TMI Blog2012 (11) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... travel expenses – alleged that assessee did not produce a majority of the vouchers – assessee submitted that these were to be called from various units located in different places – Held that:- Matter remitted to the file of the AO with the directions to allow another opportunity to the assessee to produce all the bills and vouchers in relation to the aforesaid expenses on account of repairs to building and plant & machinery as also of miscellaneous and travel expenses and thereafter, pass appropriate orders in accordance with law - appeal is partly allowed for statistical purposes. - ITA No.4913/Del/2010 - - - Dated:- 13-1-2012 - SHRI R.P. TOLANI SHRI A.N. PAHUJA, JJ. Assessee by Shri R.S. Singhvi, AR Revenue by Shri Salil Mishra, DR ORDER A.N. Pahuja:- This appeal filed on 10.11.2010 by the Revenue against an order dated 23.09.2010 of the learned CIT(A)-II, New Delhi for the AY2007-08, raises the following grounds:- 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in giving a relief of Rs.5,76,320/- on account of disallowance u/s 14A. 2. On the facts and in the circumstances of the case, the learned CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom dividends. For this working the Assessing Officer has relied on the statistics provided by the assessee s accountant Shri Pawan Sachdeva regarding total assets of the company, total closing balance of investments in mutual funds and the ratio between the two at 1.67% and has applied it to finance and other charges paid of Rs.6,40,76,660/- to arrive at the disallowance of Rs.10,70,680/-. For this the Assessing Officer has relied on the Hon ble Supreme Court Ruling in the case of CIT Vs. United General Trust Ltd. 200 ITR 488. However, it is observed that the Hon ble Apex Court in this judgment dated 19.2.1993 has allowed the appeal raised by the revenue regarding a question declined by the Hon ble Bombay High Court, regarding Hon ble Supreme Court Judgment in Distributors (Baroda) P. Ltd. Vs. Union of India (1985) 155 ITR 120 which was regarding constitutional validity of section 80AA brought with retrospective effect. Apparently the citation does not match the facts of the present case unless the Assessing Officer has attempted to draw support from the Hon ble Apex Court s approval of principle of retrospective effect of the provisions for application of section 14A. This in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 14A of the Act in reply to a query by the AO. Therefore, the ld. CIT(A) was not justified in reducing the disallowance. To a query by the Bench, the ld. DR submitted that no new investment appears to have been made in the mutual funds in the year under consideration. On the other hand, the ld. AR on behalf of the assessee contended that it was only at the behest of the AO that the assessee submitted a working of the disallowance and the assessee never agreed for disallowance u/s 14A of the Act in terms of the said working. The assessee did not utilize any borrowed funds for investment in mutual funds, because of reserves and surplus to the extent of Rs.2,42,84,70,549/-. In the absence of any nexus between investment in mutual funds and borrowed funds, there was no case for disallowance, the ld. AR argued. The ld. AR added that in the preceding assessment year total payment of interest and financial charges was to the tune of Rs.2,95,66,516/- which increased in the year under consideration to Rs.6,40,76,660/-. Even though there was increase in finance and other charges because of fresh borrowings, no fresh investment was made in mutual funds in the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded that admissibility of these expenses was not ascertainable and looking to the past history of the case, disallowed 5% of the expenses, resulting in disallowance of Rs.10,18,336/-. 7. On appeal, the learned CIT(A) deleted the disallowance of repair expenses in the following terms:- 7. On this ground the appellant has submitted that- ad hoc disallowance of Rs.23,60,746/- out of claim of repair expenses in respect of building and plant and machinery. There is no dispute that details of these expenses were filed before Assessing Officer and major vouchers were produced for verification. However, the Assessing Officer on the basis of observation that in the preceding year, 10% of the expenses were disallowed, made similar disallowance during the year under reference. However, the disallowance in the preceding year has been deleted by CIT(A) and order of the CIT(A) has been accepted by the Assessing Officer himself as no second appeal was filed before ITAT against order of the CIT(A) on this issue. 7.1 Further, the AR has relied on various rulings including Simbhaoli Sugar Mill Ltd. Vs. ACIT (2007) 17 sot 90 (Delhi), Seasons Catering Services Pvt. Ltd. Vs. DCIT 43 DTR 397 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee contended that disallowance was made on the basis of past history of the case. Since in the preceding year, similar disallowance had been deleted and the Revenue did not prefer appeal, the ld. CIT(A) was justified in deleting the disallowance. In his rejoinder, the ld. DR pointed out that neither the AO nor the learned CIT(A) verified the genuineness of the expenditure for want of relevant bills and vouchers and, therefore, matter requires reconsideration by the AO in the light of relevant bills and vouchers. 9. We have heard both the parties and gone through the facts of the case. Indisputably, the assessee did not produce all the bills and vouchers in relation to expenditure on repairs to building and plant and machinery or even in respect of miscellaneous and travel expenses on the ground that these were to be called from various units located in different places. In these circumstances, the AO made ad hoc disallowance out of these expenses, looking to the past history of the case. There is nothing to suggest that the assessee produced all the bills vouchers before the ld. CIT(A) nor seems to have verified the genuineness of expenditure or even recorded any such fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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