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M/s. Arch Impex Pvt. Ltd. Versus ACIT Cen Cir 32, Mumbai

2017 (6) TMI 348 - ITAT MUMBAI

Allowance of expenditure in the form of processing fees paid to bank for obtaining loan from the Bank for five years - assessee has claimed 1/5th of the expenditure in the preceding Assessment Year 2010-11 and was allowed but in the current year denied - Held that:- The issue under consideration is covered by the decision of Gujarat High Court in the case of Gujarat State Fertilisers and Chemicals Ltd.[2013 (7) TMI 701 - GUJARAT HIGH COURT] wherein held that financial consultants for professiona .....

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ead over the said expenditure as per the enduring benefit available with them. - Decided in favour of assessee. - Disallowance u/s.14A - Held that:- As found that the assessee has earned dividend income from one company only, the assessee does not require to incur any specific expenditure to maintain the investment portfolio, we direct AO to restrict the disallowance to the extent of 5% of the dividend income so earned from a company. We direct accordingly. - ITA No. 2763/Mum/2015 - Dated:- .....

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ees paid by the appellant. 2. The Ld. CIT (A) has erred in not appreciating the fact that the loan is for a period more than one year and, therefore the appellant is justified in debiting and claiming 1/5th of the total expenditure on bank's loan processing fees every year for 5 years. 3. The Ld. CIT(A) ought to have considered the fact that the total expenditure of ₹ 4,74,87,291/- for a loan of ₹ 25 crores for a period more than one year is of enduring nature and hence appellant .....

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hen CIT(A) have view that this expenses cannot be deferred. 6. The Ld. CIT (A) has grossly erred in confirming the disallowance ₹ 3,43,937/- u/s. 14A of the Act. 7. On the facts and circumstances of case and in law, Ld. CIT(A) erred in confirming the charging of interest u/s. 234A, 234B, 234C, 234D of income Tax Act 1961. 8. On the facts and circumstances of case and in law, Ld. CIT(A) erred in confirming the charging of initiation of penalty u/s. 271 (1) (c) of Income Tax Act 1961. 9. The .....

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s for more than 1 year, the assessee debited to the P&L account 1/5th of the amount of the processing fees of ₹ 4.75 i.e. ₹ 94.97lacs for the F.Y. 009-10 (A.Y.2010-11). 4. Similarly and for the very same reason the assessee debited same 1/5th of the expenditure i.e. ₹ 94.97 lacs for the F.Y. 2010-11 (A.Y.2011-12). The learned ACIT had allowed the 1/5th of the amount i.e. ₹ 94.97 lacs for the A. Y. 2010-11. However, he has changed his opinion and disallowed the same 1/ .....

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injustice to the assessee that the expenditure though allowed in the immediately preceding year i.e. A.Y. 2010-11 on 1/5th basis, it's not allowed in the immediately subsiding assessment year i.e. A.Y. 2011-12 and at the same time, full expenditure of ₹ 4.75 Crores is not allowed/ignored for the A.Y. 2009-10 and A.Y.2010-11. 7. We have considered rival contentions and found that assessee has incurred expenditure in the form of processing fees paid to bank for obtaining loan from the B .....

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ation for the same. The issue under consideration is covered by the decision of Gujarat High Court in the case of Gujarat State Fertilisers and Chemicals Ltd. , 358 ITR 323 wherein Hon ble Court held that financial consultants for professional services in connection with corporate debt restructuring by negotiating with banks and financial institutions are to be allowed in the year in which it was incurred. The Court further observed that where the assessee has spread over the expenditure for six .....

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supported our view. In the case of Gujarat State Fertilizers the assessee has claimed deduction of corporate debt restructuring expenses of ₹ 2.57 crores on payment to financial consultants who provided their professional services in connection with the scheme of corporate debt restructuring by negotiating with the banks and financial institutions, which eventually helped the reduction of the interest burden of the assessee. The Assessing Officer held that the assessee would derive benefit .....

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