Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 1278 - AT - Income TaxAddition on account of alleged perquisite on account of services rendered by CA Shri. Whora B.A. - Held that:- There is no dispute to the fact that Shri B.A. Wohra is getting huge professional fess from Jain Irrigation System Ltd., (JISL). At the same time, there is also no dispute to the fact that Shri B.A. Wohra is attending to the individual tax matters of the assessee and various family members and have not charged anything separately from them. Further, there is also no material on record to suggest that the company has paid any sum to the consultant on behalf of the assessee for rendering professional services. We find merit in the above submission of the Ld. Counsel for the assessee. It is not mandatory or compulsory for any professional to charge for the professional services rendered to any director or relative of a director or close family members of directors when he is getting fees for rendering services to a company. He may do it voluntarily and free of cost also. Further, there is also no material on record to show that the company has paid any amount to the consultant on behalf of the assessee. In this view of the matter, we set-aside the order of the CIT(A) and direct the AO to delete the addition.- Decided in favour of assessee. Additional of notional interest u/s.2(24)(iv) - Held that:- We find the Hon’ble Supreme Court in the case of V.M. Salgaocar and Bros. Pvt. Ltd. vs. CIT (2000 (4) TMI 2 - SUPREME Court) has held that insertion of clause (vi) in sections 17(2) and 40A(5) by Taxation Laws (Amendment) Act, 1984 and its subsequent repeal by Finance Act, 1985 provide a clear direction to interpret the provisions of section 17(2) and 40A(5) before insertion of clause (vi). Therefore, when a company obtains loan by paying interest and advances the same to directors without charging any interest, the interest attributable to the amounts advanced to directors could not be treated as perquisite. We further find that the Ld. Departmental Representative could not controvert the submission of the Ld. Counsel for the assessee that no such disallowance was made in scrutiny assessments in the past and no 263 proceedings or 148 proceedings were initiated after completion of the assessment. In view of the above discussion, we are of the considered opinion that no addition on account of interest u/s.2(24)(iv) is required on interest free deposit advanced to the assessee.- Decided in favour of assessee. Disallowance u/s.14A - Held that:- Since the assessee has neither paid any interest nor claimed any other expenditure, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal in the case of Magarpatta Township Development and Construction Co. Pvt. Ltd. [2014 (9) TMI 351 - ITAT PUNE ] , we hold that no disallowance u/s.14A of the I.T. Act is called for in the instant case. We accordingly set-aside the order of the CIT(A) and direct the AO to delete the addition - Decided in favour of assessee. Disallowance u/s.14A - Shri Atul Bhavarlal Jain - Held that:- Admittedly, the assessee has borrowed funds from different parties which was invested in fixed deposits with banks/companies and shares of a Cooperative Bank. As against the interest earned at ₹ 56,16,040/- the assessee has paid interest of ₹ 68,96,925/-. Since the interest expenditure was higher than the corresponding interest income, the assessee had restricted the deduction to ₹ 56,16,040/- thus excluding the excess interest of ₹ 12,80,885/-. Therefore, in our opinion, the disallowance u/s.14A r.w. Rule 8D should be recomputed by taking the interest expenditure at ₹ 56,16,040/- and not ₹ 68,96,925/- for working out the disallowance u/s.14A r.w. Rule 8D(1)(ii) since the assessee is not in appeal against the disallowance of the administrative expenses under rule 8D(1)(iii). We therefore restore this issue to the file of the Assessing Officer for recomputing the disallowance u/s.14A r.w. Rule 8D after giving due opportunity of hearing to the assessee as per law. This ground by the assessee is accordingly partly allowed for statistical purposes. Transaction of gift of shares to a private limited company - CIT(A) deleted the addition - Held that:- There is nothing on record to prove that any consideration or benefit has been passed on to the assessee. We find no infirmity in the order of the CIT(A) on this issue. As per the provisions of section 28(iv), the value of any benefit or perquisite whether convertible into money or not arising from business or the exercise of a profession shall be chargeable to income-tax under the head “Profits and gains of business or Profession”. Here, the assessee is not carrying out any business or profession. Therefore, the provisions of section 28(iv) are not applicable to the facts of the present case. In this view of the matter and in view of the detailed reasoning given by the Ld.CIT(A), we find no infirmity in the same. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed - Decided in favour of assessee. Disallowance of interest from the interest expenditure - Held that:- There is no dispute to the fact that both the borrowings as well as the investments were made in the past. According to the AO since the assessee has not given the details of utilisation of borrowed funds, therefore, he was of the opinion that such borrowed funds might have been utilised towards purchase of immovable properties, jewelleries etc., However, from the copies of the assessment orders for A.Yrs. 2006-07 to 2008-09, we find no such disallowance has been made. The AO has only restricted the interest expenditure to the extent of interest income. The assessee in the impugned assessment year has also restricted the claim of such interest payment to the extent of interest received. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) deleting the disallowance of interest to the extent of ₹ 56,16,040/- from the interest expenditure. - Decided in favour of assessee.
|