2026 (7) TMI 121

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Income Tax, Addl/JCIT-(Appeals) - 4, Mumbai [hereinafter referred to as "Addl. CIT(A)"], for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s. 143(3) of the Income Tax Act [hereinafter referred to as "The Act"]. 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2017-18 on 07.11.2017 declaring total income of Rs. 4,05,45,190/-. The case was selected for completed scrutiny under CASS. The assessee carries on business of providing medical healthcare facilities under the name and style SAL Hospital and Medical Institute under MoU with Adarsh Foundation Trust, (the owner of the hospital). The assessee had paid management fee charges of Rs. 2.60 crores as per MoU to M/s Adarsh Foundation. In....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he appellant craves leave to add, alter, amend or modify any of the above grounds of appeal at or before the time of hearing. 5. The Assessee has taken the following grounds in its Cross- Objection: 1. CIT (A) (NAFC) has erred in law and in facts in confirming the disallowance u/s 14A to the tune of Rs 12,22,962/- 2. The appellant craves leave to add, amend, edit, delete, change or modify all or any of the ground before or at the time of hearing. 6. The First Ground Taken by the Revenue pertains to addition of Rs. 2.60 crores u/s. 40A(2)(b) of the Act, in respect of management fee paid to M/s Adarsh Foundation. Shri Rajeev Garg, the Ld. SR-DR, submitted that the assessee had paid management charge of Rs. 2.60 crores ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nate bench of the Tribunal in ITA No. 1518/Abhd/2012 dated 21.07.2015 for A.Y. 2009-10 had given the following finding on this issue: "4. As a look at the agreement between the assessee and the Adarsh Foundation Trust clearly reveals, the payment of 40% of profits or Rs 1,00,00,000 each year whichever is less, is paid by the assessee for grant of operation and management rights under clause 4.1 of the agreement. This is not for acquiring a brand but for use of a brand. The benefit is clearly in the revenue field since the benefit of this payment is on year to year basis and does not result in any enduring or lasting benefit beyond the relevant assessment year. Learned CIT(A) was thus quite justified in holding that the expenses are....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ion, pertain to addition of Rs. 12,22,965/- u/s. 14A of the Act. The AO had made addition of Rs. 12,22,965/- u/s. 14A read with Rule 8D of the IT Rules, being 1% of the annual average of opening and closing balance of the value of investments, income from which did not form part of the total income. The Ld. Addl. CIT(A) had restricted the disallowance u/s. 14A of the Act, to the extent of exempt income only. 11. We have heard the Ld. SR-DR as well as the Ld. AR on this issue. We do not find anything wrong with the order of the Ld. Addl. CIT(A). The Hon'ble Gujarat High Court has held in the case of Corrtech Energy (P) Ltd. [223 taxamnn.com 130(Guj).], that the disallowance u/s. 14A of the Act, cannot be more than the exempt income. In fa....