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2015 (8) TMI 36 - ITAT CHENNAI

2015 (8) TMI 36 - ITAT CHENNAI - TMI - Disallowance under section 14A - CIT(A) restricted addition to 2% as against 10% disallowed by the Assessing Officer - Held that:- CIT(Appeals) restricted disallowance under section 14A to 2% relying on the decision of the co-ordinate Bench of this Tribunal in assessee’s own case for the assessment year 2001-02. Thus we do not find any infirmity in the order passed by the Commissioner of Income Tax (Appeals) - Decided against revenue.

Disallowanc .....

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derstanding they had with the holding company. The share of expenditure paid by the subsidiary companies are in the form of reimbursement of expenditure incurred by the holding company on behalf of subsidiary companies. Since the reimbursement of expenditure by the holding company is not leading to any accrual of income in the hands of that company, the question of making TDS on such income does not arise. Further the amounts paid outside India in the instant case are not falling under either ro .....

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la Nagendra Prasad,JM. These two appeals are filed by the Revenue against separate orders of the Commissioner of Income Tax (Appeals)-I, Chennai dated 25.09.2014 for the assessment years 2005-06 & 2006-07. 2. The first issue in both the appeals of the Revenue is that Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to restrict disallowance under section 14A to 2% of exempt income in place of 10% adopted by the Assessing Officer. The Assessing Officer while comple .....

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ncurred any expenditure by way of interest and other charges, no arbitrary amount of expenses can be disallowed. It is further submitted by the assessee that in its own case, the Tribunal for the assessment year 2001-02 by order in ITA No.1725/Mds/2003 dated 26.10.2005 restricted the disallowance to 2% as against 10% disallowed by the Assessing Officer. However, the Assessing Officer disallowed 10% of the dividend income earned by the assessee as the expenses attributable for earning the dividen .....

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for the assessee places reliance on the order of the Commissioner of Income Tax (Appeals). 5. After hearing both the sides and on going through the orders of lower authorities, we find that Commissioner of Income Tax (Appeals) restricted disallowance under section 14A to 2% relying on the decision of the co-ordinate Bench of this Tribunal in assessee s own case for the assessment year 2001-02 in ITA No. ITA No.1725/Mds/2003 dated 26.10.2005. Thus we do not find any infirmity in the order passed .....

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sessment noticed that assessee made certain payments to M/s. Amalgamation Pvt. Ltd. and no TDS was deducted on such payments and therefore proposed to disallow the said payments under section 40(a)(i) of the Act. In the course of assessment proceedings, assessee submitted that amounts paid to M/s. Amalgamation Pvt. Ltd. were reimbursement of expenses made by the assessee. The expenses were incurred on behalf of the assessee by M/s. Amalgamation Pvt. Ltd., therefore such expenses were reimbursed .....

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ses made to M/s. Amalgamation Pvt. Ltd., which is a holding company as that company had incurred expenses. Counsel for the assessee submits that holding company incurred expenses on behalf of the subsidiary company and subsidiary company reimbursed the such expenditure. He submits that M/s. Amalgamation Pvt. Ltd. which is a holding company incurred expenses towards rent, salary office facilities, travelling & secretarial services and these expenses were borne by the subsidiary company accord .....

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malgamation Pvt. Ltd. or not in para 5.1 & 5.2 of his order observing as under:- "5.1 The Id.AR contested as under: "The Amalgamation Pvt. Ltd pays the representative who acts on behalf of the participating group company's representative office at London. The total expenditure on the expenditure including rent, office facilities etc. incurred for the purpose of export promotion of products offered by the participating companies in the group during that year. The assesee is one .....

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e the tax is payable and not otherwise. Once the tax liability does not exist, the question of deducting TOS does not arise. The assessee relies upon the decision of the CIT(A) in the assessee's sister concern in the case of I.P Rings in ITA No.S23/06-07 for the AY 1999-2000 against which the department has not filed any appeal to the tribunal. " 5.2 I have gone through the facts and circumstances of the case. It is understood from the facts of the case that Amalgamation Pvt Ltd is a ho .....

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