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2019 (12) TMI 627 - ITAT PUNEDisallowance being commission paid to specified person / Director u/s 40A(2) - unreasonable and excessive expenditure - HELD THAT:- For making disallowance u/s. 40A(2) the onus is on the Revenue to show that payments made by assessee to persons referred in clause (b) are excessive or unreasonable with regard to fair market value of the goods or services received by the assessee. In the present case the authorities below have failed to examine terms and conditions of appointment of Shri Atul Kirloskar. If the terms of appointment allow payment of such commission at the time of appointment, the commission paid to Shri Atul Kirloskar is allowable, provided the commission paid is within the limits specified under Companies Act. We are of considered view that this issue needs revisit to the file of Assessing Officer for reexamination in the light of our above observations. The ground No. 1 of the appeal is thus allowed for statistical purpose. Disallowance of Aircraft expenses - AO disallowed 1/3rd of expenditure and depreciation on the ground that the Aircraft has been used for non-business purposes - Commissioner of Income Tax (Appeals) has restricted the expenditure to 25% - HELD THAT:- We observe that the issue of allowability of expenditure and depreciation on Aircraft was considered by the Tribunal in the past. The Tribunal [2017 (9) TMI 1832 - ITAT PUNE] for assessment year 2004-05 has restricted the disallowance of expenditure on Aircraft to 15%. Since, the facts in assessment year under appeal and reason for disallowance is identical, respectfully following the order of Tribunal in assessee‟s own case, we deem it appropriate to modify the findings of Commissioner of Income Tax (Appeals) on this issue and restrict the disallowance to 15%. Disallowance of Expenses u/s. 14A - HELD THAT:- The provisions of the Act or the Rules framed there under does not specify the manner of recording satisfaction u/s. 14A of the Act. The recording of satisfaction is subjective. The assessee has not made any suo-moto disallowance u/s. 14A for earning exempt income. After examining the assessment order we observe that the AO has recorded satisfaction before applying the provisions of Rule 8D. Hence, we do not find any merit in the contention of the assessee. Accordingly, the solitary issue raised in the appeal by the assessee is without any merit and hence, dismissed. Allowability of depreciation @ 60% on UPS and other allied items - HELD THAT:- In assessment year 2009-10 the Co-ordinate Bench has upheld the findings of Commissioner of Income Tax (Appeals) in allowing depreciation @ 60% on UPS and other allied items. Commissioner of Income Tax (Appeals) in assessment year under appeal has granted relief to the assessee by following its own order in assessment year 2009-10. We find no infirmity in the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 2 of the appeal is dismissed. Addition u/s. 14A - HELD THAT:- The Hon‟ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that where the assessee is having both interest bearing funds and interest free funds, it is presumed that the investment are made by utilizing interest free funds. In the light of the facts and decision of Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. (supra), we restore this issue back to the file of Assessing Officer for recomputation of disallowance u/s. 14A of the Act. Accordingly, ground No. 3 of the appeal by Revenue is allowed for statistical purpose. Disallowance of commission u/s. 40A(2) - HELD THAT:- We find that this issue was considered by the Tribunal in appeal by Revenue in assessee‟s case in assessment year 2009-10. The commission paid to the Directors was allowed by the Tribunal. Hence, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 4 of the appeal is dismissed. Subsidy received by the assessee from Maharashtra Government under Package Scheme of incentive, 2001 - Revenue or capital receipt - HELD THAT:- We further observe that the Co-ordinate Bench in appeal by the Revenue [2019 (7) TMI 1149 - ITAT PUNE] has confirmed the findings of Commissioner of Income Tax (Appeals) in holding the sales tax benefit received by the assessee as capital receipt not liable to tax. Since, the facts in the assessment year under appeal are identical, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 5 of the appeal is dismissed.
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