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2016 (1) TMI 615 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - Held that:- As decided in assessee's own case for previous AY there is no satisfaction recorded by the AO for invoking Rule 8D of the Rules despite the fact that the assessee has disclosed huge expenditure for earning of exempted income and the same was disallowed himself, the correctness of which is not in doubt. The assessee has enclosed details of investment made in group concerns and subsidiary companies and details of dividend income earned. In view of the above facts and circumstances, we are of the view that the AO has not recorded any satisfaction about the correctness or otherwise of the accounts of the assessee wherein the assessee himself has made disallowance of expenses relatable to earning of exempted income and secondly, we are also of the view that the primary object of investment of assessee is for holding controlling stake in group concerns and not for earning of income out of that investment. In both the eventualities, no disallowance can made u/s. 14A of the Act read with Rule 8D of the Rules - Decided in favour of assessee Proportionate disallowance of legal and professional fees and auditor's remuneration - Held that:- Legal and professional fee cannot be attributed to earning of management fee from Mena House Oberoi Hotel, Egypt, URA. Even otherwise, during this year, no legal service was provided to this concern for earning of management fees, hence, there is no nexus with the providing of legal services and that of earning of management fees. Same are the arguments for the expenses of auditor's remuneration. Hence, we agree with the argument of ld. Counsel and allow these expenses. As regards to other expenses no argument was advanced on behalf of assessee qua assessee's appeal. Even we could not find any contrary argument on the expenses allowed by CIT(A) from Ld. DR. Accordingly, the issue of revenue's appeal is dismissed and that of the assessee's appeal is partly allowed. Addition made u/s. 2(22)(e) for deemed dividend - Held that:- The issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 wherein held that the AO applied the provisions of section 2(22)(e) of the Act in case of loan taken by assessee from Oberoi Plaza Pvt. Ltd. and Bombay Plaza Pvt. Ltd. since Oberoi Plaza Pvt. Ltd. is a 100% subsidiary of the assessee and Bombay Plaza Pvt. Ltd. is a 100% subsidiary of Oberoi Plaza Pvt. Ltd. During the course of appellate proceedings, the assessee filed fresh evidence before CIT(A) in the shape of Memorandum of Association which establishes that the object ancillary to the main object includes money lending, thus, for both the companies the business includes lending of money/advance. These documents were not examined by the AO, hence, we are of the view that let it be examined by the AO and decide the issue afresh. - Decided in favour of assessee for statistical purposes. Allowance of ALV of the house property by rejecting the expected rent and accepting the actual rent received by the assessee by CIT(A) - Held that:- The issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 as held even as per the deeming provision of Section 23(1)(a), in the case of let out property, only the actual rent received was required to be considered as annual value of property. The AO failed to appreciate such estimation of annual letable value as per provision of Section 23(1)(a) was called for only in case of vacant property and not where the property was actually let out since in the case of let out property, the assessee was not entitled to anything over and above the agreed rent. The said action of the AO has resulted in taxing notional income in the hands of the assessee, which never accrued and hence cannot be brought to tax. Accordingly, we are of the view that the CIT(A) has rightly deleted the addition and hence, we confirm the order of CIT(A) on this issue - Decided in favour of assessee
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