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2024 (2) TMI 1223 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Addition of interest expenditure - assessee has earned exempt income by way of dividend - assessee did not make any suo motu disallowance under section 14A read with Rule 8D - HELD THAT:- When the AO called upon the assessee to explain, why the disallowance u/s 14A r.w.r. 8D should not be made, the submissions of the assessee was that the investments made in subsidiaries and joint ventures are in the nature of strategic investments and not with an intendment to earn exempt income. On a perusal of assessment order, it is very much clear that the AO has recorded reasons/satisfaction, why assessee’s explanation is not acceptable and disallowance has to be made under section 14A read with Rule 8D. As fairly well settled that strategic investment in group entities cannot escape the rigours of section 14A read with Rule 8D. It is not a case where the assessee has made any suo motu disallowance, which could have shifted the burden to the AO to record satisfaction to establish that the disallowance made by the assessee is incorrect, having regard to the entries made in the books of account. Therefore, decision in case of Coforge Ltd [2021 (7) TMI 346 - DELHI HIGH COURT] would not be apply to the facts of the present appeal. Thus, we are unable to accept assessee’s contention that the AO has not recorded any satisfaction, which invalidates the disallowance u/s 14A read with Rule 8D. We find substantial merit in the alternative contention of learned counsel for the assessee that the disallowance under Rule 8D(2)(iii) should be computed with reference to investments giving rise to exempt income during the year and not the entire investment, which might give rise to exempt income in further. AO is directed to recompute the disallowance under Rule 8D(2)(ii) accordingly. Grounds are partly allowed. Disallowance of depreciation on leasehold property claimed as amortization - HELD THAT:- We find, while deciding identical issue in assessee’s case in as held as unable to appreciate arguments advanced by that these advances paid are towards advance rent. Even from the terms of agreements, it is not clear as to whether advances paid has been adjusted against future rent or whether these are in the nature of security deposits which are refundable in nature on termination of agreements. Both parties before us have expressed their intention regarding issue being re-adjudicated by assessing officer de novo. Accordingly, we are inclined to set aside this issue to Ld. AO for fresh adjudication. Ld. AO shall investigate upon and take all necessary steps to ascertain true nature of alleged lease premium paid by assessee in the three agreement made as per law. Thus restore the issue to the Assessing Officer for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes. Disallowance towards static creditors - Commissioner (Appeals), having factually verified that certain creditors have been written off and amounts have been added back to the income in subsequent years and in respect of certain creditors payments have been made, deleted the addition - HELD THAT:- Before us, learned Departmental Representative has failed to bring any material on record to controvert the aforesaid factual finding of learned first appellant authority. That being the case, we decline to interfere with the decision of learned first appellate authority. Ground raised is dismissed. TDS u/s 194J - Disallowance u/s 40(a)(ia) - assessee has paid custody and listing fees to NSE, BSE, NSDL and CDSL - HELD THAT:- The issue is squarely covered by the decision of the Tribunal in assessee’s own case in assessment years 2010-11 to 2012-13 wherein the Hon’ble Supreme Court concluded that transaction charges paid to BSE by its members does not fall under the category of technical services, and therefore, no TDS is following the ratio laid down by the Hon’ble Apex Court in the case of CIT Vs. Kotak Securities [2016 (3) TMI 1026 - SUPREME COURT] we hold that the aforesaid nature of payment does not fall within the category of Technical and Managerial fee and accordingly assessee was not required to deduct TDS u/s. 194J. Disallowance on delayed payment of employees contribution to Provident Fund (PF) and Employees State Insurance - HELD THAT:- As fairly submitted by learned counsel appearing for the assessee, the issue is squarely covered against the assessee in view of the decision of Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] - Thus, following the ratio laid down by Hon’ble Supreme Court in the aforesaid decision, we uphold the disallowance made by the Assessing Officer.
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