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2021 (10) TMI 619 - AT - Income TaxNature of expenses - Disallowance of legal expenses and service tax paid - revenue or capital expenditure - expenditure related to stock-in-trade - HELD THAT:- On perusal of order of learned Commissioner (Appeals)-II, Bombay for assessment years 1990-91 and 1991-92, we find that the first appellate authority has very clearly and categorically held that the immovable properties located at Hyderabad are stock-in-trade of the assessee. The aforesaid decision of learned first appellate authority has also been approved by the Tribunal while dismissing revenue’s appeal - Thus, once the immovable properties located at Hyderabad have been held as stock-in-trade, they cannot be treated as capital asset in terms of section 2(14)(i) - Thus, any expenditure related to stock-in-trade has to be considered as revenue expenditure. On perusal of order of Commissioner (Appeals)-II, Bombay for assessment years 1990-91 and 1991-92, we find that the first appellate authority has very clearly and categorically held that the immovable properties located at Hyderabad are stock-in-trade of the assessee. Thus, once the immovable properties located at Hyderabad have been held as stock-in-trade, they cannot be treated as capital asset in terms of section 2(14)(i) of the Act. Thus, any expenditure related to stock-in-trade has to be considered as revenue expenditure. - Decided in favour of assessee. Disallowance u/s 14A of the Act r.w.r. 8D - suo-moto disallowance made by assessee - HELD THAT:- As total administrative and management expenses claimed by the assessee is little more than ₹ 13 lakhs; whereas, the assessee has disallowed an amount of ₹ 7.84 lakhs under section 14A of the Act. Admittedly, the disallowance computed by the assessing officer only relates to administrative expenditure under rule 8D(2)(iii). Therefore, when the assessee has disallowed more than 50% of the total expenditure claimed, no further disallowance is called for. Assessee’s claim that the disallowance should be restricted to ₹ 2 lakhs as held by the Tribunal in assessment year 2006-07, we are unable to accept such contention. Firstly, in assessment year 2006-07, rule 8D was not applicable. Secondly, the assessee itself has computed the disallowance at ₹ 7.84 lakhs. In fact, in assessee’s own case for subsequent assessment years, i.e. assessment years 2009-10, 2011-12, 2012-13 and 2013-14, the Tribunal has consistently held that the disallowance u/s 14A r.w.r. 8D should be restricted to suo motu disallowance made by the assessee - No infirmity in the decision of learned Commissioner (Appeals) on the issue. Accordingly, ground 2 in revenue’s appeal and grounds 4,5 and 6 in cross objection are dismissed. Disallowance u/s 14A r.w.r. 8D while computing the book profit u/s 115JB - HELD THAT:- As this issue is now squarely covered by the decision in case of ACIT vs Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] - Therefore, we uphold the decision of learned Commissioner (Appeals). This ground is also dismissed.
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