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2015 (9) TMI 596 - ITAT MUMBAI

2015 (9) TMI 596 - ITAT MUMBAI - TMI - Disallowance u/s 14A r.w.r 8d - Held that:- The issue arising before us is identical to the issue before Tribunal in Rainy Investment Pvt. Ltd. Vs. ACIT (2013 (2) TMI 602 - ITAT MUMBAI ) and following the same parity of reasoning, we hold that no disallowances under section 14A of the Act is to be made in respect of the investment made by the assessee in share application money. However, relying on the order of the Tribunal we restore this issue back to fil .....

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hare application money was not for the reason that it did not yield any tax free income for the relevant year, but for the reason that it was incapable of generating any such income. Accordingly, we hold so. - Decided in favour of assessee for statistical purposes.

Addition of vehicle expenses debited to profit & loss account treating the same as expenses for non-business purposes - Held that:- No merit in the orders of the authorities below as this is the case of the Pvt. Ltd. Compan .....

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Claim of brought forward business losses disallowed - Held that:- The said adjustment was not allowed by the AO which in turn was also not allowed by CIT(A), though ground of appeal was raised by the assessee in this regard. Following the principles of natural justice, we deem it fit to revert this issue back to the file of the AO, to verify the claim of assessee and allow the adjustment of brought forward losses in accordance with law. - DEcided in favour of assessee for statistical pur .....

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vt. Ltd. has filed the present appeal against the order of CIT(A)-18 Mumbai dated 30.10.2012 relating to Assessment Year 2009-10 against order passed under section 143(3) of the Act. 2. Both the appeals relating to related parties were heard together and are being disposed off by this consolidated order for the sake of convenience. 3. The assessee in ITA No. 7326/Mum/2012 has raised the following ground of appeal:- "The learned CIT(Appeals) has erred in confirming the addition of ₹ 13 .....

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g out the property. The AO noted that the assessee had shown investment of ₹ 3,85,89,389/- as on 31.03.2008 and ₹ 4,08,35,000/- as on 31.03.2009. The AO observed that the assessee had not attributed any expenses to carry out the activity of investment. The AO show caused the assessee as to why disallowance under section 14A of the Act read with Rule 8D of IT Rules should not be made in the hands of the assessee. In turn relying on various decisions that is the decision of Special Ben .....

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appeal against the order of the CIT(A). The Ld. A.R. for the assessee pointed out that the said investment was not capable of earning any income and hence there was no merit in making disallowance under section 14A of the Act on account of expenditure relatable to earning of exempt income. Reliance in this regard was placed on the decision of the Mumbai Bench of the Tribunal in Rainy Investment Pvt. Ltd. Vs. ACIT in ITA No. 5491/Mum/2011 relating to Assessment Year 2008-09, order dated 16.01.20 .....

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n in ITA No. 1717/Mum/2013 vide order dated 31.07.2014 had considered issue at length and held that no disallowance under section 14A of the Act was warranted where the assessee had not earned exempt income during the previous year. 8. The Ld. D.R for the Revenue placed reliance on the order of the CIT(A). 9. We have heard the rival contentions and perused the record. The short issue arising in the present appeal is in relation to the application of provision of section 14A read with Rule 8D of .....

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our of the assessee till the close of the yearr and even thereafter. Even before the CIT(A) the assessee had claimed that no allotment of share had been made till date. However, before us the claim of the assessee was that the said share application money has been refunded to the assessee and no shares were allotted out of the said share application money. The claim of the assessee in this regard was that the asset was not capable of generating any income, then no expenditure can be attributed t .....

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mpt, as dividend income in the instant case. In fact, there is no doubt with regard to this; the assessee itself conceding to the same before us and, besides, being engaged in the business of making investments and earning dividend income as an integral part thereof. The only option, therefore, if it considers the application of the provision as operating to its detriment, is to forfeit its right to exemption from tax in its respect. Qua merits, we find much force in the assessee's argument .....

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d as 'share application money' in the assessee's balance-sheet, the AO, to whom the matter is to be in any case restored for working out the disallowance by excluding the same, shall, in the set aside proceedings, also examine the veracity of the assessee's claim with regard to the same being 'share application money'. This is in view of the pertinent questions raised by the Bench in its respect, to which no satisfactory answer was forthcoming during hearing, nor - to be .....

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me for the relevant year, but for the reason that it is incapable of any such income. The same is only in the nature of application (offer) money, which would though, on allotment, get adjusted against the cost of the said shares, and only whereupon any rights in the investee company inure to the allottee. No rights, not even inchoate, in the share capital of the issuing company arise on the payment of the share application money, irrespective of the Rainy investments Pvt. Ltd. v. Asst. CIT time .....

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at the relevant dates, the same shall be excluded by the AO from the qualifying amount in reckoning the average investment in working out the disallowance under rules 8D (ii) and 8D(iii). The A.O. will decide the matter per a speaking order, allowing the assessee a reasonable opportunity to present its case before him. We may further clarify that we having, subject to the necessary verification, accepted the assessee's said contention, and no other infirmity in the application of rule 8D ha .....

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s is identical to the issue before Tribunal in Rainy Investment Pvt. Ltd. Vs. ACIT (supra) and following the same parity of reasoning, we hold that no disallowances under section 14A of the Act is to be made in respect of the investment made by the assessee in share application money. However, relying on the order of the Tribunal we restore this issue back to file of the AO for verifying the claim of the assessee that the such investment is in share application money as on 31.03.2008 and 31.03.2 .....

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incapable of generating any such income. Accordingly, we hold so. The ground of appeal raised by the Assessee is thus allowed for statistical purposes. 13. Now coming to the ITA No. 7327/Mum/2012, the assessee has raised following ground of appeal. "1) The learned CIT (Appeals) has erred in confirming the addition of ₹ 1,61 ,482/- out of vehicle expenses debited to profit & loss account treating the same as expenses for non-business purposes. The reasons assigned by him for doing .....

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cient. Provisions of the act ought to have been properly construed before doing the same. Regard being had to the facts and circumstances of the case, the said addition ought not to have been made. 3) The learned CIT (Appeals) has erred in confirming the addition of ₹ 3,95,230/- out of depreciation on motor car claimed as per Income Tax Act,1961 treating the same for non-business purposes. The reasons assigned by him for doing the same are wrong and insufficient. Provisions of the act ough .....

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