales promotion, by reallocating the same from house property....
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....0 Model coordinator for events Media Fusions 13,70,704 Movable hoardings Paprika Media Pvt. Ltd., 14,43,000 Advertisement provided in magazines RMG Connect 25,70,291 Relationship management with brand Tbwa Anthem Pvt. Ltd., 22,35,575 Advertising agency Tea Promotions & Events Pvt. Ltd., 16,30,975 Event Organiser 92. The above list is evidence of the fact that the entire expenses is incurred for promoting the business activity of the assessee. It can never be allocated to a particular revenue stream as done by the AO at the assessment stage. 93. From the record we also found that the expenditure incurred for the advertisements and promotional activities were recovered from the tenants and such recoveries were included under the head Service Charges. Clauses for recovery of such expenses from the tenants are evident from terms of lease agreement. 94. Thus as per clause of lease agreement, the assessee is responsible for advertising its mall as over and above of rental charges Rs. 5 per sq feet is collected from the licensee. Further the recovery of such charges are offered for tax under the head business and profession in form ....
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....g expenditure to disallow in the proportion of income from total revenues operations (Rs. 90,14,94,940) vis-à-vis income offered for the House property (Rs. 53,05,30,316). Particulars Amount General and miscellaneous Expenditure 37,62,613 Office Expenditure 53,97,415 Total 91,60,028 100. After verifying the details of expenses, we found that the said miscellaneous expenditure is the combination of various nominal expenditure incurred by the assessee during the year under consideration. However, the Assessee has suo motu disallowed Rs. 53,90,682. Further, looking at the nature of miscellaneous expenditure it can be inferred that these expenses arc incurred to carry out day to day business activities and have no nexus with, earning of rental income. 101. On perusal of the details of expenses so incurred we found that the assessee has debited expenses for Books, subscription & periodicals, conveyance, vehicle, secretarial expenses which are solely for business purpose. Moreover these expenses cannot be said to have anything to do with earning of rental income. Further the assessee has already suo-moto disallowed office expenses and general expenses....
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....nder HI 3 vi. e. Regular repairs and maintenance of the said Mall. f. Expenses towards utilities as diesel and other consumables that are required for operating the said Mall. g. Cost of the mall management staff expressly working for the said Mall" 107. The highlighted portion clearly establishes that the assessee is responsible for providing security in the common areas of the mall i.e. providing overall general security to the mall as a whole. It is to be noted that the assessee is not responsible for providing security inside the leased premises i.e. the shop in the mall. It is the portion other than leased portion which is the responsibility of the assessee. And the assessee earns CAM charges for the same. Accordingly, no amount of the security charges is allocable to income from house property as the same to the lease house property is no way responsibility of the assessee. Eg. if M/s Pantallons (tenant) keeps a security guard or inserts CCTV cameras inside the leased premise than M/s Pantallons will pay for the same and not the assessee. So the question of assessee incurring security expenses for the rental Income doesn't arise. 108. From....
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....judgement of Apex Court in the ease of Radhasoami Satsang v. CIT. 193 ITR 321 (SC) wherein it has been held as under : "We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where-a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no change, it was in support of the assessee. We do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was ju....
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....a). The finding recorded by CIT (A) with regard to availability of interest free funds vis a vis investment made by assessee are as per material on record which has not been controverted by learned DR by bringing any positive material on record, accordingly we do not find any infirmity in the order of CIT (A) for deleting disallowance of interest under Rule 8D2(ii). 114. Now coming to the disallowance sustained by CIT (A) under Rule 8D2 (iii), we found that assessee has offered disallowance of Rs. 6,25,294/- and given detailed working, however without recording any satisfaction to the effect that working given by the assessee is not correct as per Books of Accounts, the AO has made disallowance by invoking Rule 8D. As per our considered view, while making disallowance under Rule 8D, Assessing Officer is required to record his satisfaction regarding the correctness of the claim of the assessee made before him. 115. For these purposes, reliance can be placed upon following decisions. - M/s Graviss hospitality Ltd v DCIT in ITA 3542/M/2013 (AY 09-10) - 3DPLM Software Solutions Ltd. v ITO in ITA 5736/M/2012 (AY 08-09) 116. We also found that major investments....
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.... not form part of the total income. Such a disallowance can be made/quantified in accordance with the provisions of sub-section (2) of section 14A. In other words, disallowance u/s 14A(l) can only be triggered, once the conditions laid down under subsection (2) are satisfied. To work out the disallowance under Rule 8D(2) and for its. quantification, the Assessing Officer has to first examine the accounts of the assessee and also correctness of the claim and thereafter, if having regard to such accounts and claim of the assessee, the Assessing Officer is not satisfied either with the. correctness of the claim made by the assessee or by the claim that no expenditure at all has been incurred, then only he can resort to Rule 8D. Thus, the 'satisfaction' of the Assessing Officer is a mandatory requirement to trigger the computation mechanism of Rule 8 D. 120. However, in the instant case before us assessee has given complete break-up and detailed of the expenditure, details of its account, nature of expenditure so incurred so as to indicate that expenses were incurred had direct relation with earning of business income and given reasoning as to why such expenditure cannot be ....
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....assessment order the A.O. has not given any reasons for making the disallowance except stating that the appellant company has substantial funds in its own position and therefore, there is no need for borrowing funds. There is nothing brought on record to hold that the funds borrowed have been invested for the purposes other than business. The A.O cannot step into the shoes of the businessman and decide on the merits of the borrowed capital vis-à-vis own capital. In view of the above the addition made by the A.O is hereby deleted. 124. We have considered rival contentions, the finding recorded by CIT (A) to the effect that funds were borrowed for the purpose of business and also invested for the purpose of business have not been controverted by DR by bringing any positive materials on record. Under these circumstances merely because assessee was having substantial own funds, will not disentitle him from claiming deduction of interest on the funds borrowed and invested for the purposes of his business. From the record, we also found that interest was paid on overdraft facility utilities by the company to maintain liquidity and there is no provision in the Act which prohibit....
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....ddition made on account of deemed rent under Section 23(1)(c). We have already decided the issue in the assessment year 2009-2010. Following the same reasoning, we delete the addition made by AO under Section 23(1) (c) amounting to Rs. 28,84,560/-. 129. Assessee has taken ground for disallowance of legal and professional charges by allocating the same under the head Income from House property. 130. We have considered rival contentions and found that during the year assessee incurred an expenditure of Rs. 6,17,48,026 on account of legal and professional expenses. During the assessment proceedings, the A.O. sought details of these expenses which were furnished to the A.O. The A.O. noted that out of the said expenditure, a sum of Rs. 1,83,27,392 has been paid to a party known as M/s. Jones Lang Lasalle Meghraj Property Consultants Pvt.Ltd. The A.O. after going through the expenses concluded that this expenditure has been incurred on development of property to be given on rent or for property already given on rent. The A.O. further observed in the assessment order that the nature of the expenses shows that the expenditure is not incurred for the purpose of business....
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....ification for the disallowance of Rs. 3,46,03,594/- upheld by CIT (A) out of total disallowance of Rs. 4,26,60,315/-. Thus out of total disallowance of Rs. 4,26,60,315/- made by AO and Rs. 3,46,03,594 upheld by CIT(A). We further reduce the disallowance to Rs. 2,43,32,923/-. Thus we further reduce the disallowance by Rs. 1,02,70,671/- as per the detailed reasoning given by us hereinabove while dealing with A.Y. 2009-2010. We further allow legal expenses of Rs. 1,02,70,671/- as having been incurred for the purpose of business income. We direct accordingly. 132. The assessee is also aggrieved for disallowance made under Section 14A read with Rule 8D. As the facts and circumstances during the year under consideration are same, wherein assessee was having sufficient interest free funds available as per the audited balance sheets, which is more than the investment so made, following the decision of jurisdictional High Court in the case of Reliance Utilities Power Limited, we do not find any merit for disallowance of interest. So far as disallowance of other expenditure under Rule 8D2(iii) is concerned, following the reasoning given hereinabove, we d....
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.... disallowed miscellaneous expenses of Rs. 1,74,22,197/- by observing that these are pertaining to income from house property. We found that assessee has already allocated expenses pertaining to income from house property. The department has also accepted consistently the expenditure allocated for house property from assessment year 2006-2007, 2008-2009. Following principle of consistency, we do not find any merit for making a separate disallowance of these expenses with regard to allocation of miscellaneous expenses of Rs. 1,74,22,197/-. Based on the reasoning given in A.Y. 2009-2010, we direct the AO to delete the disallowance of Rs. 1,74,22,197/-. 138. AO has also made a disallowance of service charges by reallocating Rs. 1,73,10,577 to income from house property. We found that assessee has made a specific recovery for the same from all its tenants as service charges and offered the same as business income, the expenditure if any incurred on account of service charges is required to be reduced out of such business income and no separate disallowance under the head income from house property is warranted. Following the reasoning given by us in the A.Y. 2009-....
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....ssions filed by the appellant have been carefully considered. 18.1 The issue under consideration was already decided in the appellant's own case for the Assessment Years 2006-07, 2007-08 and 2008-09 vide appellate no. CIT(A)-38/1T228/2013-14 dated 19.09.2014 for the A.Y. 2006-07, and vide appellate nos. CIT(A)-38/IT-229 & 230/2013-14 dated 22.09.2014 for the assessment years 2007-08 and 2008-09. It was mentioned in those orders that since interest free funds available with the appellant company was sufficient to care of the bogus purchases, no presumption could be made on the ground that the interest bearing funds have been used for such purposes. Therefore, the issue was decided in favour of the appellant. Following my own decision in the earlier years, the disallowance of Rs. 6,16,626/- made by the Assessing Officer is hereby deleted." 143. We have considered rival contention. The finding recorded by CIT (A) to the effect that interest free funds available with the assessee company was sufficient to take care of purchases, no presumption could be made on the ground of interest bearing funds have been used for such purchases. This finding of CIT (A) has not been co....