GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 118 - ITAT MUMBAI

2016 (6) TMI 118 - ITAT MUMBAI - TMI - Disallowance under section 14A - Held that:- It is an undisputed fact that, the assessee has not earned any exempt income during the year on the investment made in the subsidiary company, stated for the business purpose, that is, for acquiring controlling interest and in the nature of strategic investment. Once there is no exempt income during the year, then in wake of latest Delhi High Court decision in the case of Cheminvest Ltd. vs. CIT, reported in [201 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

electrical work, P0P and false ceiling work, painting, plumbing, aluminum, partition cum door, vertical blinds, sun control films, fire alarm systems etc. The expenditures which have been incurred on the premises does not belong to the assessee, albeit has been taken for a temporary period for conducting its business, that is, to work efficiently in the premises looking to the needs and requirements of modern business premises. The Department has referred to Explanation 1 to section 32, which o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ose of conducting the business more profitably. Thus, if the expenditure has been incurred for carrying on business more efficiently on day-to-day basis then it has to be reckoned as revenue expenditure. - Decided in favour of assessee - ITA No. : 3045/Mum/2012, ITA No. : 3046/Mum/2012, ITA No. : 4088/Mum/2012 - Dated:- 27-4-2016 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Appellant : Shri Jitendra Jain For The Respondent : Shri Kailash Gaikwad ORDER PER .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

being disposed off by way of this consolidated order. We will first take-up assessee s appeal in ITA No. 3045/Mum/2012 vide which following ground has been raised:- 1. The Commissioner of Income Tax (Appeals) -16, Mumbai [hereinafter referred to CIT(A)] erred in confirming the disallowance of ₹ 2,17,167/- under section 14A of the I.T. Act r.w.r. 8D of the I.T. Rule being the expenses attributable to investment giving rise to the exempted income. Your Appellant submits that it has made stra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xanlab Laboratories Private Limited amounting to ₹ 4,99,99,000/-, the income from these investments will not form part of the total income. In response to the show cause notice as to why disallowance under section 14A r.w. Rule 8D should not be made, the assessee submitted that, assessee has not earned any exempt income from such investments and these investments were made purely for acquiring controlling interest. However, the Ld. AO rejected the assessee s contention and held that in vie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at now in wake of latest High Court decision in the case of Cheminvest Ltd. vs. CIT, reported in 378 ITR 33, no disallowance under section 14A can be made if there is no exempt income during the year. 5. On the other hand, Ld. DR relied upon the decision of ITAT Mumbai Bench in the case of Double dot Ltd vs DCIT, reported in [2014] 65 SOT 324 also referred to CBDT Circular No.5 of 2014 dated 11.04.2013 and contended that, even if investment in shares are capable of earning exempt income then als .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

est Delhi High Court decision in the case of Cheminvest Ltd. vs. CIT, reported in 378 ITR 33, no disallowance under section 14A can be made. Hon ble High Court after discussing the various decisions including that of Hon ble Supreme Court in the case of Rajendera Prasad Moody, reported in [1978] 115 ITR 519) came to the following conclusion:- 23. In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression does not form part of the tota .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cordingly, ground raised by the assessee is allowed. 8. Now, we will take-up ITA No. 3046/Mum/2014, vide which following grounds have been raised:- 1. The Commissioner of Income Tax (Appeals) -16, Mumbai [hereinafter referred to CIT(A)] erred in confirming the disallowance of ₹ 14,66,757/- under section 14A of the I.T. Act r.w.r. 8D of the I.T. Rule being the expenses attributable to investment giving rise to the exempted income. Your Appellant submits that it has made strategic investment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n in the aforesaid will apply mutatis mutandis for this year also and accordingly, we hold that, no disallowance under section 14A can be made. Accordingly, ground raised by the assessee is allowed. 10. Now, we will take-up cross appeal by the revenue in ITA no. 4088/Mum/2014, vide which following grounds have been raised:- 11. Thus, the only issue involved in revenue s appeal is disallowance of expenditure incurred on repairs and maintenance on household premises by treating the same to be capi .....

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 time of filing of return of income, the expenses to the extent of ₹ 1,98,68,798/- was claimed as revenue expenditure. It was contended that nature of expenses was neither for any enduring benefit nor any capital asset has come into existence. The expenditure incurred and its nature thereof has been stated in the following manner:- Nature of Expenses Advantages Wall painting Makeover and fresh look to the existing Office premises providing better working Atmosphere False ceiling Heat redu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re alarm system Audible alarm in case of fire accident The AO disallowed the entire expenditure as capital expenditure on the following reasons:- (i) These expenses are capital in nature and appellant itself has capitalized the same in its books of accounts; (ii) These expenses are not in the nature of current repairs as such repairs has to be for the purpose of preserving or maintaining an already existing assets; (iii) The provision of explanation 1 to section 32 of the I.T. Act applies to 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

tion of the appellant and also carefully gone through the documents available on record. I find that the appellant had incurred expenditure of ₹ 1,98,68,798/- towards the leasehold improvements and claimed the same as revenue expenditure. It is also a matter of record that the appellant had taken the premises on leave & license for the period of 5 years only for the purpose of its office, laboratory, research and development work. It is also submitted that the leave & license agree .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce workable for it. The Ld. AO treated this expenditure as capital expenditure. The Hon'ble Bombay High Court in the case of CIT v/s. TVS Len Logistics Ltd reported in 293 ITR 432 had categorically stated that renovation or the improvement must be to the building In the instant case, repairs & renovation is in respect of the premises occupied by the appellant and not to the entire building and therefore the expenditure clearly falls in the realm of revenue expenditure. Further, similar v .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ound of appeal is accordingly allowed . 14. After hearing both the parties and on consideration of the relevant finding given in the impugned orders, we find that it is an undisputed fact that, the repair and renovation has been done on lease premises which has been taken on Leave and License basis for the period of 5/6 years. From the perusal of the details furnished before the authorities below as well as before us, we find that it is mainly in the nature of exterior works done like electrical .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to any capital expenditure incurred. It does not speak about the revenue expenditure. Thus, reference of Explanation 1 to section 32 in the grounds of appeal may not be relevant. The section 30(a)(i) on the other hand provides that, if repairs have been carried out in the premises occupies as a tenant then it has to be allowed as deduction under section 30 as repairs that is, as cost of repairs to the premises. The Hon ble Delhi High Court in the case of High Line Pins, reported in 306 ITR 182 h .....

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 expression "current repairs". It is obvious that the word "repairs" is much wider than the expression "current repairs". This fact has also been taken note of by the Supreme Court in the case of Saravana Spinning Mills P. Ltd. (supra). The expression "current repairs" is much more restricted than the word "repairs" because the latter is qualified by the word "current". What the assessee has done in the present case has been construe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion between expenses incurred by a tenant for "repairs" of the premises and expenses incurred by a person who is not a tenant towards "current repairs" to the premises. This distinction has to be given meaning. Perhaps the logic behind the distinction was that a tenant would, by the very nature of his status as a tenant, not undertake expenditures as would endure beyond his likely period of tenancy or create a new asset. Whereas, an owner may undertake expenditures so as to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| 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