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2016 (5) TMI 790 - ITAT DELHI

2016 (5) TMI 790 - ITAT DELHI - TMI - Disallowance made u/s 14A r.w.r 8D - Held that:- The assessee does not have income which is exempt from tax. Under these circumstances no disallowance can be made u/s 14A of the Act. See Cheminvest Ltd. vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT ) - Decided in favour of assessee

Disallowance made by invoking section 40(a)(ia)- Held that:- The assessee should have made every effort to gather necessary evidence from the payees i.e. M/s. Yash Ram F .....

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assessee shall make every effort to obtain from the payees, evidence that they have filed their return of income and paid taxes on these payments and furnish the same to the AO - Decided in favour of assessee for statistical purposes.

Disallowance of deduction claimed u/s 80IC - Held that:- Factual submissions have not been controverted by the AO or the Ld. CIT(A). The AO at page 5 records that the assessee has provided the working capital requirement of the two units. This note was r .....

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ve done so for Greater Noida unit only. Ld. DR could not controvert this factual submissions of the Ld. Counsel for the assessee. Under these circumstances, we are of the considered opinion that the AO should have been consistent in his stand on allocation of expenditure in all the years in which the account of the assessee have been scrutinised. The AO should have give specific reasons as to why he does not agree with the calculations furnished by the assessee or the note on requirement of the .....

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apoor, Advocate For the Respondent : Rashmita Jha, Sr.DR ORDER Per J. Sudhakar Reddy, Accountant Member This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals) VIII, New Delhi dated 4.1.2013 for the assessment year 2008-09. 2. The assessee is a company and is in the business of manufacturing and trading in electronic components and goods. It manufactures, monitors, DVDs and other electronic items for LG and Set up boxes for Tatasky. The asse .....

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the assessee s claim for deduction u/s 80IC to ₹ 2,57,263/- and making a disallowance u/s 40(a) (ia) to the tune of ₹ 38,75,000/-. On appeal the first appellate authority granted part relief. Aggrieved the assessee is in appeal before us on the following grounds :- 1. That the assessment order passed U/s 143(3) and the additions disallowances made are illegal, bad in law and without jurisdiction. 2. That in view of the facts and circumstances of the case, the CIT(A) has erred in law .....

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O. 4. That, in view of the facts and circumstances, CIT(A) erred in law and on facts in upholding the action of the Aa in disallowing the sum of ₹ 38,75,0001- U/s 40(a)(ia) of the Act. 5. The CIT(A) has failed to appreciate that the payment was paid in March 2006 for the music right from Yash Raj Films and Saregama India P. Ltd as Royalty and there was no liability to deduct the TDS as per provision of the Act in the year the payments were made. 6. That the observation of the AO & CIT( .....

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llant has enough capital of its own. 9. The additions / disallowances made are unjust, unlawful, without jurisdiction and are also highly excessive. The income has been wrongly & illegally computed at ₹ 13,36,35,770/- as against income declared at ₹ 12,09,55,320/-. 10. That the CIT(A) and AO erred in not providing proper and adequate opportunity to assessee company to place the material on record to substantiate its claim and the same was done by the assessing officer. 11. That t .....

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y worked out. 3. We have heard Shri Salil Kapoor Ld. Counsel for the assessee and Shri Rashmita Jha the Ld. Sr.DR on behalf of the assessee. 4. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below we hold as follows. 5. Ground No. 1 is general in nature. 6. Ground No. 3 is on the disallowance made u/s 14A r.w.r 8D. The assessee does not have income which is exempt from tax. Under these circumstances no .....

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ion 40(a)(ia) of the Act . The assessee relies on the decision of Hon ble Jurisdictional High Court in the case of 377 ITR 635 (Del) and submits that the second proviso to section 40(a)(ia), which was brought out by the Finance Act 2012 w.e.f 1.4.2013, was held as having retrospective operation and as a payee i.e Yash Raj Films and Saregama India P. Ltd. had filed their returns and paid taxes, no disallowance can be made u/s 40(a)(ia). On a query from the bench he submitted that the issue should .....

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nce from the payees i.e. M/s. Yash Ram Films Pvt. Ltd. and M/s. Saregama India Ltd. that they have paid taxes on these receipts from the assesee and then sought for set aside of the case. The assessee should prima facie demonstrate that in its case the second proviso to section 40(a) (ia) is attracted before seeking set aside of the matter. As in this case the revenue has already obtained some information u/s 133(6) of the Act, we are of the opinion that this issue should be set aside to the fil .....

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jected without pointing out any defects, which act is bad in law. b) The explanation given by the assessee that insurance charges, bank charges and interest have been correctly allocated between the unit at Greater Noida and the unit at Rudrapur has been arbitrarily rejected by the revenue authorities. c) The assessee prepared unit wise working capital requirement and that these demonstrates as follows : The working capital requirement at Noida as on 31.3.2008 was ₹ 28.23 crores and the fi .....

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s. Based on the above, it is clear that each unit is independently funding its activities, hence, there is no question of allocation of any interest to the Ruderpur unit. We would also like to mention here the credit periods for various products purchased and sold by the two units- Product Purchase from LG Other Purchase sale DVD Player Rudrapur 90 Days 45-60 Days 15 Days PCB-Noida 30 Days 30-45 Days 15 Days Set top Box - Noida N.A. 45-60 Days 90-110 days As can be seen from-the above the borrow .....

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expenses, we state that the two units function independent of each other and all direct/indirect expenses pertaining to each unit are booked accordingly. There is no separate head office or corporate office of the assessee where expenses need to be bifurcated between units. The company is a private limited entity with limited -corporate overheads, hence, there is no need for bifurcation of expenses other than managing directors remuneration, his travel expenses and statutory audit fees, which ha .....

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his orders u/s 143(3) on 30.11.2009 and for the asstt. year 2009-10 vide order dated 30.3.2013 u/s 143 (3) read with section 144C(1), on similar facts and circumstances has not disturbed the allocation made by the assessee. Thus on the ground of consistency, the allocation made by the assessee has to be accepted. g) On a query from the bench, he drew our attention to the balance sheet of the assessee company which is in the paper book specifically to schedule 3 i.e secured loans and submitted t .....

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d. 11. After hearing rival submissions we find that the AO on the very same set of facts, for the assessment year 2007-08 vide order dated 30.11.2009 passed u/s 143(3) and for the assessment year 2009-10 vide order dated 30.3.2013 passed u/s 143(3) r.w.s 144 C(1) has accepted the allocation made by the assessee between these two units. The assessee has made the allocation on in question in this year on the same basis. The books of account have been rejected by the AO without pointing out any def .....

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