Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Forbes Marshall Pvt. Ltd. Versus Addl. Commissioner of Income Tax, Range-9, Pune

Disallowance u/s 14A - CIT(A) deleted part disallowance - Held that:- It is an admitted position that no expenses directly attributable to the earning of dividend income has been quantified as per Rule 8D(2)(i) of the Rules. Secondly, proportionate disallowance has been made towards interest expenses attributable to the average investments held by the assessee as per formula laid down in Rule 8D(2)(ii) of the Rules. The plea of the assessee is that non-interest bearing own funds as source far ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on of interest-free funds, borrowed funds, etc. qua the corresponding investments yielding tax-free income is a relevant factor need to be borne in mind. It is not the case of the Revenue that any direct expenses including interest expenses have been incurred. in the case of CIT vs. HDFC Bank Ltd. reported in (2014 (8) TMI 119 - BOMBAY HIGH COURT), wherein the Hon'ble High Court categorically held that in-principle, if there are funds available both interest-free and interest bearing, then a pre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 35,007/- being one month salary of its Accountant towards estimated expenses attributable to the tax-free income. Thus, admittedly, certain expenditure is accepted to have been incurred by the assessee. It is the quantum of estimation which is subject matter of dispute. Statutory framework provides that Rule 8D(2)(iii) of the Rules will come into play when essentially there is certain amount of expenditure which can be said to have been incurred by the assessee for which quantification .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee income which remains un-discharged. Accordingly, we decline to interfere with the disallowance sustained by the CIT(A) under Rule 8D(2)(iii) of the Rules

On facts, having regard to the colossal investments and dividend income, no cogent basis for disallowance of one month salary of an Accounts person is discernible. The assessee has failed to establish correctness of disallowance offered by it. The ingredients of prima facie satisfaction contemplated under S. 14A are thus present .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed under section 143(3) of the Income-tax Act, 1961 (in short "the Act"). 2. The Grounds of Appeal raised by the assessee are as under :- "1. The learned CIT(A)-V, Pune erred in law and on facts, in partially sustaining the disallowance of expenses u/s 14A of the ITA, 1961 made by the learned ACIT, Range-9, Pune. The learned CIT(A)-V, Pune ought not to have sustained disallowance of ₹ 6,35,558/- u/s 14A of the ITA, 1961, considering the facts of the case and various legal p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

de by the appellant from it's own funds. The learned I-T authorities further erred in law in not following ratio of CIT vs. Reliance Utilities & Power Ltd. - 313 ITR 340 (Bombay) as regards the theory of presumption of investments from own funds. 4. The learned CIT(A)-V, Pune erred in law and on facts in sustaining ad-hoc disallowance of expenses @ 0.50% on average investments of the appellant without appreciating the reasonable disallowance of ₹ 35,007/- worked out by the appellan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t facts concerning the issue involved are that the assessee company is engaged in the business of manufacturing of Steam Control Instrumentation. During the course of assessment proceedings, the Assessing Officer noticed that the assessee company has, inter-alia, declared tax-free dividend income of ₹ 4,11,66,682/- which was claimed to be exempt. The Assessing Officer further noted that the assessee had made investments in shares, securities and mutual funds, both quoted and unquoted, as a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e AO is as under :- (a) in terms of Rule 8D(2)(ii) of the Rules - ₹ 5,82,322/- (b) in terms of Rule 8D(2)(iii) of the Rules - ₹ 5,02,668/- Thus, estimated suo-motu disallowance of ₹ 35,007/- by the assessee was not agreed upon by the Assessing Officer. 6. In appeal before the CIT(A), it was submitted by the assessee that the assessee himself has disallowed ₹ 35,007/- voluntarily being one month salary of the Accounts Officer as reasonable estimated expenses attributable t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act r.w. Rule 8D of the Rules are clearly applicable. The CIT(A) further observed that adhoc disallowance of ₹ 35,007/- being one month salary of the Account Officer is without any basis and cannot be accepted in view of specific manner provided in Rule 8D of the Rules for working of disallowance. Nonetheless, the CIT(A) agreed to the contention of the assessee that the total investments generating tax-free dividend income also include investments in shares of overseas companies where the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tc. being 0.5% of average value of investment under Rule 8D(2)(iii) of the Rules worked out to ₹ 3,10,668/-. Accordingly, the disallowance under section 14A of the Act r.w. Rule 8D of the Rules was reduced and revised to ₹ 6,70,565/- as against the aggregate disallowance of ₹ 10,84,990/- computed by the Assessing Officer. 7. Aggrieved by the impugned order of the CIT(A), assessee is in appeal before us. 8. The Ld. Authorized Representative for the assessee, at the outset, drew .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the assessee company as on 31.03.2009 stands at ₹ 71.56 crores as against the consolidated investment in shares and securities, debentures and mutual funds, etc. which stands at ₹ 10.53 crores. Therefore, the interest-free own funds available with the assessee far outweigh the total investments by nearly 7 times. Thus, impugned investments can be deemed to be made out of non-interest bearing capital available at the disposal of assessee. Therefore, no disallowance is called for tow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

match corresponding application in its investments yielding exempt income, the disallowance of interest component under Rule 8D(2)(ii) of the Rules is not justified. 9. He further emphasized that disallowance under Rule 8D(2)(iii) of the Rules is also improper. It is so because the dividend is self-generated income for which no administrative costs etc. per se are required to be incurred. However, the assessee itself has offered a reasonable disallowance of ₹ 35,007/-, which is appropriat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Kolkata Bench of the Tribunal in the case of Balarampur Chini Mills Ltd. vs. DCIT reported in (2011) 140 TTJ 73 (Kol) (UO). He, therefore, submitted that there is no justification to invoke Rule 8D(2)(iii) to invite estimated disallowances by invoking Rule 8D of the Rules. 10. The Ld. Departmental Representative for the Revenue relied upon the orders of the authorities below and pleaded that no interference with the order of the CIT(A) is called for. 11. We have carefully considered the riv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

interest bearing own funds as source far exceeds the corresponding application of funds toward investments. In the circumstances, the contention of the assessee that investment in shares cannot be said to be out of borrowed funds on which the interest expenditure has been incurred is well founded and deserves to be accepted. Mere utilization of OD / CC accounts for routing payment towards investment shares by itself has no consequence as such. The payment out of these overdrafts account is only .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rect decision of the Hon'ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. reported in (2014) 366 ITR 505 (Bom), wherein the Hon'ble High Court categorically held that in-principle, if there are funds available both interest-free and interest bearing, then a presumption would arise that investment would be out of interest-free funds generated or available with the assessee, if the interest-free funds were sufficient to meet the investments. Hence, in the light of the aforesaid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, certain expenditure is accepted to have been incurred by the assessee. It is the quantum of estimation which is subject matter of dispute. Statutory framework provides that Rule 8D(2)(iii) of the Rules will come into play when essentially there is certain amount of expenditure which can be said to have been incurred by the assessee for which quantification of exacting standards are not possible. Rule 8D(2)((iii) provides statutory formula for computation of disallowance to cover up probable in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(2)(iii) of the Rules which is quantified at Rs. ₹ 3,10,668/-. Thus, on this count, the plea of the assessee fails. 14. The Assessee has inter alia also taken a legal plea and has objected to authority of Assessing Officer in invoking section 14A of the Act in the absence of requisite 'satisfaction' in this regard. In this context, We find that the Assessing Officer has recorded a finding a finding of fact that the investments have been made out of OD/CC account which are interest .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Forum: GST on RCM on rent in a unregistered state

Forum: COMPOSITION SCHEME

Forum: Input Tax Credit - Reg

Forum: GST Invoice

Article: Websites of Government Departments need lot of improvement. We are noticing detoriations in them for example, case of website of ITAT.

Highlight: Levy of additions tax u/s 115O on distribution of dividend - shares of its profits declared as distributable among the shareholders is not impressed with the character of the profit from which it reaches the hands of the shareholder - not to be bifurcated as agriculture and non-agriculture dividend - SC

Highlight: Rate of GST on old and scrap buses - 28% or 18% - at such initial tender process initiated by the Respondents-KSRTC, the present petitions filed by the petitioners are premature and misconceived and do not require any interference by this Court at this stage. - HC

Forum: Rent a cab operator

Highlight: In view of amendment made u/s 132A of the Income Tax Act, 1961 by Finance Act of 2017, the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal, SC dismissed the appeal of the assessee

Highlight: Validity of Assessment Order - period of limitation u/s 153 (2A) is applicable even if the entire order was not set aside but matter was remanded back for for limited aspects with directions - HC

News: Note ban was a shake-up, achieved its main objectives

Notification: Amendments in the notification No.5/2017- Integrated Tax (Rate) dated the 28th June, 2017.

Highlight: Levying interest u/s 234C - interest is to be charged on the returned income and not on assessed income.

Highlight: Accrual of income - sale of right to develop and sell incentive FSI under LOI - till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assessee

Highlight: TPA - determination of ALP - TP adjustment by applying Bright Line Test (BLT) is not sustainable on protective basis having no statutory mandate.

Highlight: Safeguard Duty - Advance License Scheme - as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty

Highlight: Manufacture - process of cutting of waste plastic container - Such plastic containers before and after cutting are nothing but waste / scrap - Not a manufacturing activity as no new product emerges.

News: NITI Aayog and Govt. of Assam organizes workshop on health sector reforms in Guwahati; launches SATH- Sustainable Action for Transforming Human Capital

Notification: Seeks to amend notification no. 5/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics

Notification: Seeks to amend notification no. 2/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst exemptions

Forum: GSTR 3B Rectification

Notification: seeks to exempt Skimmed milk powder, or concentrated milk

Notification: Seeks to amend notification no. 2/2017- integrated tax(rate) dated 28.06.2017 to give effect to GST council decisions regarding GST exemptions.

Notification: Seeks to amend notification no. 1/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates

Notification: Seeks to amend notification no. 1/2017- integrated tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates.

News: Notification Issued For GST Actionable Claim On Branded Food Products

Highlight: Classification printed computer stationary/manifold Business Forms - to be classified under Chapter Heading 4820.00 or under Chapter Heading 4901.90 - items like A4 sheets, advertisement and job card to be classified under Chapter 49

Article: RCM Applicability to persons not liable to get registered us 23(1)

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017

News: Tax Payers Advised To Confirm Identities Of Income Tax Search Authorities

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Notification: The Customs and Central Excise Duties Drawback Rules, 2017

Circular: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version