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Mahila Udyog Ltd. Versus The Income Tax Officer, Ward – 11 (1) , Pune

2016 (8) TMI 594 - ITAT PUNE

Disallowance u/s. 40A(2)(b) of electricity expense - Held that:- In so far as the observations of the authorities below that the electricity bill is in the name of M/s. Kirloskar Oil Engines Ltd. is concerned, we are of the view that the same are unwarranted. Since, the premises from where the assessee is carrying on its activities belong to M/s. Kirloskar Oil Engines Ltd. the electricity connection would obviously be in the name of M/s. Kirloskar Oil Engines Ltd. In view of the entirety of fact .....

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has made investment from the interest bearing funds. We are of the considered view that the disallowance of ₹ 3,04,830/- made by the Commissioner of Income Tax (Appeals) is very much on the higher side. To meet the ends of justice disallowance of 5% of the exempt income earned would be fair and justified - ITA No. 1449/PN/2014 - Dated:- 17-6-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee by : Shri C.H. Naniwadekar For The Revenue by : Shri Mukesh Jha ORDER PER VIKAS .....

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rther failed to appreciate the arguments and contentions advanced in this behalf. 2. The learned CIT (A) erred on facts and in law in upholding disallowance of ₹ 3,04,830 u/s. 14A of the Act. He also failed to appreciate that the AO had failed to record her satisfaction as required under rule 8D. The learned CIT (A) further failed to appreciate the arguments and contentions advanced in this behalf. 3. The appellant craves leave to add, alter, delete or substitute all or any of the above gr .....

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siness of manufacturing of bearings, bushes and thrust washers required for the engines manufactured by M/s. Kirloskar Oil Engines Ltd. The assessee filed its return of income for the impugned assessment year on 31-10-2007 declaring total income as Nil. The case of the assessee was selected for scrutiny under CASS and accordingly, notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was issued to the assessee on 17-09-2008. During the course of scrutiny assessment .....

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expenses and partly accepted the appeal of the assessee on account of disallowance made u/s. 14A r.w. Rule 8D. Against the findings of Commissioner of Income Tax (Appeals), the assessee is in second appeal before the Tribunal. 4. Shri C.H. Naniwadekar appearing on behalf of the assessee submitted that the assessee company has been set up for upliftment of the women from the down trodden strata of the society by providing job opportunities. All the employees of the assessee company are women. M/s .....

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essee company is operating. Since, the premises are owned by M/s. Kirloskar Oil Engines Ltd., therefore, the electricity bill is in the name of M/s. Kirloskar Oil Engines Ltd. The authorities below while making disallowance has observed that there are no connection between the consumption of electricity and the turnover of the assessee. The relation drawn by the authorities below in respect of turnover and electricity consumption is of no relevance. M/s. Kirloskar Oil Engines Ltd. in their books .....

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holds paltry share of M/s. Kirloskar Oil Engines Ltd. The assessee company has invested ₹ 2,04,527/- in M/s. Kirloskar Oil Engines Ltd., Kirloskar Brothers Ltd. and Palus Audyogik Vasahat Society. The assessee has earned ₹ 3,56,000/- as dividend from these investments and the Commissioner of Income Tax (Appeals) has made disallowance of ₹ 3,04,830/- u/s. 14A of the Act. The assessee has not incurred any expenditure whatsoever towards the earning of exempt income. The disallowan .....

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k done by the assessee. Since, the assessee has failed to show the quantum of work there is no question of granting any expenditure. The ld. DR submitted that the assessee has not shown either before the authorities below or before the Tribunal the basis or formula on which the electricity charges are bifurcated between the assessee and M/s. Kirloskar Oil Engines Ltd. The assessee has simply stated that the assessee is sharing 40% to 50% of the electricity bill with M/s. Kirloskar Oil Engines Lt .....

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. 6. The ld. AR conroverting the submissions advanced by the Revenue referred to the Annual Report for financial year 2006-07 at page 21 onwards of the paper book. The ld. AR contended that a perusal of the profit and loss account for the year ended on 31-03-2007 would show that the assessee has income from Job order receipts to the tune of ₹ 3.68 Crores. 7. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The fi .....

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has claimed electricity consumption charges which have been disallowed by the authorities below on ground that there is no corelation between the work performed and the consumption of electricity. We do not concur with the findings of authorities below on this issue. The Department has not disputed the fact that the assessee company has been promoted by the M/s. Kirloskar Oil Engines Ltd. for the purpose of upliftment of women from the underprivileged strata of the society. It is also an undispu .....

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