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2016 (1) TMI 647 - ITAT CHENNAI

2016 (1) TMI 647 - ITAT CHENNAI - TMI - Disallowance u/s 14A - Held that:- In the present case, the assessee has earned exempt dividend income of ₹ 2,715/-. The assessee has not admitted any expenses to earn the above dividend income. The Assessing Officer disallowed the expenses to the tune of ₹ 2,33,324/- by invoking section 14A r.w.r. 8D. By taking into consideration of the facts and circumstances of the present case and keeping in view of thedecision of n the case of Joint Invest .....

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s under the PF Act - CIT(A) deleted the disallowance - Held that:- It is not disputed by the Revenue that the assessee has not paid the employees contribution received by it before the due date of filing of the return. The Hon'ble Jurisdictional High Court in the case of CIT v. Nexus Computer (P) Ltd. [2008 (8) TMI 304 - MADRAS HIGH COURT ] has held that the PF and ESI contribution paid belatedly, but prior to due date of filing of return could not be disallowed under section 43B of the Act. The .....

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ed by the ld. DR. Under the above facts and circumstances, we find that the ld. CIT(A) has rightly followed the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Ooty Dasaprakash (1998 (2) TMI 77 - MADRAS High Court), wherein observed that "the expenditure incurred by the assessee for the relevant assessment years in repairing and modernising the hotel and replacing the existing components of a portion of the building, furniture and fittings could not at all be stated to be .....

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pondent : Shri A B Koli, JCIT ORDER PER: DUVVURU RL REDDY: These cross appeals filed by the assessee and the Revenue are directed against the order of the ld. CIT(Appeals)-III, Chennai, dated 19.02.2013 relevant to the assessment year 2008-09. The only effective ground raised in the appeal of the assessee is with regard to confirmation of addition of ₹ 2,33,324/- made under section 14A of the Income Tax Act, 1961 ["Act" in short] r.w. Rule 8D for earning dividend of ₹ 2,715 .....

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8377; 16,01,096/-. The case of the assessee was processed under section 143(1) of the Act and the case was selected for scrutiny. Notice under section 143(2) of the Act was issued. After considering the details filed by the assessee, the Assessing Officer completed the assessment under section 143(3) and determined the total income of the assessee at ₹ 31,34,301/- by making various additions. 3. With regard to the disallowance of ₹ 2,33,324/- under section 14A read with Rule 8D, the .....

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ed attention to monitor and it cannot be denied that there was a hidden cost in the overall cost to the company. Accordingly by applying second and third limbs of Rule 8D, the Assessing Officer computed the disallowance under section 14A of the Act at ₹ 2,33,324/-. 4. On appeal, the ld. CIT(A), after considering the submissions of the assessee, confirmed the disallowance made by the Assessing Officer. 5. On being aggrieved, the assessee is in appeal before the Tribunal and the ld. Counsel .....

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assessee has earned dividend of ₹ 2715/-. Before the Assessing Officer, the assessee has submitted that the entire investment made is out of its surplus generated from business and that it was not out of any borrowals. It was also submitted that no expenditure attributed to earn the exempt income. Since it cannot be ruled out that the assessee has not utilized its office establishment and staff, a proportionate disallowance based on the investments valued in terms of third limb of Rule 8D .....

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gh Court in the case of Joint Investments Pvt. Ltd. v. CIT 372 ITR 694 has held as under: "Held, allowing the appeal partly, that the Assessing Officer had not disclosed why the assessee's claim for attributing ₹ 2,97,440 as a disallowance under section 14A had to be rejected. The jurisdiction to proceed further and determine amounts is derived after examination of the accounts and rejection if any, of the assessee's claim or explanation. There was no scrutiny of the accounts .....

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ent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the exempt income surely cannot swallow the entire amount. The order of the Assessing Officer was set aside. The initiation of penalty proceedings also was set aside. The matter was remitted to the Assessing Officer for fresh consideration." 8. In the present case, the assessee has earned exempt dividend income of ₹ 2,715/-. The assessee has not admit .....

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he extent of exempt income earned by the assessee and accordingly, the ground raised by the assessee is allowed. 9. In Revenue's appeal, the first ground raised by the Revenue relates to deleting the disallowance under section 36(1)(va) of the Act. In the assessment order, the Assessing Officer has observed that the employees contribution of PF amounting to ₹ 1,02,818/- in the Ernakulam Branch has not been remitted within the due dates under the PF Act. The Assessing Officer has held t .....

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#39;ble Delhi High Court in the case of CIT v. AIMIL Ltd. (supra) has not considered the decision of the Special Bench in ITC Ltd. 112 ITD 57 (Kol) (SB) and also it is inconsistent with Godaveri (Mannar) Sahakari 298 ITR 149 (Bom). On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A). 12. We have heard both sides, perused the material on record and have gone through the orders of authorities below. It is not disputed by the Revenue that the as .....

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o delete the addition made on this issue. Accordingly, the ground raised by the Revenue is dismissed. 13. The next ground raised in the appeal of the Revenue relates to disallowance of capital expenditure claimed as revenue in nature under section 37 of the Act. The Assessing Officer has observed that under repairs and maintenance (others), the assessee had debited ₹ 59,47,601/- and when the details were called for, the assessee has furnished ledger copy and also produced the bills for ver .....

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were purchased in huge quantities in kilograms. Therefore, the Assessing Officer has held that such huge quantities of materials could have been used only to extend the property to carry out really major repairs which will give enduring benefit to the assessee running into number of years and it is only but fair that these expenditures were also claimed over a period of time by classifying it as capital expenditure. Accordingly, the Assessing Officer has held that some of the expenditure relate .....

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e ground raised by the assessee. 15. Aggrieved, the Revenue is in appeal and the ld. DR has strongly contended that the assessee has constructed an annexe to the building thereby bringing in a new asset, whereas, in the case cited by the ld. CIT(A) in the case of CIT v. Ooty Dasaprakash (supra), the assessee has carried out minor repair works. Therefore, incurring expenditure for creating an annexe to the building cannot be treated as current repair and it cannot be allowed as revenue expenditur .....

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making any addition to the numbers of rooms of the hotel, the size of the restaurant, etc., renovation, repairs, etc. were carried out in the existing building. It was also contended that when there was no enhancement of the rooms of the hotel or the size of the restaurant, there is no enhancement of the earning capacity of the assessee to be considered the expenditure as capital in nature. The assessee has furnished details of repair works carried out in the first and second floor, details of .....

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out such bulk quantity of building materials are not required to carry out minor repairs. It has to be seen the building condition in which the materials so purchased were used for repairing work. Before the ld. CIT(A), the assessee has submitted that the repair works were carried out in a heritage building, which is more than 250 years old and also submitted that the assessee has incurred the expenditure towards repair of the building viz., in the ground floor : (i) renovate the walls/floor of .....

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