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2013 (9) TMI 225 - AT - Income TaxExpenditure on sale of JV business - Whether Expenses related to sale of the Parker Pen Division is related to business of the assessee company - Disallowance u/s 14A - international sale of parker pen business - Held that:- there is no evidence to show how this expenditure is relatable to the business interests of the assessee as admittedly being joint venture partner in LWIPL with 50% share holding along with its affiliates where the other 50% belonged to the Jain family wherein only Jain family was paid non-compete fee and the assessee being a partner in the joint venture was instead burdened with legal and travel costs which are in the business interests of the ultimate holding company i.e Gillette USA and not the assessee have not been addressed by him. - disallowance sustained by the AO is upheld - Decided against the asseessee. Expenditure in relation to income which does not form part of Total Income - Disallowance u/s 14A - AO was of the view that the assessee has moved away from its stated stand namely that its principle business was to establish Gillette business in India and the assessee has now contended that it was doing its own business and entering into joint ventures and promoting other companies which were in the same business as that of Gillette Group USA. - Held That:- matter remanded back fresh decision - the assessing officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment - Following decision of Maxop Investment vs CIT [2011 (11) TMI 267 - Delhi High Court] - Decided in favor of assessee. Fluctuation in rate of exchange - Increased liability in respect of loans taken - in which year, loss incurred on “revenue account” should be deducted u/s 37(1) - Held that:- Assessing Officer has merely assumed that external commercial borrowing was utilized for loans and advances made by the assessee during this year because there was an increase in unsecured loans. In relation to the assessee’s claim of deduction on account of additional foreign exchange liability, we are not concerned with unsecured loans of the assessee but only with external commercial borrowing on which additional liability has been incurred. The contention of the assessee is that during this year there was no fresh borrowings and only repayment of brought forward ECB. In this view of the matter we see no force in the case made out by the Assessing Officer - no justification for the disallowance of Rs.36,36,030/- claimed by the assessee by way of additional liability incurred on account of fluctuation in foreign exchange rate - Following decision of CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd. [2009 (4) TMI 4 - SUPREME COURT] - Decided in favour of assessee.
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