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2017 (11) TMI 1368 - AT - Income TaxDisallowance made u/s.14A r.w.r. 8D - Held that:- FAA has held that provision of Rule 8D of were not applicable for the year under consideration. We do not see any legal or factual infirmity in the order of the FAA. So, confirming his order we decide first Ground of appeal against the AO. Disallowance made u/s.37(1)- AO held that activity of investment for controlling interest in share capital of the other companies could not be treated as business activity - Held that:- It was brought to our notice that identical issue was decided in favour of the assessee and against AO by the Tribunal, while deciding the appeal for the AY. 2004-05 as held that the assessee being an investment & finance company and a promoter of new companies and having interest in the business of these companies has made the investments for business purposes for having control over these subsidiary and associated companies. In the light of the proposition in “S.A. Builders v. CIT” (2006 (12) TMI 82 - SUPREME COURT) it is held that no disallowance in this case is attracted u/s 36(iii) Payment under the head legal and professional fee - non deduction of tds - Held that:- We find that in the remand report the AO, himself had admitted that foreign entities rendered services outside India and they did not have any PE in India, that payment made to Indian consultant was below the threshold limit envisaged by the provisions of section 194J of the Act. Considering the above facts, we are of the opinion that there is no need to interfere with order of the FAA. Disallowance u/s 14A - Held that:- In our opinion, expenditure incurred for earning exempt income only can be disallowed. As stated earlier, Rule 8D was not applicable for the year under appeal. But, the honorable Bombay High Court in the case of Godrej Boyce Manufacturing Company [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held reasonable disallowance can be made u/s.14A of the Act for the year under appeal. Therefore, we hold that disallowance should be restricted to 2% of the expenses of HO. First ground of appeal is decided in favour of the assessee. TDS u/s 194A - Non deduction of tds on payment of interest to a trust - Held that:- .We find the AO had made the disallowance as the assessee had not deducted tax at source while paying interest, that as per the assessee the recipient of the disputed amount had paid the taxes. In our opinion, the matter needs further verification. So, in the interest of Justice, we are restoring that the matter to the file of the AO for verification. We hold that the second proviso to section 40(a) of the Act is retrospective in nature. Respectfully following order of the Tribunal in the case of M/s. Selprint (2015 (12) TMI 396 - ITAT MUMBAI), we direct the AO to decide the issue after affording a reasonable opportunity of hearing to the assessee Taxability of capital gains in the hands of the assessee on sale of shares of IDEA by its wholly owned subsidiary (WOS) - whether provisions of section 93 are applicable to the sale of Idea shares by Apex to Birla Group? - Held that:- Section 93 has to be strictly construed and has to be taken to its logical conclusion. It means that if the situation specified in the section exists, only then it will be applicable. We find that one of the basic fact i.e. transfer of property by a resident to a non resident is not there in the whole transaction. In the case under appeal, a non-resident company has transferred property i.e. shares to a resident and that resident is an unrelated party. Absence of transfer by resident to a non resident entity takes the transaction out of the ambit of section 93,a deeming provision. As stated earlier, the section has to be construed strictly and full effect has to be given to the consequences flowing from it. The apparent consequence is that the assessee is out of the net of the provisions of section 93 of the Act. Therefore, in our opinion, the departmental authorities have wrongly invoked the provisions of section 93.- Decided favour of the assessee.
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