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2015 (6) TMI 993 - ITAT PANAJI

2015 (6) TMI 993 - ITAT PANAJI - TMI - Disallowance u/s. 14A - CIT(A) deleted the addition - Held that:- The undisputed fact is that the investments have been made out of own funds and no borrowed fund was utilized. It is also undisputed fact that in both the years under consideration, the assessee has disallowed suo motu fees paid to the portfolio manager. It is also an admitted fact that the Assessing Officer has nowhere recorded his dissatisfaction on the claim of expenditure attributable to .....

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ity. In our considered opinion, only expenditure incurred towards discharge of corporate social responsibility can be considered as allowable u/s. 37(1) of the Act. - IT Appeal Nos. 81 & 82 (PNJ) of 2014, C.O. No. 24 (PNJ) of 2014 - Dated:- 9-6-2015 - George Mathan, JUDICIAL MEMBER AND N.K. BILLAIYA, ACCOUNTANT MEMBER M.R. Bangari, DR. for the Appellant. Mihir Naniwadekar, Adv. for the Respondent. ORDER N.K. Billaiya, Accountant Member - ITA Nos. 81 & 82/PNJ/2014 are the appeals by the Reven .....

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h Rule 8D for A.Y. 2008-09 ₹ 22,44,429/- and for A.Y. 2009-10 ₹ 34,75,801/-. While scrutinizing the return of income for the years under consideration, the Assessing Officer noticed that the assessee-company has shown other income from share of profit from partnership firm and income from dividend. These income were claimed as exempt from tax. The assessee was asked to submit explanation regarding application of sec. 14A read with Rule 8D in case of expenditure in relation to exempt .....

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of sec. 14A is to quantify the amount of expenditure which is not allowable as relatable to the exempt income and not to consider the expenses one by one for ascertaining if any of these have resulted in exempt income and thereafter considering such expenses as disallowable u/s. 14A. The Assessing Officer further observed that the method prescribed in Rule 8D pertains to both direct and indirect expenditure. The Assessing Officer proceeded by computing the disallowance as formally provided in Ru .....

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een made out of own funds and no borrowed fund was used for making such investment. It was pointed out to the Ld. CIT(A) that the investment in partnership firm is not a new investment made during the year. It was brought to the notice of the Ld. CIT(A) that the assessee suo motu disallowed ₹ 1,47,706/- in A.Y. 2008-09 & ₹ 11,82,924/- in A.Y. 2009-10. Therefore, there is no question of any further disallowance of the expenditure debited to the P & L account or related to the .....

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Tribunal Mumbai Bench in the case of Auchtel Products Ltd. v. Asstt. CIT [2012] 52 SOT 39 (URO)/22 taxmann.com 99 and Delhi Bench in the case of Priya Exhibitors (P.) Ltd. v. Asstt. CIT [2012] 27 taxmann.com 88/54 SOT 356 observed that the Assessing Officer was not justified in invoking the provisions of sec. 14A read with Rule 8D automatically in a routine manner without recording his satisfaction or dissatisfaction on the explanation of the assessee. The Ld. CIT(A) deleted the disallowance mad .....

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the orders of the authorities below. The undisputed fact is that the investments have been made out of own funds and no borrowed fund was utilized. It is also undisputed fact that in both the years under consideration, the assessee has disallowed suo motu fees paid to the portfolio manager. It is also an admitted fact that the Assessing Officer has nowhere recorded his dissatisfaction on the claim of expenditure attributable to the disallowance u/s. 14A made by the assessee. The Ld. CIT(A) has r .....

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Assessing Officer at para 7 of his order. While scrutinizing the return of income during the course of scrutiny assessment proceedings, the assessee was asked to furnish the ledger account for advertisement expenses. On perusal of the said ledger account, the Assessing Officer noticed that an amount of ₹ 11,71,431/- was debited on account of donations. The assessee was asked to give the details of donations in the advertisement expenditure. The reply of the assessee reads as under:- " .....

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Assessing Officer did not accept this explanation of the assessee and who was of the firm belief that this expenditure is not related to the business activity of the assessee nor do they help in attaining any of the objectives of the business. The Assessing Officer added the expenditure of ₹ 11,71,431/- to the return of income of the assessee. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) considered this issue at para 5.4 at page 11 of his order. .....

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y expenditure amounting to ₹ 23,925/- can be considered for allowance u/s. 37(1) of the Act and, accordingly, directed the Assessing Officer to allow expenses amounting to ₹ 23,925/- as corporate social responsibility expenses, thereby affirming the disallowance of ₹ 11,47,506/-. 10. Aggrieved by this, assessee has filed cross objection before us. 11. Before us, counsel for the assessee strongly relied upon the decision of the Tribunal, Panaji Bench in the case of Prime Mineral .....

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low. It is not denied that transportation of the iron ore was not possible without the co-operation of the villagers as the movement of the trucks had to be through the village where the temple was located for which the Assessee has contributed the amount for renovation. The expenditure incurred for renovation of the temple is also not denied. For carrying on the business smoothly, it was necessary for Assessee to maintain cordial relation to ensure smooth movement of the trucks otherwise the As .....

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ile allowing this deduction. Thus, we confirm the order of CIT(A) on this issue. Thus, this ground stands dismissed." It is say of the counsel that the facts being identical, decision of the coordinate bench should be followed. 12. Per contra, learned DR strongly opposed to this and stated that the said expenditure has nothing to do with the business of the assessee and, therefore, cannot be allowed. 13. We have carefully considered the rival contentions and have given a thoughtful consider .....

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