Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 1435 - AT - Income TaxAllowable business expenses u/s 37(1) - expenses incurred for the running of the business of the assessee OR Income from house property - nature of advertisement expenses and business promotion expenses debited under the head “Administrative and Selling Expenses” - possibility of common expenditure - Revenue’s case is that, for earning of rental income, amount should be disallowed on the ground that, this much amount should be allocated for the earning of the rental income from the amount of expenses debited under the head “Administration & Selling Expenses” as appearing in Schedule “E” above - HELD THAT:- From the clear cut covenants and terms of the agreement, it is abundantly clear that the assessee does not have to incur any administrative expenditure for running and maintenance of the Mall and, therefore, in the light of these facts and background, it cannot be held that any administrative expenditure should be allocated for running of the Mall. On a perusal of expenditure debited under Schedule E, as incorporated above, it is seen that the assessee has debited sum under the head “Advertisement” and under the head “Business Promotion Expenses”. Further, from a perusal of break-up of these expenses which was filed before the CIT(A), we find that certain amounts have been debited for “Mall Upkeep & Promotional receipt”. If these expenditures are related for earning of income from Mall then, definitely it cannot be allowed as an expenditure under section 37(1) i.e. while computing the business income of the assessee, because admittedly, receipts from the Mall is in the form of lease rental which has been assessed under the head “Income from House Property” like in the earlier and subsequent years. This fact needs proper verification and examination by the AO which has not been done in the proper prospective. This matter should be restored back only for the limited purpose of examining the nature of advertisement expenses and business promotion expenses debited under the head “Administrative and Selling Expenses” as enumerated in Schedule E of the Profit & Loss Account. If these expenditures directly attributable to earning of lease rental income then, appropriate disallowance can be made, if at all required. With this direction this issue is treated as partly allowed for statistical purposes. Disallowance made u/s 14A - incurring of any expenditure in respect of earning of the exempt income - HELD THAT:- CIT(A) has referred to the earlier order of the CIT(A) and Tribunal for the assessment year 2008-09, however before us, nothing relating to A.Y. 2008-09 has been filed before us. In any case, we find that, assessee’s claim with regard to non-incurring of any expenditure for earning of exempt income has not been examined by the AO, as per the requirement of section 14A(2) and (3). The AO has blindly followed Rule 8D without complying with the mandatory requirement of section 14A(2) and (3). Therefore, in the interest of justice, we are restoring this issue to the file of the AO to examine the nature of accounts of the assessee and also the contentions raised before us that all these investments are strategic investment made in the subsidiary company and decide the issue afresh and in accordance with the law. Accordingly, ground as raised by the assessee is treated as allowed for statistical purposes.
|