TMI Blog2015 (3) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in computing the value of closing stock by taking into consideration excise duly on that portion of closing stock where no excise duty is actually payable in law (goods procured under advance license, exempted, etc.)? - Held that:- As relying on assessee's own case [ 2014 (7) TMI 426 - ITAT MUMBAI] assessee is following ‘inclusive method of accounting’ and the only actuals are entered in the books of accounts. There is no need for adjustment of inventories as they were already adjusted basing on the actuals in accordance with the provisions of section 145A of the Act. On hearing both the parties and on perusal of the material on record, we are of the opinion that this issue needs to revisit the file of the AC and the closing stock valuations have to be redone in the light of the provisions of section 145A of the Act. Accordingly, we remand the issue to the file of the AO for adjudicating the issue afresh - Decided in favour of assessee for statistical purposes. Expenditure in respect of guest houses and residential flats disallowed - appellants have failed to produce documentary evidence in respect of use of guest house and residential flats - Held that:- As relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CT (1991 (4) TMI 53 - BOMBAY High Court). Considering the same, we are of the opinion that the CIT (A) has rightly adjudicated the issue. - Decided in favour of assessee. - ITA NO.824/MUM/2012 , ITA NO.8610/MUM/2012 - - - Dated:- 26-2-2015 - Shri I.P. Bansal And ShrI Chandra Poojari JJ For the Appellant : Mrs. Parminder Kaur Shri Premanand J. For the Respondent : Shri . S. Sriram ORDER Per I.P.Bansal, J.M: These are cross appeals and are directed against order passed by Ld. CIT(A)- 12, Mumbai dated 13/10/2011 for A.Y 2008-09. Grounds of appeal read as under: Grounds of Assessee s Appeal: A. The Ld. Commissioner of Income Tax (Appeals) erred in disallowing expenditure amounting to ₹ 42,16,000 in terms of Rule 8D. Investments materially decreased in the present financial year compared to the previous financial year hence, no fresh investments were made in the present financial year. Further, the non- interest bearing own funds far exceed the interest bearing funds. Therefore no part of the expense can be attributed to the exempted income. B. The Ld. Commissioner of income Tax (Appeals) erred in disallowing expenditure amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th as Annexure-1 affirming the details of expenditure incurred on account of guest house and residential houses. E. The Ld. Commissioner of Income Tax (Appeals) has erred in disallowing exemption claimed in respect of dividend income earned from subsidiary based in Sri Lanka. The Appellants submit that they did not claim exemption in respect of dividend income earned from subsidiary based in Sri Lanka. The Ld. Commissioner of Income Tax (Appeals) has erred in rejecting the present ground on the basis that the same has not been pressed by the appellants at the time of hearing. The appellants have mistakenly not pressed the present ground because the appellants relied upon wrong statement showing computation of income. The appellants wrote a letter dateN 23.12.2011 (Annewre-2) to the CIT(A) that the present ground is correct and the Additional Commissioner is incorrect in holding that the appellants have claimed exemption for dividend income. In fact, in the return filed, the appellants have indeed offered dividend income earned from subsidiary based in Sri Lanka for taxation in India and also claimed credit of TDS deducted in Sri Lanka. The Ld. Additional Commissioner has made er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value of the investments as on 1st April NIL b) Average value of investments during the year 640.74 Value of the total assets as on 1st April 89417.35 Value of the total assets as on 31st March 101815.99 c)Average value of total assets during the year 95616.67 Amount of disallowance [a (b/c)] 38.16 iii) 0.5% of Average Investment of 640.74 lacs 3.20 TOTAL DISALLWOANCE U/S.14A (i+ii+iii) 42.16 2.2 The aforementioned table was referred during the course of hearing of this appeal and it was submitted by Ld. AR that the grievance of the assessee in the present appeal is limited to the extent of ₹ 38,16,000/-, which is on account of interest disallowance. Therefore, to that extent the Tribunal may consider the submissions of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of interest, other part is confirmed. Ground A B are partly allowed. 5. Ground C was stated to be covered by earlier decision of the Tribunal in assessee s own case for assessment year 2007-08. The decision is dated 25/06/2014, rendered in ITA No.1933/Mum/2011, copy of which is filed at pages 42 to 50 of the paper book and this issue has been dealt by the Tribunal as under: 8. Third issue raised by the assessee relates to the valuation of closing stock. At the outset, Ld Counsel for the assessee mentioned that this issue should also be remanded to the file of the AO. To justify the same, Ld Counsel mentioned that the assessee is following inclusive method of accounting and the only actuals are entered in the books of accounts. There is no need for adjustment of inventories as they were already adjusted basing on the actuals in accordance with the provisions of section 145A of the Act. Ld Counsel for the assessee vehemently argued by stating that the judgments relied on by the Revenue Authorities have no relevance to the facts of the present case. Further, referring to the Annexure-A to the assessment order, Ld Counsel mentioned that there are patent errors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats owned by the employees. It is also submitted that the expenditure incurred on employees may be fully allowed as it is incurred for the business purposes. As such, it is not dear from the record that why the assessee has to incur on the residential flats allotted to the employees of the company. Considering the no objection from the Ld DR, we remand the matter to the file of the AO with a direction to decide the issue afresh after examining the details and contents made in the said affidavit and pass a speaking order after granting a reasonable opportunity of being heard to the assessee. Accordingly, ground no.2 raised by the assessee is allowed for statistical purposes. 8.1 It was further submitted that facts and circumstances of present year are similar and affidavit of Shri Govind Sharma is also filed in the paper book. 9. In this view of the situation, after hearing both the parties, respectfully following the aforementioned decision of Tribunal in assessee s own case, we pass similar order and the matter is restored back to the file of AO with similar directions. This ground is also considered to be allowed for statistical purposes in the manner aforesaid. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the brought forward losses which are determined in the earlier years subject to fulfillment of other conditions laid down for valid claim for set off of brought forward losses. The AO will pass appropriate order after giving the assessee a reasonable opportunity of hearing. This ground is also considered to be allowed for statistical purposes in the manner aforesaid. ITA No.8610/Mum/2011:Revenue s Appeal : 14. The sole grievance of the Revenue in the present appeal is regarding grant of relief by Ld. CIT(A) against expenses incurred towards club membership and this issue has been dealt with by the Tribunal in Departmental appeal for A.Y 2007-08 in the aforementioned order dated 25/6/2014 passed in ITA No.2538/Mum/2011(cross appeal with assessee s appeal ITA No.1933/Mum/2011) and this issue is dealt with by the Tribunal as follows: 20. Ground no.3 relates to the disallowance of ₹ 6,16,455/- in respect of club expenses. Briefly stated, in the return assessee claimed ₹ 6,16,455/- as expenditure on account of payments made to clubs which includes annual subscription as well as cost of club services. During the assessment proceedings, AO is not satisfied with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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