TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1024
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....s. 15,40,235. 1.2 In doing so, the Id. CIT(A) further erred in denying the Appellant's claim of restricting the s. 14A disallowance to the extent of exempt income; based on the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. and Wipro Ltd. 1.3 The Appellant prays that the disallowance under section 14A be restricted to Rs. 15,40,235 being the amount of exempt income. Ground II: Disallowance of Rs. 1,02,73,260 being Maintenance Expenses (Versova) - BSRCL 2.1 On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the maintenance expenses related to flats in the Versova Property, allocated to the share of the land owner, although related to the Appellant's real estate business do not qualify as revenue expenses under section 37(1) on the alleged ground that they are linked to a capital asset and a legal dispute. 2.2 The CIT(A) further erred in holding that the liability, in respect of the expenses which are held to be not allowable, has not crystalised yet and that it is a contingent liability and not an ascertained one. 2.3 The Appellant prays that a sum of Rs. 1,02,73,260 being Maintenance Expe....
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....sfied with the correctness of the disallowance made by the taxpayer. The learned CIT(A) further held that the AO acted in accordance with law and correctly applied the provisions of Rule 8D of the Rules. Accordingly, the disallowance under section 14A r.w. Rule 8D of the Rules amounting to Rs. 1,91,18,144/- was confirmed by the learned CIT(A). Being aggrieved, the assessee is in appeal before us. 6. We have considered the submissions of both sides and perused the material available on record. In the present case, there is no dispute regarding the fact that the assessee earned dividend income on units of mutual funds amounting to Rs. 15,40,234/-, which was claimed as exempt while filing the return of income. There is further no dispute regarding the fact that the assessee suo motu computed the disallowance under section 14A r.w. Rule 8D of the Rules amounting to Rs. 1,91,18,144/-. However, we find that before the lower authorities, the assessee on the basis of judicial pronouncements, raised a plea that the disallowance under section 14A of the Act should be restricted to the dividend income which was claimed as exempt by the assessee. 7. We find that the Hon'ble Supreme Court in ....
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....er the Act. The law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic). It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable in law." 10. We further find that the Hon'ble Jurisdictional High Court in Balmukund Acharya vs. DCIT, reported in (2009) 310 ITR 310 (Bom), held that if any assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that the only legitimate taxes due are collected. The relevant findings of the Hon'ble Jurisdictional High Court, in the aforesaid decision, are reproduced as follows: - "31. Having said so, we must observe that the Apex Court and the various High Courts have ruled that the authorities under the Act ar....
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....e maintenance expenditure amounting to Rs. 1,02,73,260/-, which was suo motu disallowed by the assessee. The AO, vide assessment order, rejected the submission of the assessee by placing reliance upon the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. vs. CIT, reported in (2006) 284 ITR 323 (SC). 14. The CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and upheld the disallowance of maintenance expenses, by observing as follows: - "5.5 Disallowance of Maintenance Expenses (Versova) - BSRCL of Rs. 1,02,73,260 The appellant claimed a deduction of Rs. 1,02,73,260 as maintenance expenses related to the Versova property. These expenses were incurred in connection with a legal dispute involving the Bombay Slum Redevelopment Corporation Limited (BSRCL). The appellant contended that the maintenance expenses were a necessary business expenditure and should be allowed as a deduction. The Assessing Officer (AO) disallowed this amount, asserting that it was not an allowable business expense. The appellant argued that the expenses incurred were directly related to maintaining and managing the Versova property, which was integral to hi....
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....under a Development Agreement dated 10.03.2003 entered into by the assessee with Bombay Slum Redevelopment Corporation Ltd. ("BSRCL"), the assessee constructed a building known as Bay View. The Occupancy Certificate in respect of Wings A and B of the building were received by the assessee on 09.01.2012. Under the terms of the Agreement dated 10.03.2003, 39 flats in the said building were allocated to BSRCL and 48 flats were allocated to the assessee. All the 48 flats were sold by the assessee, and the profit arising on the sale was offered for taxation in the assessment year 2013-14. However, the possession of flats allotted to BSRCL was not handed over to BSRCL due to a dispute between the assessee and BSRCL. As per the assessee, the said dispute was sent for arbitration, and an Arbitral Award was passed on 07.09.2018 by the Ld. Sole Arbitrator. In an appeal filed by the BSRCL against the aforesaid Arbitral Award, the Hon'ble Bombay High Court set aside the Arbitral Award. Aggrieved by the order passed by the Hon'ble Single Judge of the Hon'ble Bombay High Court, the assessee preferred an appeal before the Division Bench of the Hon'ble Bombay High Court, which was pending consider....
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.... the material available on record, we find that the learned CIT(A), vide impugned order, upheld the disallowance of interest on delayed payment of TDS under section 37(1) of the Act on the basis that the interest paid on delayed payment of TDS arises because the assessee failed to comply with statutory requirements and it is not an expenditure incurred for the primary purpose of conducting business operations. 19. We find that the Hon'ble Bombay High Court in Ferro Alloys Corporation Ltd. vs. CIT, reported in (1992) 196 ITR 406 (Bom), held that the interest levied for delayed payment of TDS is not an allowable business expenditure. The relevant findings of the Hon'ble Bombay High Court, in the aforesaid decision, are reproduced as follows: - "At the instance of the assessee, the following question of law is referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the claim for deduction of interest levied under section 220(2) of Rs. 6,03,168, interest levied under section 215 of Rs. 1,38,506 and interest levied under section 201(1A) of Rs. 66,590 was rightly rejected as not allowable ....
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....el for the assessee. 15. The counsel for the assessee in support of his submission that the interest paid by the assessee was merely compensatory in character besides relying on the case of Mahalakshmi Sugar Mills Co. (supra) also relied on the decisions of the Apex Court in the cases of Prakash Cotton Mills (P.) Ltd. v. CIT[1993] 201 ITR 684 / 67 Taxman 546 ; Malwa Vanaspati & Chemical Co. v. CIT[1997] 225 ITR 383 and CIT v. Ahmedabad Cotton Mfg. Co. Ltd. v. CIT[1994] 205 ITR 163. In all those cases, the Court was concerned with an indirect tax payable by the assessee in the course of its business and admissible as business expenditure. Further, liability for interest which had been incurred by the assessee therein was regarded as compensatory in nature and allowable as business expenditure. 16. The ratio of those cases is not applicable here. Income-tax is not allowable as business expenditure. The amount deducted as tax is not an item of expenditure. The amount not deducted and remitted has the character of tax and has to be remitted to the State and cannot be utilised by the assessee for its own business. The Supreme Court in the case of Bharat Commerce & Industries Ltd. ....