9911796707
TMI Blog2016 (3) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,306/- to Rs. 2,70,548/- by applying the ratio of 1:30:85 for exempt income and taxable income. Whereas provision of Section 14A r.w.r. 8D does not speak about ratio between exempt income and taxable income. 3. restricting the disallowance of expenses under head Office & General Expenses from Rs. 2,00,000/- to Rs. 50,000/- whereas the AO has mentioned that some of the bills and supporting were not produced by the assessee. Some of the expenses have been paid in cash during verification of bills and vouchers. 4. restricting the disallowance of expenses under head Repairs and Maintenance from Rs. 50,000/- to Rs. 10,000/- whereas the AO has mentioned that bills and voucher for supporting of some of the expenses were missing, during verification of bills and vouchers. Ground Nos. 1 & 2 : 3. The brief facts of the case are that the assessee is a Private Ltd. Company, in the business trading of coal. The assessee company has filed its return of income declaring total income of Rs. 2,51,21,670/-. During assessment proceedings, the Learned AO has disallowed Rs. 85,96,306/- u/s 14A by applying calculation given in Rule 8D, on exempted profit received from firm, in which assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant shall get consequential relief." 2.2 In view of the above discussion, the AO is directed to restrict the addition to the ratio of exempt income to taxable income and accordingly, the balance addition is directed to be deleted. All the grounds of appeal are partly allowed." 5. The Ld. DR relied on the order of the AO. 6. The ld. Authorized Representative has submitted the written submission before this Bench, which reads as under :- "The assessee is a Private Ltd. Company, in the business trading of coal. The assessee company has filed its return of income declaring total income of Rs. 2,51,21,670/-. During assessment the Learned AO has disallowed Rs. 85,96,306/- u/s 14A by applying calculation given in Rule 8D , on exempted profit received from firm, in which assessee company is a partner of 10%.The assessee company has preferred an appeal with CIT(A)-2, Indore, against the said order. In addition to this the Learned AO has also disallowed Rs. 2,00,000/- on ad hoc basis out of Office & General Expenses of Rs. 16,42,333.81 and Rs. 50,000/- on ad hoc basis out of Repairs & Maintenance expenses of Rs. 9,14,817/-. The learned CIT(A)-2, Indore has restricted the above add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar; C= The average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; (iii) An amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. We would like to draw your kind attention to the 'B' in formula as prescribed in Rule 8D above, which stands for: Your honour, investment in firm has earned a taxable interest income of Rs. 1,55,39,200/- @12% p.a. (Calculated on the balance in the capital account on day to day basis) to the assessee company and therefore this investment could not be considered to be forming part of the formulae as prescribed in Rule 8D. Therefore since AO has satisfied that section 14A(2) is application to assessee company, the maximum disallowances should not be more than Rs. 831/- only as per calculation given in separate chart, which was also submitted to Learned AO and Learned CIT(A)-2 (Encl. 19). Copy of the balance sheet and computation of Income is also enclosed for verification of data. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been brought to our notice by the assessee that Hon'ble ITAT, Indore Bench has duly approved the decision of the then CIT(A). Further, it has also been brought out that the appeal preferred by the department against the order of Hon'ble ITAT, Indore Bench in the M.P. High Court has been dismissed. The assessee has filed copies of order of ITAT and Hon'ble M.P. High Court. After considering the orders of the then ld. CIT(A), I.T.A.T., Indore Bench and M.P. High Court, we uphold the action of the ld. CIT(A) in directing the AO to follow the ratio laid down by him in the appeal order dated 16.07.2012, the relevant part of which is reproduced as under:- "4.1.5 Thus on consideration of overall facts and circumstances of the case and the relevant provisions of law and following the decision of Hon'ble Special Bench (supra) it has to be necessarily held that once the appellant has earned substantial taxable income from investment in partnership firm and the Exempt Income earned being merely 3% of the substantial taxable income earned by the appellant at Rs. 52.84 lacs, the disallowance has to be made in the ratio of Exempt/Taxable income which comes to 1:30.85 and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. 3.1 The Learned A. O. has disallowed the expenses under head Office and General expenses on lumsum basis of Rs. 2,00,000/- upon the reason that on verification on test basis, it was found that bills and voucher for supporting of some of the expenses were missing. 3.2 Your honour the sub-schedule of Office & General expenses of Rs. 16,42,334/- includes 9 expenses accounts of different nature .All these expense are fully vouched major expenses in this list is security expenses Rs. 8,00,309/ - paid to security agency by Cheque after deducting income tax on such payment, Diwali expenses Rs. 1,42,605/-, Stationery & Printing Rs. 3,00,650/- postage and Courier Expenses Rs. 1,92,178/- having complete Bills & vouchers and all other expenses are fully vouched. The accounts of the appellant being Pvt. Ltd. Company were duly audited and there is no adverse observation in the Audit Report. 3.3 Sir, in this list there is one item i.e. Office & General Expenses Rs. 1,38.299/ - consisting of petty items and that very petty expenses may be made without external supporting bills but duly authorized on behalf of company. We are submitting copies of ledger Accounts of these expenses. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd against the facts and circumstances of cases. The Learned A. 0. has disallowed the expenses under head Repair and Maintenance expenses on lumsum basis of Rs. 50,000/- mentioning the reason that on verification on test basis, it was found that bills and voucher for supporting of some of the expenses were missing. Your honour the sub-schedule of Repair and Maintenance expenses of Rs. 9,14,817/- includes 6 expenses accounts of different nature. The Repair and Maintenance expenses was of Rs. 4,26,495/- only. The major expenses under this particular head was because of water seepage in the office during rains and assessee company has to get the water proofing done and get to repair its furniture which was damaged due to such water seepage during rains. Copy of ledger account is enclosed. Other expenses were also fully vouched and it has been very much clarified by the narration mention against each of the entry that the expense was supported by the documentary evidence. The TDS has also been deducted wherever it was statutorily required to do. The accounts of the appellant being Pvt. Ltd. Company were duly audited and there is no adverse observation in the Audit Report. Further there ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
