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2016 (10) TMI 918 - AT - Income TaxDeemed dividends u/s. 2(22)(e) - loans and advances - claim of the assessee is that it is an Inter-Corporate Deposits - Held that:- The authorized share capital of ₹ 2 crores is fully paid up. When the authorized capital has been fully subscribed and paid up, we fail to understand how can the assessee accept share application money of ₹ 1,55,20,000/- when it cannot allot shares of even one rupee to anyone. There is no documentary evidence on record to suggest that the assessee has applied for the increase in its authorized share capital. When the subscribed and paid up share capital has fully exhausted, the authorized share capital of the assessee company claiming to have received share application money of ₹ 1.55 crores is nothing but eyewash and afterthought just to manipulate the facts. The theory of share application money can be demolished simply by these facts on record. The assessee blows hot and cold in the same breath. On the one hand it is claiming the impugned amount as share application money and when this story is demolished, it is taking an alternative plea on Inter-Corporate Deposits (ICD). There is nothing on record to suggest that the two companies are authorized for Inter-Corporate Deposits. Since there is no demonstrative evidence on record by which it can be proved that the impugned amount is Inter-Corporate Deposits, the claim of the assessee cannot be accepted. - Decided against assessee. Disallowance of Insurance Premium - Held that:- There is no denying that the Insurance Premium has been paid on the life of the Directors of the Company. The claim of the assessee that such Insurance Premium is nothing but perquisite is not acceptable. Since there is nothing on record which could suggest that such perquisite is part of the service agreement with the Directors. Moreover, there is no commercial expediency to take Insurance on the life of Directors unless the premium is paid towards Keyman Insurance Policy. The assessee has also failed to produce any documentary evidence to prove that the said amount has been treated as a perquisite in the hands of the Directors. Considering all these facts in totality, we decline to interfere with the findings of the ld. CIT(A). The second grievance of the assessee is also dismissed. Disallowance made u/s. 14A read with Rule 8D - Held that:- There is no denying that during the year under consideration the assessee has earned exempt income in the form of dividends and Long Term Capital Gains. It is also an admitted fact that the assessee has engaged a Portfolio Manager for doing transaction on its behalf. The Portfolio Management Fees, Demat charges and Security Transaction Tax have already been disallowed by the assessee. It is also an admitted fact that the assessee has paid substantial interest on its borrowings. The Assessee must have also incurred some administrative expenses. Provisions of Section 14A read with Rule 8D squarely apply on the facts of the case. The disallowance computed by the A.O. are as per the provisions of the Act; therefore, calls for no interference with the findings of the ld. CIT(A)
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