TMI Blog2016 (10) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, For The Repondent : Shri G. N. Makwana, D.R. ORDER PER RAJESH KUMAR, AM: Both appeals have been filed by assessee against the orders of Commissioner of Income-Tax (Appeals)-8, Mumbai, dated 19th October, 2012 for both A.Ys. i.e. 2009-10 2010-11. Since, these appeals pertain to same assessee and on almost similar issue, so they are being disposed of by common order for the sake of convenience. 2. In ITA No.7187/Mum/2012 for A.Y. 2009-10, assessee has filed appeal on following grounds: 1) The learned CIT (A) erred in confirming additional disallowance of '4,07,741/u/s. 14A of the Income Tax Act computed under Rule 8D over and above the suo-motto disallowance of ₹ 2204742/- made by the appellant without finding any defect on the disallowance made by the appellant and on the incorrect premise that the appellant had not allocated any expenditure to earning of tax free income and that the appellant had made composite use of funds. 2) The learned CIT (A) erred in confirming the disallowance of commission of ₹ 41,95,784/- paid to director without considering any submission made by the appellant. 3) The learned CIT (A) erred in confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 8D cannot be trusted upon assessee. Therefore, Assessing Officer has to arrive at the conclusion whether and when specific expenses were incurred and the same had been considered proportionately by assessee, whether there could not be any further addition in a summary fashion by applying Rule 8D. Assessee relied on following decisions: I. Walfort Shares Securities vs. CIT [2010] 326 ITR 1 (SC) II. CIT vs. Hero Cycles Ltd. 323 ITR 518 (P H) III. Maxopp vs. CIT 2003 Taxmann 364 (Del) In this background, it was claimed that no disallowance u/s.14A of the Act r.w. Rule 8D can be made without showing how assessee‟s calculation was wrong and only read expenses attributable to the dividend income earned. Dividend income can be disallowed. 3.3 We have heard the parties. We find that the assessee during the year has earned tax free dividend of ₹ 9,34,629/- and suo mottu disallowed the sum of ₹ 22,04742/- as expenses attributable to earning of exempt income under section 14A r.w.r 8D. We also find that the assessee has hired one portfolio manager to handle portfolio management as the assessee is in the business of logistic operation and was not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... progressively grew nearly 10 times what it was prior to 1995-96. The Board made resolution for the payment in question. The stand of assessee has been that for the business expediency, the payment of commission was duly considered by all the four Directors. By virtue of that resolution, the whole work devolved to said Shri Mahesh A Dharira who devoted whole time services to the company. Other Directors who were share holders and were not paid any commission. All the share holders have received dividend. Under the management and whole hearted dedication of said Director Shri Mahesh A Dharira, company grew manifold. The payment of commission made against services rendered by the Director and were not in lieu of dividends as dividend were prima facie an appropriation of profits which was paid to all the shareholders on the basis of their shareholding. All the shareholders had been paid dividend. The commission payment is a charge against profits only. Thus, the nexus of rendering of services and payment of commission was very co-related in the instant case and the same has not been properly considered by lower authorities. Assessing Officer mainly relied on the decision of Special Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance in the previous year. During assessment proceedings, assessee was requested to justify the payments made to said transporter because similar claim was disallowed in the preceding years as the party was not found genuine. Accordingly, disallowance was made. 5.1 In appeal, the stand of assessee has been that assessee had utilized the service of transporters as it was under contractual obligation to deliver the cargo at the customer‟s places located outside Mumbai and assessee was not having any transport vehicle of its own. Assessee has recovered the transportation charges from the customers and shown it as income. Assessee has challenged the disallowance made on account of similar disallowance. The stand of assessee has been that every assessment year is independent as new assessment year is concerned. According to us, every year is independent but consistency of judicial authorities has also been give much priority, so, let every claim has to be decided in its facts and circumstances. Therefore, we restore this issue to Assessing Officer with direction to decide as per fact and law and after taking into consideration, the read service rendered by the said transporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r but every year is independent year, so, same should be looked into its facts and circumstances. Assessee has not been able to substantiate the foreign visit expenses with assessee‟s business. So, taking all facts and circumstances of the case, we are not inclined to interfere with the finding of CIT(A) who has disallowed the expenses in question on account of foreign travel of two Directors made by Assessing Officer and same is upheld. 8. Next issue is with regard to medical expense of Director ₹ 60,438/-. During assessment proceedings, Assessing Officer found that the amount of expenditure had not been considered as perquisite in the hands of Director. Assessee was asked to explain the allowability of claim. No details were filed by assessee, the amount of ₹ 60,438/- was disallowed as medical expenses. Same was confirmed by CIT(A). 8.1 We find that there is nothing on record to suggest that above said expense has been incurred. No evidence in this regard has been rendered by assessee before lower authorities. So, same has rightly been disallowed by lower authorities. Same is upheld. 9. As a result, appeal filed by assessee for A.Y. 2009-10 is partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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