TaxTMI 
TaxTMI 
2026 (8) TMI 941
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....ion for filing of second appeal only on corporate ground (other than TP issue) was received and proceedings were under progress with the Ld. Pr. CIT for according approval towards transfer pricing issue only. Thereafter, approval was received for grounds of appeal with respect to transfer pricing issue on 21.05.2019. The Ld. DR requested the Bench that the delay may be condoned in view of the aforesaid reasons. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeals within statutory time limit. We, therefore, condone the delay and admit the appeals for adjudication. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: I. ITA No. 1246/KOL/2019; AY 2012-13: "1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the sum of Rs. 77,70,880/- incurred towards professional fees to legal advisors which was treated as capital expenditure by the A.O. 2. That on the facts and the circumstances of the case, the Ld. CIT(A) erred in corre....
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....& 10C of Income Tax Rules' 1962 (the Rules). 10. That the Ld. CIT(A) has erred in facts and law to also ignore the fundamental fact that LIBOR is just the inter-bank rate to transact between banks and to determine arm's length interest rate for loan transactions between two companies (assessee and its associated enterprise), an appropriate adjustment for difference between international transaction and comparable uncontrolled transaction as envisaged under Rule 10B & 10C of the Rules becomes imperative. 11. That the Ld. CIT(A) has erred on facts and law by restricting the guarantee fee rate to 1% which is much lower than the CG rate of 3.6% determined by the Ld. TPO, for a non-fund based financial assistance. 12. That the Ld. CIT(A) has erred on facts and law in stating that the CG rate charged by the TPO at 3.6% is highly excessive or unreasonable without giving any scientific or logical reasoning or the same while the TPO had determined the rate at 3.6% based on the information available on record. 13. That the Ld. CIT(A) has erred on facts and law restricting the CG rate at 1% without considering the credit rating of the AE which is a ....
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....ating of the AE which is a vital factor while availing loan from a financial institution and accordingly, the effective rate of interest was calculated and CG rate was determined accurately. 7. That the Ld. CIT(A) has erred on facts and law in determining the arm's length rate of interest in accordance with 92C of the Income-tax Act, 1961 (the Act) read with Rule 10B and Rule 10C of the Income tax Rules, 1962 (the Rules). 8. That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds herein above before or hearing of this appeal." III. ITA No. 1248/KOL/2019; AY 2014-15: "1. That on the facts and circumstances of the case the Ld. CIT(A) erred in correct upholding the Order of the Ld. CIT(A) deleting the disallowance made by the AO of excess depreciation of Rs. 43,39,284/- claimed by the assessee, as the assessee-company except for claiming that the equipment identified for having claimed excess depreciation are integral to the manufacturing process, has not been able to prove or justify as to in which way the concerned in terms have been able to enhance the production process or output of the assessee's bus....
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.... determined the rate at 3.6% based on the information available on record 9. That the Ld. CIT(A) has erred on facts and law by restricting the CG rate at 1% without considering the credit rating of the AE which is a vital factor while availing loan from a financial institution and accordingly, the effective rate of interest was calculated and CG rate was determined accurately 10. That the Ld. CIT(A) has erred on facts and law in determining the arm's length rate of interest in accordance with 92C of the Income-tax Act, 1961 (the Act) read with Rule 10B and Rule 100 of the Income tax Rules, 1962 (the Rules). 11. That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds herein above before or hearing of this appeal." IV. ITA No. 2037/KOL/2019; AY 2015-16: "1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 50,73,670/- made by the A.O on account of Excess depreciation on Furniture & Fixtures when the assessee, except for claiming that the equipment identified for having claimed excess depreciation are integral to the manufacturing pro....
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....al institution, and accordingly, the effective rate of interest was calculated and CG rate was determined accurately. 10. The Ld. CIT(A) has erred on the facts and in law in determining the arm's length rate of interest in accordance with 92C of the Income Tax Act, 1961 (the Act) r.w. Rule 10B & 100 of the Income Tax Rules, 1962 (the Rules). 11. The Ld. CIT(A) has erred on the facts and in law as it failed to appreciate that, the act of giving CG by the assessee to its AE has benefitted the AE and hence the benefit needs to be equally shared between the guarantor and the receiver. 12. That the appellant craves to add, delete or modify any of the grounds of appeal before or at the time of hearing." 2.1 Since the issues are common, all the four appeals were heard together and are being decided vide this common order for the sake of convenience and brevity. A. We shall first take up the appeal in ITA No. 1246/KOL/2019; AY 2012-13 for adjudication. 3. Brief facts of the case are that the assessee is a company engaged in the business of trading and servicing of vacuum cleaners. water filters cum purifiers. water & waste water treatment plant, elec....
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....s for the works/services which pertain to either acquisition/setting up of a new unit which has not yielded any revenue or for the expansion of existing business. Out of those Rs. 77,70,880/- has been paid to Borel and Barbey for acquisition (of) a company/business unit in foreign country which not yet generated any revenue and the assessee has claimed the same as revenue expenditure. Though the assessee has tried to impress that it is not an expansion of existing business and also not an effort of setting up of a new business unit and it should not be covered by the provision of section 35D of I.T. Act, 1961. 2. The contention of the assessee is considered and compared with the language of section 35D of I.T. Act, 1961 and it is observed that the said expenditure does not qualify for deduction either u/s.36(2) or 37(1) as the said unit is not yet operational during this year. Further, the details of professional activities done by Borel & Barbey according to the work sheet filed by the assessee during the course of hearing has revealed that it comprises review of draft amendment to the Article of association, amendments to Articles, drafting of Board Regulations, draft le....
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....ompany. Further, as planned by the Appellant, the target company has been made (directly/through a wholly owned subsidiary in Mauritius) a wholly owned subsidiary of the Appellant. b. The Appellant could expand its business either directly or through its subsidiary- the modality of expansion not being relevant to determine whether the expenses incurred for such expansion are revenue or otherwise. Resultantly, any expenditure incurred towards "expansion" of the existing business of the Appellant has to be held as "laid out or expended wholly and exclusively for the purpose of business" and as such allowable u/s 37(1) of the Act. c. It was held in case of Television Eighteen India Ltd. [2014] 46 taxmann.com 283 (Delhi HC) that expenditure related to expansion incurred for carrying out existing business more efficiently and with a view to generate more revenues, expenditure was in revenue field. d. Without Prejudice to the above, it is further submitted that since the expenditure was incurred on conducting due diligence and feasibility studies, it is in the nature of revenue expenditure. It is only a preliminary step to determine the feasibility of undertaki....
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.... held as "laid out or expended wholly and exclusively for the purpose of business" and as such allowable u/s 37(1)'of the Act. I observe that the case of the appellant is well covered by the Hon'ble Jurisdictional High Court of Calcutta which had held in the case of M/s Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) that: "This expenditure was not related to the setting up of a new factory, it pertained to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, might incur expenditure for obtaining a project report or legal opinion regarding the validity of such project. This could not, be considered as capital expenditure as, in that case, any legal expenses incurred by an assessee for taking any opinion on the desirability or feasibility of expansion of the business would not be allowable as deduction. Such expenditure was unmistakably connected with the running of the business." 4. I am also in agreement with the appellant-company that its situation was also covered by the case of Commissioner of income tax....
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....tible as revenue expenses. One has to consider the purposes of the expenditure and its object and effect. The finding of the Tribunal in this case is that there was an expansion or extension of the existing business of the assessee. The assessee is a manufacturer of cement. In addition to its factory in Andhra Pradesh, it proposed to start another cement factory in Rajasthan. There is one business. Although the factory at Rajasthan was not set up in the previous year relevant to the assessment year, this fact, in our view, is not a relevant factor in determining whether the deduction is allowable or not. The expenses in this case are miscellaneous expenses and legal charges for the proposed cement factory project. This expenditure is not related to the setting up of a new factory, it pertains to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, may incur expenditure for obtaining a project report or legal opinion regarding the viability of such project. This cannot, in our view, be considered as capital expenditure as, in that case, any legal expenses i....
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....ng authority to see whether the claim of the assessees falls under any one of the items of deduction specified in sections 30 to 36. Where the case specifically falls under any one of the specific provisions of sections 30 to 36, although, it was not specifically pleaded by the assessee, the assessing authority has a statutory duty and obligation to consider the claim of the assessee pertaining to a particular item as revenue expenditure. Since there is a specific provision under section 35D for amortization of certain preliminary expenses which was applicable on the facts of the case, the recourse could not have been had to the residuary provision of section 37(1) of the Act. Thus, on the facts of the case, the decision of the Ld. CIT(A) is not correct and is reversed, the findings of the Ld. AO are upheld and Ground No. 1 of the appeal is allowed. 7. Ground No. 2 relates to the Ld. CIT(A) erring in giving part relief to the extent of Rs. 86,08,865/-, being 90% of the actual disallowance made by the Ld. AO of Rs. 95,95,406/- under repairs and maintenance without there being any justification of as to why such disallowance should be restricted to 10% and not more or fully disall....
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....ears of rental or lease agreement and cognizance of this fact was not given in earlier occasions or not discussed in the assessment order where the assessee had been given relief by Hon'ble ITAT. The period of agreement in that occasion was mentioned for three years only and the continuous renewal without any intervention with prior intention to continue there was not brought on record. It is a very common practice across the country not to allow any private party as tenant to occupy any building for more than three years. in a single agreement, only to avoid the litigation but not with an intention to not renew the same. Therefore, in view of this the above discussed expenses of Rs. 1,27,53,875/- is in the nature of capital expenditure as the same provides the enduring benefit to the assessee. However, the assessee has claimed the said expenses as revenue in nature. The assessee has also claimed that in the case of the assessee an order was passed by the ITAT for A.Y. 1992-93 in favour of the assessee and therefore no issue should be taken in the relevant A.Y. 2012-13. The above claim of the assessee is not acceptable as the facts are totally different in this year from those ....
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....ctive assessment orders. The Ld. CIT(A), while confirming 10% of the overall disallowances considering the same as capital in nature, deleted the disallowance of the balance 90% following his earlier decision in respect of earlier assessment years. which have been affirmed by this Hon'ble Bench of the Tribunal. The Ld. AR further submitted that in deciding this issue, the Ld. CIT(A) has followed the orders passed by the Hon'ble Tribunal in assessee's own cases for the AYs 2008-09 and 2009-10, being ITA Nos. 2126 & 2625/Kol/2013 dated December 21, 2016 and for AYs 2010-11 and 2011-12 passed in ITA Nos. 2159-2170/Kol/2017 and 2160-2171/Kol/2017, dated November 28, 2018. 7.4 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) has given his finding in para 15 of the appeal order. He noted that the Ld. AO has disallowed the said expenses to the extent of Rs. 95.65 lakh (3/4th of Rs. 127.53 lakh) on the alleged ground that the said expenses are deferred revenue expenses and, therefore, the expenses are allowed over a span of 4 years. He has also gone through the appeal on identic....
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....ssee has incurred huge expenditure which has resulted in long term benefit to the assessee and such expenditure is not allowable as revenue expenditure and the same cannot be passed as repair and maintenance. Therefore, an amount of Rs. 1,43,46,644/- out of a total of Rs. 4,09,64,919/- incurred under the head 'repairs and maintenance' is treated as capital in nature. This way, the ld. DR has reiterated the stand taken by the Assessing Officer. The ld DR also relied on the following judgment: CIT, Madurai Vs. Saravana Spg. Mills (P) Ltd. [2007] 163 Taxmann 201 (SC): Assessee manufacturer of yarn replaced old 3 ring frames by new ones and claimed expenditure incurred in said activity as current repairs contending that whole textile mill was a 'Plant' and ring frames were one of 25 machines which constituted a single process and therefore, replacement of frames be treated as replacement of part of plant/total machinery and not replacement of a machine Assessing Officer held that each machine including ring frame was an independent and separate machine capable of independent and specific function and, therefore, expenditure incurred for replacement of entire m....
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....s money, the assessee did not acquire any capital asset. The only advantage the which the assessee derived by spending the money was that it got the lease of a new building at a low rent. From the business point of view, therefore, the assessee got the benefit of reduced rent. The High Court had, therefore, rightly considered this as obtaining a business advantage. The expenditure was, therefore, to be treated as revenue expenditure." 6.3 Heaving heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the proposition canvassed by the Id.AR for the assessee are supported by the judgment of hon'ble supreme court in the case of CIT Vs. Madras Auto Service (P) Ltd. (Supra). The Id AR pointed out that the assessee spent the amount to repair leased property. The leased property belongs to the Lessor and not to the assessee. The assessee can not claim depreciation also. Considering the factual position, we are of the view that order passed by the Id CIT (A) does not contain any infirmity. Therefore, we confirm the order of ld. CIT(A). 6.4 In the result, the appeal filed by th....
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....he expenditure relates to renovation of various office premises taken on rent/lease for three years of term, but renewed continuously whereas in the case of Madras Auto Service (P) Ltd. (supra) the lease was a long lease of a newly constructed building and the assessee got the benefit for 39 years by expending these amounts, yet the amount was treated as revenue in nature. Hence, in view of the findings of the Tribunal in the assessee's own case in A.Y. 2008-09 and others. Ground No. 2 of the appeal is dismissed and the findings of the Ld. CIT(A) are confirmed. 8. Ground No. 3 relates to the Ld. CIT(A) erring in deleting the disallowance of excess depreciation of Rs. 12,61,664/- claimed on building as the assessee company failed to substantiate its claim properly and had no approvals/permits from various authorities to use such a premise for guest house. 8.1 The Ld. AO has observed as under regarding this issue: "6. The assessee has claimed depreciation @10% on the residential flats and the details submitted vide Annexure-7 vide written submission dated 10-032016 during the course of hearing which reveals that the flats ore situated at Starling Sea Face, Dr. Annie Be....
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....17 for AYs: 2010-11 and 2011-12, involving similar facts. In fact, the Ld. CIT(A) has followed the said order of the Hon'ble Tribunal. The Ld. AR further submitted vide written notes filed that the contention of the Department, therefore, is unsustainable in respect of grounds referred in paragraphs 4 to 7 hereinabove following the principles of consistency laid down by the Hon'ble Apex Court in the cases of Radhasoami Satsang Vs. CIT, 1992 (1) SCC 659, paras 16 & 17 and Pr. CIT Vs. Maruti Suzuki India Ltd., [2019] 416 ITR 613 (SC), para 34 [which decision has been followed by the Hon'ble Delhi High Court in Pr. CIT Vs. PNB Housing Finance Ltd. [2024] 461 ITR 476 (Del), [SLP of Department against which has been dismissed by the Supreme Court in (2024) 461 ITR 481 (SC)] consistently followed by this Hon'ble Tribunal. 8.4 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Since the issue has been decided based upon the findings of the Ld. CIT(A) in A.Y. 2011-12 which have been confirmed by the Tribunal, therefore, there is no reason to interfere with the findings of the Ld. CIT(A) whos....
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.... for the continuance and protection of the business of the company and reduces the legal expenses of the company. In my considered view it would therefore qualify for an expense incurred wholly and exclusively for the purposes of the assessee company's business, and as such be allowable under section 37(1) of the Income Tax Act, 1961. I also find that in a similar situation the Hon'ble High Court of Gujarat in the case of CIT -vs.- Cadila Healthcare Ltd. [2013] 214 Taxman 672 (Gujarat) has fortified the view. The factual matrix has been elaborated in the decision of the Hon'ble ITAT, Ahmadabad Bench in the same said case reported in [2012] taxmann.com 483 (Ahmadabad Tribunal ) [2015] 67 SOT 110) (Ahmadabad ITAT) where the Hon'ble bench as observed, in the relevant portion, as under: .... 4. Keeping in view the ratio emanating from the various decisions as discussed supra, I find that the Ld. AO was incorrect in not appreciating the facts of the case, and the law applicable to the relevant facts. In following the ratio emanating from the above decisions as discussed, the Ld. AO is directed to delete the addition and as a result, this ground of appea....
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....AO to delete the disallowance of Rs. 1,19,67,718/- computed u/s 14A of the Act read with Rule 8D(2)(ii) of the Income Tax Rules, 1962 and to restrict expenses for the investments which actually yielded dividend income to the assessee company during the year for determination of actual disallowance u/s 14A of the Act. 10.1 The Ld. AO had observed as under regarding this issue: "9. Disallowance of Expenditure to the extent of Rs. 1,19,67,718/- u/s.14A w.r.t. Rule 8D: 25.1. From the accounts of the assessee it is noticed that the assessee company has invested huge amount into the shares of various subsidiary companies and in other quoted shares a/so. The assessee has received dividend income on Mutual Fund/Other Companies shares of Rs. 28,103/- and Dividend from Subsidiary Company of Rs. 11,08,54,000/- [exempted u/s.10(34)] during the year. The assessee has disallowed Rs. 5,53,878/- u/s.14A of the I.T. Act, 1961 considering the dividend and investment made in other than the subsidiary companies. But the provisions laid down in Rule-8D vide the Clauses-(i), (ii) & (Hi) does not suggest the same. According to the assessee the company has not incurred any direct expe....
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.... not enough to declare that the investment is made only out of own capital or fund. There are more aspects in the business as well as investment in the case of assessee. The business house has to spend money for tangible assets, to maintain business debtors. inventories etc. also. Thus without the cash trail since the first day of investment, it is not practicable to conclude that no Interest bearing loan fund has been utilized in investment or has an impact in retaining the old investments. In this circumstances the disallowance u/s.14A with reference to the Clauses (i), Clauses (ii) and Clauses (Hi) to Sub-Rule (2) of Rule-(2) is warranted in the case of assessee and the disallowable amount is worked out according to the following manner: 25.4. The disallowance of expenditure in relation to dividend income (exempt income) due to investment in shares, is being determined in accordance with the provisions of Clause-(ii) & Clause-(iii) to sub-rule (2) of Rule 8D in following manner: (I) The amount of expenditure directly relating to income which does not form part of total income = Not Available, hence treated as NIL. (II) In a case where the assessee has ....
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.... as under: "1. I have carefully considered the submissions of the Ld. A.Rs and perused various judicial decisions cited before me in support of the appellant's claim. I have also examined the impugned order wherein the disallowance u/s 14A has been made by invoking Rule 8D of the IT Rules, 1962. According to the Ld. AO the assessee's submission that its capital was much more than investment was not sufficient to establish that borrowed funds was not used for investment purposes. The Ld. Assessing Officer accordingly rejected the [suo-motu] disallowance of Rs. 5,53,878/- which had been offered by the appellant-company u/s 14A and held that the most appropriate manner of making disallowance was to invoke Rule 8D(2)(ii) & (iii) and accordingly, interest of Rs. 89,02,300/- was disallowed out of interest paid. Besides, the AO also disallowed Rs. 36,19,296/- being half percent of the average investments amounting to Rs. 72,38,59,254/-. 2. I have examined these findings and action of the Ld. AO in the light of the detailed submissions made by the Ld. A.Rs in the submissions as also the appellate and assessment orders passed in appellant's own case for the ear....
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....he assessee has made Investment in shares out of its own funds no disallowance can be attributed qua the interest paid on borrowed funds for investing the same in interest free funds. In view of the above, we confirm the order of CIT(A) on the common issue " We find that this case has yielded concurrent finding of facts regarding expenditure incurred by the assessee for the purpose of earning the exempt income, by the Appellate Authority and the Tribunal. As such there is no scope for interference with such concurrent findings of facts. We, therefore, are not satisfied that the case involves any substantial question of law. The application and appeal are thus dismissed." 4. Respectfully following the above judgment of the Hon'ble Calcutta High Court, I hold that AO was not justified in disallowing interest of Rs. 89,02,300/- under Rule 8D(2)(ii) and the same is directed to be deleted. 5. The Ld. AO has further disallowed 0.5% of the average investments amounting to Rs. 36,19,296/- by invoking Rule 8D(2)(iii). It is noted that the Hon'ble ITAT, Kolkata in the case of REI Agro Ltd Vs ACIT (144 ITD 141) has held that 0.5% of dividend bearing....
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....ssessee it would be seen that its capital, reserve and secured loans far exceed its shares in investments. Hence it is evident that the assessee is having sufficient own funds for making the investments and therefore no disallowance of interest under Rule 8D(2)(ii) of the Rules can be made. In this regard reliance is also placed on the decision of the Hon'ble Supreme Court in South Indian Bank Ltd. Vs. CIT, [2021] 438 ITR 1 (SC). The Ld. CIT(A), following the decision of the Hon'ble Calcutta High Court in CIT Vs. Rasoi Ltd., passed in ITA No. 109 of 2016 dated February 15, 2017, has held that the Ld. AO was not justified in disallowing interest of Rs. 89,02,300/- under Rule 8D(2)(ii) and directed the same to be deleted. The CIT(A) following the decision of this Hon'ble Bench of the Tribunal in the case of REI Agro Ltd. Vs. ACIT, (2013) 35 taxmann.com 404 (Kolkata -Trib.), (2013) 144 ITD 141 (Kolkata Trib) directed the Ld. AO to recompute the disallowance under Rule 8D(2)(iii) of the Rules by considering the investments which actually yielded dividend income to the assessee for computing disallowance under Section 14A of the Act and held that since the disallowance so wo....
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....t the provisions laid down in Rule 8D vide the Clauses-(1), (ii) & (ii) does not suggest the same. According to the assessee the company has not incurred any direct expenditures including interest in earning tax exempt dividend income and further the assessee has computed disallowance under Rule-8D(2)(iii) is Rs 5,53,878/- and made a request to accept accordingly. 9.2 The A/R has explained in various ways with logic but the related expenses including interest on loans are indivisible and no way can be concluded that there is no direct involvement of loan with the investment The decisions of "A" Bench of Chennai ITAT in the case of Shiva Industries & Holidays Pvt. Ltd. vs. ACIT (IT Appeal No. 1917 of 2011) and "K" Bench of Mumbai ITAT in the case of Stream International Services Pvt. Ltd vs. ACIT (IT Appeal No 8997 of 2010) and the Circular issued by CBDT vide No. 5 of 2014 empower the Assessing Officer to disallow the expenses u/s 144 with reference to Rule BD, irrespective of any income received or not, which does not form the part of total income for any period (s), but the investments in the shares mutual funds etc are there which returns only the exempted income or the....
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....come which does not form part of total income Not Available, hence treated as NIL. (ii) In a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt on amount computed in accordance with the following formula, namely:- AxB/C= 7,30,81,680 X 72,38,59,254/594,23,80,382 = Rs. 89,02,300/- A= Rs. 7,30,81,680/- (in this clause) amount of expenditure by way of interest and other charges according to the definition of interest as laid down in section 2(284) of IT Act 1961 other than the amount of interest included in clause(i) incurred during the previous year. B= Rs. 72,38,59,254/- (Opening Value of Investment Rs. 76,95,98,999/- and Closing value of Investment Rs. 67,81,19,510/- in this case) the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. C= Rs. 594,23,80,382 (Opening Value of Assets Rs. 607,91,92,945/- and Closing value of Assets Rs. 580,55,67,819/- in this case) the average....
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....s. 5,53,878/- suo moto identified by the appellant for the purposes of disallowance u/s 14A(1) could have utmost been disallowed and added back under clause (f) of Explanation 1 to Section 115JB. The Ld. AO's action of adding back the disallowance computed under Rule 8D while assessing the book profit is held to be unjustified in view of the decision of the Hon'ble ITAT, Delhi (Spl. Bench) in the case of ACIT Vs. Vireet Industries Ltd (165 ITD 27) and Bombay High Court in the case of CIT vs. JSW Energy Ltd. (60 taxmann.com 303). For the reasons set out in the foregoing, the Ld. AO is directed to restrict the addition in terms of clause (f) of Explanation 1 to Section 115JB to Rs. 5,53,878/-. These grounds therefore stand partly allowed." 11.3 The Ld. DR submitted that the view of the Ld. AO is correct as per law. 11.4 On the other hand, the Ld. AR submitted that in the absence of any proximity having been proved between earning exempt income and expenditure attributable to earning such exempt income, while working out the book profit under Section 115JB of the Act no addition could be made on presumption/estimation basis. This submission of the assessee is supported b....
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....ferred the matter of international transaction to the TPO and based upon the transfer pricing study and the adjustment made by the TPO, added a sum of Rs. 4,47,18,502/- as interest on loans to AEs and a sum of Rs. 2,39,55,670/- as fee against corporate guarantee. 12.2 The Ld. CIT(A) has observed in para 31 of the appeal order based upon his finding in the appeal for A.Y. 2010-11 that the approach of the TPO in computing the ALP was unjustified and the internal CUP available as adopted by the assessee is to be restored in the matter and as such no adjustment is necessary. The internal CUP available of the LIBOR + 225 bps plus 1% (Guarantee commission) as adopted by the assessee was to be restored in the matter as such and no adjustment was necessary. Thus, in view of the finding of the Everest Kanto Cylinder [2016] 75 taxmann.com 238 (Mumbai - Trib.) relied upon by the Ld. CIT(A) in which LIBOR + 2% has been held as the ALP in respect of loans advanced to AE, there is no reason to interfere with the finding of the Ld. CIT(A) and Ground Nos. 7, 8, 9, 10 and 14 (Ground No. 14 being repetitive of Ground No. 9) of the appeal are dismissed. 13. As regards Ground Nos. 11, 12 and 13,....
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....13, Ground No. 2 of the appeal is dismissed. 18. Ground No. 3 relates to the Ld. CIT(A) erring in restricting the addition of Rs. 51,48,540/- being expenses incurred on exempt income, while computing book profit u/s 115JB of the Act and directing the Ld. AO to restrict the addition in terms of clause (f) contained in the Explanation 1 to section 115JB of the Act to Rs. 4,19,505/-. 18.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 11.5 of the order. In view of the finding for AY 2012-13, Ground No. 3 of the appeal is allowed. 19. Ground Nos. 4, 5 and 6 relate to the Ld. CIT(A) erring on facts and law by restricting the guarantee fee rate 1% which is much lower than the CG rate of 3.6% is highly excessive or unreasonable without giving any scientific or logical reasoning for the same while the Ld. TPO had determined the rate at 3.6% based on the information available on record. Ground No. 5 is similar to Ground No. 12 of the appeal for A.Y. 2012-13 while Ground No. 6 is same as Ground No. 13 of the appeal for A.Y. 2012-13. 19.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 13.....
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....raphs 4,5,6,7 and 8 have confirmed my findings. Therefore, following my findings and adjudication for the A.Ys 2010-11 and 2011-12, as well as respectfully bound by the orders of the Hon'ble ITAT for the A.Ys 2010-11 and 2011-12, in this year also this ground is allowed, meaning thereby that the claim of depreciation as made by the appellant-company stands restored. The ground is therefore in effect allowed." 23.1 Since the findings of the Ld. CIT(A) are based upon his own findings in the earlier year, which have been confirmed by the Tribunal, therefore, there is no justification for interfering with the findings of the Ld. CIT(A) whose decision is confirmed and Ground No. 1 of the appeal is dismissed. 24. Ground No. 2 relates to the Ld. CIT(A) erring in giving part relief to the extent of Rs. 40,89,253/-, being 90% of the actual disallowance made by the Ld. AO of Rs. 45,43,615/- under repairs and maintenance without there being any justification of as to why such disallowance should be restricted to 10% and not more or fully disallowed. 24.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 7.5 of the order. In view of the ....
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....required if the managerial person does not hold interest in capital of the company and the person is a graduate with specialised knowledge in the field. It was therefore argued that in the appellant's case, the Executive Vice Chairman is a graduate and has specialized knowledge with extensive experience of marketing the company's products. Hence, the conditions of the said notification were clearly satisfied, and as such the appellant-company was exempt from seeking approval of the Central Government under the provisions of the aforementioned notification. 3. It was submitted that in the Appellant's case, the Appellant has complied with the provisions of the Companies Act following the Gazette notification no. GSR 534(E) dated 14/07/2011 issued by the Ministry of Corporate Affairs. Government of India. Thus, the remuneration cannot be considered excessive and therefore there has been no contravention of any provisions of the Companies Act. The appellant relied on the decision of Hon'ble Mumbai Tribunal in case of IMA PG India Limited (ITA No.5960/Mum./2013) wherein it was held that: "We find that the assessee had made excessive payment of remunerat....
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....ng unsustainable in the facts and circumstances of the case is directed to be deleted. The ground of appeal stands allowed." 25.2 The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. The Ld. AR has made written submissions as under: "(a) CIT(A)'s decision in favour of the assessee is covered by the Gazette Notification issued by the Government of India, Ministry of Corporate Affairs. bearing GSR 543(E) dated July 14, 2011 C II/p 87-96), wherein it has been clarified that no Central Government approval is required if the managerial person does not hold interest in capital of the company and the person is a graduate with specialised knowledge in the field, fully covers the instant case. Herein also as recorded by the CIT(A) in para 24.5 of the impugned order dated January 31, 2019 for assessment year 2014-15, it is conclusively established that the requirements laid down in the aforesaid Gazette Notification dated July 14, 2011 stands completely satisfied. The contention that this Notification is confined to listed companies only is ex-facie incorrect. This would appear from para 3 of the said Notification itself. The provision....
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....ng para no. 9.6 of the order. In view of the finding for AY 2012-13, Ground No. 4 of the appeal is allowed for statistical purposes. 27. Ground No. 5 relates to the Ld. CIT(A) erring in directing the Ld. AO to delete the disallowance of Rs. 2,97,71,945/- computed u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules and to restrict expenses for the investments which actually yielded dividend income to the assessee company during the year for determination of actual disallowance u/s 14A of the Act. 27.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 10.5 of the order. In view of the finding for AY 2012-13, Ground No. 5 of the appeal is dismissed. 28. Ground No. 6 relates to the Ld. CIT(A) erring in restricting the addition of Rs. 2,97,71,945/- being expenses incurred on exempt income, while computing book profit u/s 115JB of the Act and directing the Ld. AO to restrict the addition in terms of clause (1) contained in the Explanation 1 to section 115JB of the Act to Rs. 49,670/-. 28.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 11.5 of the order. In view of the finding for ....
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..... Ground No. 4 relates to the Ld. CIT(A) erring in directing the Ld. AO to restrict the addition in terms of clause (f) contained in the Explanation 1 to section 115JB of the Act to Rs. 2,12,146/-. 35.1 This issue has been decided in ITA No. 1246/KOL/2019 for AY 2012-13 in the preceding para no. 11.5 of the order. In view of the finding for AY 2012-13, Ground No. 4 of the appeal is allowed. 36. Ground No. 5 relates to the Ld. CIT(A) erring in deleting the addition of Rs. 2,06,17,228/- being excess payment to remuneration made to Executive Director as the Gazette Notification No. GSR 534(E) dtd. 14.07.2011 in question applied to listed entities which the assessee is not. 36.1 This issue has been decided in ITA No. 1248/KOL/2019 for AY 2014-15 in the preceding para no. 25.3 of the order. In view of the finding for AY 2014-15, Ground No. 5 of the appeal is allowed for statistical purposes as the issue is remanded to the Ld. AO for examination and reconsideration as per law. 37. Ground No. 6 relates to the Ld. CIT(A) erring in deleting the addition of Rs. 24,99,734/- made by the Ld. AO by treating the renewal of previously sanctioned IPR/Trademark as capital expenditure ins....