TaxTMI 
TaxTMI 
2025 (9) TMI 555
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....come Tax Act, 1961 (the "Act") on 16.03.2021 determining total income of the assessee at Rs. 46,94,97,181/- wherein he made the following additions/disallowances : (i) disallowance out of deduction claimed u/s 80IA(4) amounting to Rs. 10,29,58,075/-; (ii) disallowance on helicopter expenses of Rs. 47,77,646/-; (iii) disallowance u/s 14A r.w. Rule 8D of the Income Tax Rules, 1962 ("IT Rules") of Rs. 22,83,215/- and (iv) disallowance on account of depreciation on luxury cars of Rs. 32,42,484/-. 3. In appeal, the Ld. CIT(A) gave full relief to the assessee in respect of the above additions/disallowances made by the Ld. AO on account of deduction claimed u/s 80IA(4), disallowance u/s 14A r.w. Rule 8D and depreciation on luxury car. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal raising the following grounds of appeal : "a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 22,83,215/- made by the Assessing Officer u/s. 14A of the L.T. Act, 1961. c) On the facts and in the circumstances of the case and in law, the Ld.CIT (A) has erred in deleting the disall....
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....further placed in the case of Ravindra Rajaram Patil in ITA No. 1070 & 1071/PN/2014 (Pune Trib.) wherein it has been held that no disallowance of interest on advances should be made when assessee has sufficient own funds. Without prejudice to the above, the assessee also submitted before the Ld. AO that if section 14A is still applicable disallowance u/s 14A r.w. Rule 8D works out to Rs. 22,83,215/-. However, the above contention of the assessee was not acceptable to the Ld. AO. The Ld. AO on verification of accounts of the assessee recorded his dissatisfaction as to the correctness of the claim of the assessee that no expenses were incurred to earn exempt income under the Act for the following reasons : "1. The earning of exempt income is not in the nature of a passive activity having no input. In fact in the present day financial markets scenario, decisions relating to making of investments, maintaining or continuing the investments, and the time of exit from investment are well informed and well coordinated by the management involving not only inputs from various sources but also extensive research and the acumen of senior management functionaries. Therefore a cost is i....
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....3 Accordingly, respectfully following these decisions, the addition of Rs. 22,83,215/- is deleted and the Ground of Appeal is Allowed." 5. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 6. We have heard the rival arguments made by both the sides and perused the records. At the outset, the Ld. AR submitted that an identical issue came up for consideration before the Tribunal in assessee's own case for AY 2017-18 wherein the Tribunal directed the Ld. AO to restrict the disallowance u/s 14A to Rs. 23,575/- being the amount of actual dividend income received by the assessee in the relevant AY. However, for the AY 2018-19, the Ld. AR contended that the assessee is having sufficient capital and free reserves which far exceeds the investment in shares and mutual funds, the dividend income of which is exempt. Without prejudice to the above arguments, the Ld. AR drawing support from the decision of the Special Bench of the Delhi Tribunal in the case of ACIT Vs. Vireet Investment Pvt. Ltd. reported in 165 ITD 27 (Delhi)(SB) submitted that for disallowance u/s 14A r.w. Rule 8D only those investments should be considered which has earned exempt....
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....ement of the Hon'ble Gujarat high court in the case of Sayaji Iran and engg. Co which has been followed by the Jurisdictional Pune Bench of the ITAT in the case of Hindumal Balmukund Investment Co Pvt Ltd ITA No 569/PUN/2017 to support the view that there cannot be disallowance of expenses in the hands of the company on account of personal use even by its directors. Respectfully following the decision of the Jurisdictional Tribunal, the disallowance/addition made by the A.O is deleted and the Ground of Appeal is Allowed." 18. Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before the Tribunal. 19. After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) deleting the 50% disallowance of depreciation of Motor cars for probable personal use of the Directors and Family members by relying on the decision of Hon'ble Gujarat High Court in the case of Sayaji Iron and Engineering Company and the decision of the Pune Bench of the Tribunal in the case of Hindumal Balmukund Investment Co Pvt Ltd. The ld. DR could not bring any material to take a contrary view than the view taken by the ld. CIT(A) on this issue. Accordingl....