TaxTMI 
TaxTMI 
2016 (10) TMI 1405
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....ing 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 1,84,617 Total 75,98,514 37,01,714 6,17,594 Particulars Expense Disallowed ....
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....ails 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 passed u/s. 143(3)/143(3) read with section 147 of the I.T. Act. 8. Common grounds have been taken in all the years under consideration. Therefore all the appeals are he....
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....leted. 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 property of Rs. 86,03,116 may kindly be deleted. Ground No. 8: 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 addition done by AO an amount of Rs.....
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....ent 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 into income escaping assessment. 14. It is clear from the record that assessment was reopened beyond the period of 4 years since notice u/s 148 was issued on 29-3-2012. If the assessment has to be reopened beyond four years, then there must be a failure on the part ....
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.... 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 there is no new material found 18. Furthermore merely on the basis of change of opinion with respect to same set of facts, assessment cannot be reopened. Our view is supported by the decisions of Hon'ble Jurisdictional High Court in the case of G.N. Shaw (Wine) Pvt. Ltd. Vs. ITO (260 ITR 513), and Ho....
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....butable 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 figures which were already available before the A.O. at the time of completion of the assessment u/s. 153A r.w.s 143(3) of the Act. No new materials or facts have come to the notice of the A.O. Thus, on the same set of facts and material, now there is a change in the A.O.'s opinion and this change of opinion has been taken as reas....
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....d 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. 65,70,03,3601- for A.Y 2007-08 and Rs. 46,06,80,500/- for A.Y. 2008-09 respectively. 27. It was contended by learned AR that the formation of reason to belief by the A.0 for reopening of assessment cannot be based on change of opinion. It was further submitted that the material facts relevant for the assessment have been already available with the ....
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....ea 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. However, pursuant to the search proceedings in the assessee's premises in the month of February 2008, the assessee's case was centralized and notice u/s. 153A dated 03.10.2008 was served on the assessee. In response to the above notice, the Return of income was filed by assessee on 28.11.2008. The case was selected for scrutiny vide Notice u/s. ....
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....usion 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 opinion could not be a valid ground for issuing a notice u/s. 148 of the Act. 35. The ITAT Mumbai in the case of Audco India Ltd. v/s ITO (39 SOT 481) held that where it was clear from the original assessment orders as well as order made by the appellate authority that the Assessing Officer was well aware about the primary facts, viz., the claim made by the assess....
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....ngs 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 sq.ft This property could not be let out as the assessee could not find a competitive customer for renting out the same. The same was subsequently let out. Total 4,368 sq.ft. 41. The AO proceeded to compute the annual letting value of the above 4,368 square feet by applying an ad hoc rental value of Rs. 119 thereby adding Rs. 62,37,504 to the total income of the assessee. A.O. ig....
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....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. Accordingly AO is directed to delete the same. 47. Rival contentions have been heard and record perused. Facts in brief are that the Assessing Officer had bifurcated and disallowed certain expenses claimed by the assessee as being incurred in respect of the business Income by treating the same as having being-incurred towards the earning of rental Income. The additions have been made under the heads legal and profession....
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....f 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 Common Maintenance Charges (CAM). The break up of the same would reflect the nature of the business activities of the assessee - Service Charges Break up Particulars Amount (Rs.) Common Area Maintenance, Marketing Promotion, other amenities viz., water drainage, supervision etc., 25,11,99,479 Electricity Charges 3,65,73,471 Prop Tax received 2,25,33,242 Parking 15,51,806 Other 3,40,243 Service Charges 31,21,98,241 51. It is clear from the above that th....
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....m 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 Minimum Guaranteed License Fees or License Revenue Share as the case may be, the following amounts shall be payable to the UCENSOR on or before the 7th day of... each and every month. i) Common Area Maintenance ("CAM") charge for the entire period of 36(thirty six) months commencing from June 1, 2008 to May 31, 2011 @ Rs. 15/- (Rupees Fifteen only) per sq. ft. on built up area, amounting to. Rs. 35,595/- (Rupees Thirty Five Thousand Five Hundred and Ninety Five only) per month in advance subject to deduction of tax at source. CAM charges ....
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....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 for payment on or before the 7th day of each month. This money shall be used for the joint promotion of the LICENSEE and the other occupants at the said Mall by the LICENSOR, at ..its sole discretion. It is clarified that this will be for the overall promotion of the said Mall, generating incremental traffic/ business to all occupants. The said Mall's marketing program would be intimated to all occupants in advance, on a periodic basis. v. Parking charges: The LICENSOR is evolving a suitable system of parking for said Mall. The details of the scheme will vary and the relevant charges will be modified. Presently the LIC....
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....actual 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" was developed for international luxury brands. Palladium is a one of a kind mall in India which houses more than 90 premium brands from world's leading fashion houses. Hence, to retain the said brands the assessee had to have incurred the expenditure in relation to maintain the mall as per the requirements of the international brands. 56. We had also carefully gone through the order of the AO and found that the AO firstly picked certain heads of expenses from the P&L account and allocated it to the income from house property thereby disallowing the claim of the said expenses against the business income. The majority of the allocation was done on revenue basis i.e. the revenue of the company during th....
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.... 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 per learned A.R under the provisions of section 37 of the Act, the entire expenditure be held to be allowable as a deduction since the assessee had even offered service charges to tax under the head 'Income from Business. In 'case the deduction for expenses is not allowed then there will be a case, wherein the assessee won't be given the deduction for the expenses incurred by 'the assessee for the purpose of its business, which is not the intention of the Income Tax Provisions. 61. Our attention was also invited to the Tribunal order in assessee's own case for A.Y. 2000-01, wherein the Tribunal has given a finding to the effect that the assessee's business is one consolidated business and the allocation of expenses based on the revenues cannot be ma....
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.... 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. After going through the nature of service rendered by this professional, we found that the expenditure of Rs. 3,11,45,504/- was related to the business activities of the assessee. There are no direct nexus between those expenditure and rental Income of the assessee. Further, there would have been no change in the legal expenditure if the assessee company did not earn the Income from house property. Accordingly the legal expense of Rs. 3,11,45,604/- was allowable as business expenditure. 67. We have carefully gone through the detailed breakup of the said expenditure of Rs. 3,11,45,604 which had clearly revealed the exact nature of the said expenditure and also substantiate as to why the action of treating the same as incurred for the purposes of earning House property Income is incorrect. Sr....
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....nference, professional charges for attending to clients representatives for various legal issues, payment made to Chartered Accountants, professional fees in connection with attending to stamp duty adjudication matters, which are essentially in the nature of services rendered for earning income offered under the head business income. 69. We found that the headings for the bifurcation i.e. the expenses specifically no related to rental Income as well as Income mandatory for running of business clearly reflects the rationale for not allocating the expenses to earning of income from the house property. The nature of expenses clearly establishes the purpose for the incurrence of the expense and it is self evident that the same doesn't relate to the earning of income from house property. Only on the basis of the rationale that the income of the assessee is taxed in two heads of income, there is no justification in the AO's stand to apportion the expenses between income from house property and income from business and profession. There was no tangible evidence before the Assessing Officer to show that the above expenses were specifically incurred for earning income from house pr....
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....st 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 business etc. The detailed function wise breakup of the said expenses is as under :- Particulars Amount ACCOUNTS & FINANCE 13,758,739 ADMINISTRATION 685,077 PURCHASE & STORES, RETAIL SHOP AND SALES 1,534,079 LEGAL 2,648,132 MARKETING 2,225,717 OPERATIONS VIZ SUPERVISION, WATCH, WARDS & PEONS ETC. 9,174,601 74. With regard to the salary of the operational staff of Rs. 91,74,601 out of the total salary expense, we found that the said staff is engaged for the upkeep and maintenance of the mall. The liability to maintain mall arises out of the contractual obligations. In respect of the same, the assessee clearly earns CAM charges which are offered under the business head. Accordingly, how the same can be considered for the purposes of house property. The entire mall management exercise starts after the activity of leasing has ended. However, the AO had allocated the same to income from house property without cogent reasoning. 75. We have carefully perused the record with regard to balance of expenses and found that sal....
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....view these peculiar facts and circumstances of the case, we direct the AO to restrict the disallowance of staff cost to the extent of Rs. 12.00 lacs being incurred for earning rental income. Accordingly, disallowance under the head staff cost is restricted to Rs. 12.00 lacs. 78. The Assessing Officer has also disallowed repairs and maintenance expenses by reallocating Rs. 1,52,76,903/-to income from house property. 79. We have considered the rival contentions and found that during the captioned assessment year assessee had debited a total sum of Rs. 1,80,80,948 as repair expenses in its P&L account. The break of the repair and maintenance is as under:- Particular Amount Repair to Buildings 14,22,787 Repair to Machinery & Vehicles 57,71,550 Other repairs 1,08,86,611 Total 1,80,80,948 80. The treatment of the above expenses by the assessee himself and the subsequent disallowance made by the Assessing Officer in the assessment order is as follows :- Particulars Disallowance Basis Considered by assessee himself as pertaining to House property -Suo-motu disallowed by assessee 9,95,951 70% of the repair to buildings Additional disallowance 1,52,76,903 &n....
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.... the responsibility of the assessee. And the assessee earns CAM charges for the same. Accordingly, no portion of the repairs is allocable to income from house property as the repairs to the lease house property is no way responsibility of the appellant. Eg. if M/s Pantallons (lessee) carries out expenditure for repairing of lights in its rented premises than M/s Pantallons (lessee) will pay for the same and not the assessee. So the question of assessee incurring repair expenses for the rental income doesn't arise at all. 84. As per our considered view disallowance of any expense under business and profession can only be made if such expense is carried out for earning income from any other head or earning exempt income. However in the assessee's case the same does not hold true. The assessee has incurred repairs and maintenance in order to keep its mall in an arrangement which will attract customers and for general maintenance of common area. Further the said expenses are carried out for maintenance of common area which is part of the mall and not of shops/premises from which rental income is earned. The breakup of other repairs amounting to Rs. 1,08,86,611/- which clearly show....
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....unting to Rs. 1,71,53,581/-. 89. Rival contentions have been heard and record perused. From the record we found that during the year under consideration, the assessee had debited in the profit & loss account a sum of Rs. 4,49,51,731 towards advertisement and sales promotion. During the course of the assessment proceedings the assessee submitted the details before the Ld. AO. In the assessment order, the Ld. A0 applied the proportion of 38.16% and accordingly disallowed a sum of Rs. 1,71,53,581 as being proportionately. By the impugned order the CIT (A) had confirmed the action of AO. It was argued by learned A.R that there is no justification in allocating this expenditure between the service income and rental Income since the promotional expenditure related to the mall is recovered by the assessee and offered for tax under the head of the business income. However, the A.O. ignored the assessee's submissions and bifurcated the said expenses in ratio of the income earned. The A.O.'s action in bifurcating this expenditure between the business income and rental income is without merit. The bifurcation has been done by the A.O. mechanically without appreciating the facts. The....
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....ow can expenses relate to such income be disallowed and allowed under any other head. Accordingly we do not find any justification for the disallowance of advertisement and sales promotion expenses. However, keeping in view the fact that such advertisement also helps the A.O. in getting regular tenants, we direct the AO to restrict the disallowance to the extent of Rs. 12 lacs. We direct accordingly. 95. The Assessing Officer has also disallowed expenditure under the head of other miscellaneous expenses by reallocating Rs. 31,38,876/- to the income from house property. 96. We have considered rival contentions and found that assessee had already disallowed a sum of Rs. 53,90,682 as Miscellaneous Expenditure directly related to earning of house property income; however disregarding, the submission of the assessee disallowing Rs. 53,90,682/- the .Ld. AO had further disallowed an additional sum of Rs. 31,38,876 in the ratio of income earned from business and house property. 97. We have considered the rival contentions and found that during the year under consideration, the assessee has debited a sum of Rs. 2,23,52,092 in the profit and loss account towards Miscellaneo....
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....do not find any justification for further disallowance of miscellaneous expenses by the Assessing Officer amounting to Rs. 31,38,876/-. 103. The Assessing Officer has also disallowed security charges by reallocating the same to income from house property amounting to Rs. 62,87,352/-. By the impugned order the CIT (A) had confirmed the action of AO. 104. We have considered the rival contentions and found that during the year under consideration, the assessee had debited in the profit & loss account a sum of Rs. 1,64,76,289 as Security charges. In the course of the assessment proceeding the assessee submitted the detailed submission before the Ld. AO. And the Ld.A0 applied the proportion of 38.16% and accordingly disallowed a sum of Rs. 62,87,352 as being proportionately related to income from house property. 105. We found that the said expenditures were recovered from the tenants and such recoveries were included under the CAM Charges. Thus, the expenditure is an allowable deduction and no part thereof could be apportioned against house property income. 106. Furthermore, the said expenditure has been incurred for services rendered and all the more, the expenditure has ....
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....n activity for the protection of the entire business of the assessee and accordingly the Assessing Officer has wrongly linked the same to income from house property. Even as per the contract the assessee used to recovers the same as well from all its tenants as Amenities charges, which-is offered to tax under the head Service Charges and accordingly such expenses can also not be allocated to earning of rental income. 109. In addition to the above, after going through the entire terms and conditions of the lease agreement, we found that the assessee has received the income in addition to the rental activity in respect to providing the additional services and amenities like common area maintenance, electricity for common areas, promotions and advertising, furniture fixtures, security on a cost plus basis. The assessee incurs expenditure and recovers the same from the tenants based on an agreed rate so as to recover its costs; the ancillary 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". The assessee undertakes manufacturing and trading of garments and undertakes vario....
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....n the judgment of Orissa High Court In the case of CIT v. Belpahar Refractories Ltd., 128 ITR 610, wherein Court has been held as under: "Precedent keeps the law predictable and so more or less ascertainable- A lawyer cannot always say with confidence exactly how a judge will decide a point of law. But he can put the decision between fairly narrow limits. In any matter of novelty he will know that the boldest judge will not move more than a small distance beyond that which has already been decided." We think it unwise to deviate from the earlier conclusions and would, therefore, answer the two questions referred to us against the assessee by saying." 111. In view of the above facts and circumstances, the Assessing Officer has not justified in disallowing the security charges by reallocating the same to income from house property. 112. AO has also made disallowance under Section 14A read with Section Rule 8D on the plea that assessee has earned dividend income which is exempt from tax. By the impugned order CIT (A) deleted disallowance of interest by observing that assessee is having own funds as per the balance sheet amounting to Rs. 14,99,79,91,752/- which is more than ....
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....ecisions: (a) M/s Garuiare Wall Ropes Ltd vs Addl. CIT in ITA 5408/M/2012 (AY 09-10) (b) CIT v Oriental Structural Engineers Put Ltd in ITA 605/2012 (Delhi High Court); (c) M/s JM Financial Ltd vs AddL CIT in ITA 4521/Mum/2012(09-10) 117. Learned AR also contended that the disallowance if at all under clause (iii) of Rule 8D is to be made, then only those investments are to be considered on which, dividend has been received during the year. In support, he relied upon following decisions: ACB India Ltd v ACIT reported in 374 ITR 108 ACIT u M Baskaran.inITA 1717/M/2013(AY 09-10) CIT u Corrtech Energy (P) Ltd. reported in 272 CTR 262 (Guj) CIT v Holcim India (PJ Ltd. reported in 272 CTR 282 (Del) CIT v Lakhani Marketing Incl. reported in 272 CTR 265 (P&H) 118. From the record, we found that in response to show-cause notice issued by the AO, the assessee has contended that no disallowance on account of interest can be made as the assessee has huge surplus funds for making investment and there is no direct expenditure relating to earning of the exempt income and whatever indirect expenditure has been incurred, detailed break-up of expenses which are in the natu....
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....disallowance without adhering to the mandatory requirement as contained in subsection 2 of Section 14A and Rule 8D(1) will not empower the AO to make any disallowance. Under these circumstances AO is not empowered to enhance the disallowance under Section 14A over and above the amount offered by assessee. We accordingly direct the AO to restrict the disallowance to the tune of Rs. 6,25,294/-. We also found that issue is also covered by the decision of the Tribunal in assessee's own case for the assessment year 2008-2009 vide order dated 19/8/2015. 121. The AO has also disallowed a sum of Rs. 1,08,600/- as expenditure incurred for increase in share capital. As per judicial pronouncements laid down by Hon'ble Supreme Court in case of Punjab Industrial Corporation, Brook Bond India, expenses incurred for increase in share capital cannot be allowed as revenue expenditure. Accordingly, we uphold the disallowance so made by the AO and confirmed by CIT(A). 122. In the revenue's appeal, revenue is aggrieved for addition on account of Municipal Tax which was deleted by CIT (A) after recording detailed finding and basing on his decision on the order of ITAT in assesse's own case for t....
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....wance so made by AO was deleted by CITA after observing as under:- 16.0 The facts of the case, the grounds of appeal, the stand taken by the A.O in the assessment orders and the written submissions filed by the appellant have been carefully considered. This issue also came up in the grounds of appeal filed by the appellant in respect of assessment years 2003-04, 2004-05 and 2005-06. The Ld. Predecessor CIT(A), vide orders No. CIT(A)-XIXIIT-297/05-06 dated 29.05.2006 for assessment year 2003-04, CIT(A)-XI IT-25/06-07 dated 08.08.2006 for assessment year 2004-05 and No. CIT(A)-XIXlIT-63/07 -08 dated 04.01.2008 for assessment year 2005-06 has held that the expenses incurred by the appellant on foreign travel are allowable expenses. On a further appeal by the department, the Hon'ble ITAT, Mumbai Bench vide order ITA No. 375 & 571/Mum/2006, 374 & 572/Mum/2006, 373 & 573/Mum/2006, 3541 & 4773/Mum/2005, 4144 & 4578/Mum/2006, 4889 & 5409/Mum/2006 and 1097 & 1947/Mum/2008 for A.Yrs. 1997-98, 1998-99, 1999-2000, 2001-02, 2003-04, 2004-05 and 2005-06 dated 27.04.2012 has confirmed the findings given by the Ld. Predecessor CIT(A). Therefore, the expenses incurred by the ap....
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.... Rs. 1,83,27,392) is also required to be apportioned as per the revenue of the house property and other than house property. The rental income is 56.04% of the total revenues therefore 56.04% of the balance expenditure of Rs. 4,34,20,634 which amounts to Rs. 2,43,32,923 is required to be disallowed. Accordingly, the A.O. computed the disallowance at Rs. 4,26,60,315 (directly attributable to house property at Rs. l,83,27,392 + attributable to house property in revenue proportion at RS.2,43,32,923). 125. By the impugned order CIT (A) confirmed disallowance of Rs. 3,46,03,594/- both assessee and revenue are in appeal against the above order of CIT(A). 131. We have considered rival contention and found that legal and professional expenses have been incurred for whole composite business of the assessee and not for properties given on rent or being developed for giving on rent. Premises in Phoenix Mill Compound were partly let out and assessee used balance portion for its own use. The assessee receives service charges from its tenants in addition to the rent for additional services and amenities provided to the tenants along with letting out of the property. The....
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.... i.e., disallowance is restricted to Rs. 6,25,294/-. 133. Assessee is also aggrieved for disallowance of Rs. 1,08,600/- in respect of expenditure incurred for increase in share capital. Following the reasoning given in the assessment year 2009-2010, we confirm the disallowance of expenses so made by the lower authorities. 134. Assessee is also aggrieved for allocation of staff cost and Director's remuneration. Following reasoning given in the assessment year 20092010, we restrict the disallowance to the extent of Rs. 12 lacs, keeping in view the services rendered by the staff for collecting the income from house property etc., 135. The AO has also made disallowance of Rs. 3,59,29,851 on account of repairs and maintenance expenditure by observing that these are relating to income from house property. We have considered rival contention and found that assessee himself has suo-moto disallowed 70% on repairs of building. In respect of other repair charges, assessee has made specific recovery for the balance repairs i.e., repairs on machinery, furniture and other sundry repairs from all its tenants as service charges and offered as Business income which cannot be ....
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....llowing his order for assessment year 2009-2010. 140. The precise observation for CIT (A) was as under: "[15.0 The facts of the case, the grounds of appeal, the stand taken by the A.O in the assessment order and the written submissions filed by the appellant have been carefully considered. In the above submissions, the appellant explained that though it possessed its own funds, they are not always available with it for use. In the assessment order the Assessing Officer 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. The Assessing Officer cannot step into the shoes of the businessman and direct him to use the own funds as against the borrowed fund for construction purposes. In view of the above addition made by the Assessing Officer is hereby deleted." 141. We have considered rival contention. As per the fund flow statement filed by the assessee before the lower authorities, investments as well as ICDs have been deployed from the interest free surplus funds available with the company and bank O.D. had been utilised for meeting the imme....
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....llowance of claim of legal and professional charges in ITA No. 52/M/2015. Following the reasoning discussed in ITA No. 52/M/2015 we do not find any infirmity in the order of CIT (A) deleting allocation of legal and professional charges of Rs. 80,56,721/-. 145. AO has also made disallowance of Rs. 2,30,11,224/- under Section 14A. By the impugned order CIT (A) deleted disallowance of Rs. 1,02,18,714/- by following his order for the assessment year 2009-2010 wherein CIT (A) has observed that assessee was having sufficient interest free funds from the investment so made, therefore, no disallowance of interest was warranted. We have already dealt with the issue while deciding assessee's appeal for the assessment year 2009-2010. Following the same reasoning, we don't find any infirmity in the order of the CIT (A) for deleting the disallowance of interest of Rs. 1,02,18,714/-. 146. The AO has also made disallowance of interest under Section 36 (1)(iii) amounting to Rs. 2,96,70,510/- which was deleted by CIT (A) after following the order for the assessment year 2009-2010. 147. We have considered rival contention and found that out of total interest expendit....