TMI Blog2014 (10) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... nst provision of such services after verification of the same. Accordingly this ground is partly allowed - this ground of appeal is partly allowed as a part of the service charges collected is to be considered as 'Income from Business and Profession' / 'Income from Other Sources' – thus, the order of the CIT(A) is to be upheld - Decided against revenue. Non-deduction of TDS on commission paid to directors u/s 40(a)(ia) – Requirement u/s 194H fulfilled or not – Held that:- The tax deducted at source was deposited before the due date of filing the return under section 139(1) of the Income Tax Act – following the decision in CIT vs. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT] the proviso to section 40(a)(ia) as amended by the Finance Act, 2010 are free from any ambiguity and doubt and clearly support the view that the expression "said due date" in clause (A) to the proviso to unamended section refers to the time specified in section 139(1) of the Act - the amendment vide Finance Act, 2010 as a remedial and therefore the payment of tax deducted at source before the due date of return of income u/s 139(1) is sufficient compliance of provisions of section 40(a)(ia) and no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore for the purpose of disallowance under section 14A by applying rule 8D the investment made in the subsidiaries and in the foreign company shall be excluded - The apportionment of the administrative expenses can be made only by considering the investment in the domestic companies other than the subsidiary company – the AO is directed to re- compute the disallowance under section 14A in respect of the administrative expenses by excluding the investment in the subsidiaries and in the foreign companies – Decided partly in favour of assessee. - ITA No. 6277/M/2012, ITA No. 6167/M/2012 - - - Dated:- 17-10-2014 - Shri Vijay Pal Rao And Shri Rajendra,JJ. For the Petitioner : Shri Pradip N. Kapasi, A.R. For the Respondent : Shri Akhilendra P. Yadav, D.R. ORDER Per Vijay Pal Rao, Judicial Member: These cross appeals are directed against the order dated 03.07.2012 of the CIT(A) for the assessment year 2008-09. First we take up the Revenue's appeal wherein the Revenue has raised the revised grounds as under: ITA No. 6277/M/2012 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years 2002-03 to 2007-08. The ld. CIT(A) decided the issue by following the decision of this Tribunal in assessee's own case in paragraphs 3.1 to 3.3 of the impugned order as under: 3.1 After taking into consideration the order of the assessing officer, the details and voluminous submission of the appellant, the orders of the appellate authority in the case of the appellant for the earlier assessment years, it is seen that the issue concerned was present in the case of the appellant in the earlier years also and the Hon'ble ITAT had adjudicated upon it in their order dated 13/04/2012 wherein after taking into consideration all the details they have observed as under: We have considered the rival submissions carefully and in our opinion, it seems to be a simple case of letting out of properly. This fact becomes clear from the following chart wherein details of receipts of account of services and details of expenditures have been furnished. 3.2 The Hon'ble ITAT has thereafter examined a chart for assessment years 2004-05, 2005-06 and 2006-07 regarding receipts and proportionate expenses of various items and stated as under: ........ ... The above clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly this ground is partly allowed. 3.3 As the facts of the case in the concerned assessment year which is the subject matter of this appeal has remained the same with similar stand being taken both by the appellant and the assessing officer as was taken in the earlier assessment years from 2004-05 to 2007-08, it is essential that for the sake of uniformity the stand that is taken by the assessing officer while giving effect to the order of the Hon'ble ITAT quoted above be taken in this year also. Accordingly, the AO is directed to strictly comply with the observation and the directions of the Hon'ble ITAT as available in their order dated 13/04/2012 in the case of the appellant (for assessment years 2004 - 05 to 2007 - 08) on the issue under discussion to take appropriate action in the concerned assessment year also. Accordingly, this ground of appeal is partly allowed as a part of the service charges collected is to be considered as 'Income from Business and Profession' / 'Income from Other Sources' as stated by the Hon'ble ITAT. 4. Since the ld. CIT(A) has followed the decision of this Tribunal in assessee's own case, therefore we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held in paragraphs 25 26 as under: 25. In view of the aforesaid discussion in paragraphs 18, 19 and 20, it is apparent that the respondent-assessee did not violate the unamended section 40(a)(ia) of the Act. We have noted the ambiguity and referred the contention of the Revenue and rejected the interpretation placed by them. The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support the view taken in paragraphs 17 to 20 that the expression said due date used in clause (A) of the proviso to the unamended section refers to time speci- fied in section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statute when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. 26. Before we close, we must deal with another contention raised by the counsel for the Revenue to the effect that the Finance Bill, 2010, increases the rate of interest from 12 per cent. to 18 per cent. for failure to deposit TDS in time. This increase in rate of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: I. Ground No 1 - Disallowance u/s 14A (Para 11 of the AO's order Para 8 of the CIT(A)'s order) 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in confirming disallowance of ₹ 13,800,000/- under section 14A of the Income Tax Act, 1961 ('the Act') read with Rule 8D of the Income-tax rules ('the Rules') out of the genuine business expenses incurred wholly and exclusively for the purposes of business. 2. On the facts and circumstances of the case and in law the CIT(A) failed to appreciate that the calculation furnished during the course of assessment was not suo-moto but was furnished without prejudice under the direction of the Ld.AO and therefore the Ld.CIT(A) erred in law in sustaining the disallowance on account of the calculation furnished under the directions of the Ld.AO. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have held that no disallowance could be made under s. 14A of the Act. 4. Your appellant prays that the said expenditure be allowed in full as claimed by the appellant and the disallowance thereof/ additions thereto of ₹ 13,800,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33.80 crore have been made in the subsidiaries of the assessee out of which the investment of ₹ 32.80 crore is in the foreign subsidiary. Thus the ld. A.R. has submitted that no disallowance in respect of interest expenditure is called for under section 14A when the assessee's own fund is more than sufficient for the investment during the year. He has further contended that for the assessment year 2007-08 and earlier years the Tribunal had remanded the matter to the record of the Assessing Officer for disallowance under section 14A in the light of decision of Hon'ble Jurisdictional High Court in the case of Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT reported in (2010) 328 ITR 81 (Bom) and the Assessing Officer while passing the giving effect order of the Tribunal's direction has disallowed the administrative expenses at 0.25% of the investment and no disallowance has been made in respect of interest expenditure. Therefore when no disallowance was made on account of interest expenditure under section 14A in the earlier year and the assessee's own fund is many times more than the investment made during the year then the action of the authorities below is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 32.80 crore has been made in CG International BV which is a foreign company and the dividend on such investment is not tax free as per the provisions of section 10. Therefore the provisions of section 14A are not attracted to the extent of the investment in the foreign company. Accordingly, we direct the Assessing Officer to exclude the investment made in the foreign company for the purpose of disallowance under section 14A. Now we will examine the fact whether the assessee had sufficient funds for the investment which generates the tax free income. As we have already noted that out of the total investment of ₹ 59.22 crore during the year an investment of ₹ 32.80 crore is in the foreign company and therefore after excluding the said investment the investment during the year generating the tax free income comes to ₹ 26.42 crore only. From the analysis of the statement of source and application of fund as well as the balance sheet of the assessee, we find that there is an increase in the assessee's own fund to the tune of ₹ 300 crore and at the same time there is a decrease in the loan funds during the year to the tune of ₹ 228 crore. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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