TMI Blog2016 (4) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the assessee that it did not incur any expenditure in relation to the dividend income. Further, as contended by Ld A.R, the AO did not reject the contentions of the assessee by having regard to the accounts of the assessee. Hence, we find no reason for invoking the provisions of Rule 8D of the I.T. Rules in the hands of the assessee for the year under consideration. Accordingly, we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made u/s. 14A - Decided in favour of assessee Rejection of deduction claimed u/s. 80IA - Held that:- We have earlier noticed that both the AO as well as the Ld CIT(A) has made some more observations to support the rejection of the claim for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasoning that it did not incur any expenditure to earn the exempt dividend income of ₹ 2,000/-. However, the Assessing Officer worked out the disallowance as per Rule 8D of the IT Rules and accordingly disallowed a sum of ₹ 19,20,787/-, which was also confirmed by CIT(A). 3.2 The Ld. Counsel invited our attention to the schedule of investment given in the Annual Report and submitted that the assessee has made investment in the following companies:- i) Jankalyan Sahakari Bank, ii) PRIA CETP (India) Ltd. And iii) Vijaya Bank Ltd. 3.3 The ld. Counsel submitted that the dividend received from Jankalyan Sahakari Bank(JSB) is taxable and hence, the provisions of section 14A are not applicable to it. He has further su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a strategic investment. The assessee has received dividend income of ₹ 2,000/- only during the year under consideration and the said dividend income has also been directly credited to the bank account of the assessee. Considering the smallness of the dividend income and also considering the fact, that the investment in shares have been made in the earlier years, we are of the view that there is merit in the contentions of the assessee that it did not incur any expenditure in relation to the dividend income. Further, as contended by Ld A.R, the AO did not reject the contentions of the assessee by having regard to the accounts of the assessee. Hence, we find no reason for invoking the provisions of Rule 8D of the I.T. Rules in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developing, operating and maintaining a new infrastructure facility ; (c) it has started or starts operating and maintaining the infra structure facility on or after the 1st April, 1995: The AO noticed that the assessee has entered into a MOU with R.I.A.C.E.P.T Cooperative Society only, whereas the provisions of sec. 80IA(4) require that an agreement should be entered with the Central Government or a State Government or a local authority or any other statutory body . Accordingly, the AO rejected the claim for deduction u/s 80IA in respect of Roha unit. 4.2 During the course of appellate proceedings, the Ld CIT(A) called for a remand report from the AO, since the assessee appears to have claimed that it along with RIA CETP Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations, as discussed above. 4.4 It is a well settled proposition of law that the nomenclature given to a document will not decide its characteristics, i.e., the substance will prevail over the form. The main characteristics of a commercial agreement, inter alia, consists of ordinarily the clauses relating to (a) Scope of contract or work to be executed. (b) Consideration involved and payment terms. (c) Clear specification of scope, risks and responsibilities of each of the parties (d) Time period for completion of contract (e) Liability clause in case of failure to adhere to contract terms. If the understanding reached between the parties encompasses the above terms, in our view, the same would constitute an agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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