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2014 (10) TMI 653 - AT - Income TaxAddition of various incomes deleted - Income from Business Service Centre, letting out services like communication, couriers, provision of electricity, air- conditioning and DC sets are assessable under the head 'income from other sources' in connection with the letting out of business services centre – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been rightly held that it is a case wherein income from lease of premises has to be segregated from the income from services and only income from lease should be assessed as income from house property against which only standard announce of 30% should be allowed - The other receipts should be assessed as income from other sources and expenditure incurred on the provision of such services should he allowed as per sec.57 after verification - This proposal was accepted even by the assessee - the incomes should be assessed separate as income from house property and service charges collected to be assessed separately as income from business and profession after allowing expenditure incurred against provision of such services after verification of the same. Accordingly this ground is partly allowed - this ground of appeal is partly allowed as a part of the service charges collected is to be considered as 'Income from Business and Profession' / 'Income from Other Sources' – thus, the order of the CIT(A) is to be upheld - Decided against revenue. Non-deduction of TDS on commission paid to directors u/s 40(a)(ia) – Requirement u/s 194H fulfilled or not – Held that:- The tax deducted at source was deposited before the due date of filing the return under section 139(1) of the Income Tax Act – following the decision in CIT vs. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT] the proviso to section 40(a)(ia) as amended by the Finance Act, 2010 are free from any ambiguity and doubt and clearly support the view that the expression "said due date" in clause (A) to the proviso to unamended section refers to the time specified in section 139(1) of the Act - the amendment vide Finance Act, 2010 as a remedial and therefore the payment of tax deducted at source before the due date of return of income u/s 139(1) is sufficient compliance of provisions of section 40(a)(ia) and no disallowance of the expenditure can be made – the order of the CIT(A) is upheld – Decided against revenue. Disallowance u/s 14A read with Rule 8D – Held that:- Out of total investment of ₹ 59.22 crore, the investment to the extent of ₹ 33.80 crore is in the subsidiaries of the assessee - even in the subsidiaries of the assessee the investment of ₹ 32.80 crore has been made in CG International BV which is a foreign company and the dividend on such investment is not tax free as per the provisions of section 10 - the provisions of section 14A are not attracted to the extent of the investment in the foreign company – the AO is directed to exclude the investment made in the foreign company for the purpose of disallowance under section 14A. Sufficiency of funds - Whether the assessee had sufficient funds for the investment which generates the tax free income – Held that:- Out of the total investment of ₹ 59.22 crore during the year an investment of ₹ 32.80 crore is in the foreign company and therefore after excluding the investment the investment during the year generating the tax free income comes to ₹ 26.42 crore only - there is an increase in the assessee's own fund to the tune of ₹ 300 crore and at the same time there is a decrease in the loan funds during the year to the tune of ₹ 228 crore. Therefore, even if its presumed that out of the ₹ 300 crore increase in the assessee's own fund a sum of ₹ 228 crore is used for repayment of the loan during the year, still the assessee would have a sum of ₹ 72 crore available for investment - Since the investment in the domestic companies is only to the extent of ₹ 26.42 crore during the year, the assessee's own fund is more than sufficient to meet the investment during the year - no disallowance u/s 14A is called for on account of interest expenditure when the assessee's own fund is more than sufficient for the investment generating tax free income. Administrative expenses – Held that:- For taking an investment decision a high level thought process is required and therefore when the assessee has made investment during the year the provisions of section 14A are applicable on account of administrative expenses - out of the total investment of ₹ 59.22 crore a sum of ₹ 33.80 crore has been invested in the subsidiary companies, therefore for the purpose of disallowance under section 14A by applying rule 8D the investment made in the subsidiaries and in the foreign company shall be excluded - The apportionment of the administrative expenses can be made only by considering the investment in the domestic companies other than the subsidiary company – the AO is directed to re- compute the disallowance under section 14A in respect of the administrative expenses by excluding the investment in the subsidiaries and in the foreign companies – Decided partly in favour of assessee.
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