TMI Blog2019 (1) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the AO to prove that the guidelines issued by the RBI is only advisory in nature and any contravention of such guidelines can be cured by making an application before RBI for condonation of such violations using its powers. Therefore, we are of the considered view that disallowing notional interest on borrowings for the simple reason that the assessee has violated directives issued by RBI without any contrary materials to prove that the assessee has incurred such expenditure for contravention of the provisions of the Act is incorrect. - decided in favour of assessee Disallowance of club fee - assessee had failed to prove the nexus of these expenses to the business - Held that:- As the issue is squarely covered in favour of assessee in assessee’s own case for the AY 1996-97 respectfully following the same, we confirmed the order of CIT(A) deleting the addition. Disallowance u/s 14A - Held that:- As assessee has its own funds available in the shape of share capital plus reserves at ₹ 35897.69 lakhs as against the investment in equity shares at ₹ 3501.05 lakhs, which is much below the own funds. Once this is the position, respectfully following the Hon’ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee, under the instructions of the assessee has not pressed this issue the same is dismissed as withdrawn. 4. The next common issue in these three appeals of assessee for AYs 2003-04 to 2005-06 in ITAs No. 2416,2417 2418/Mum/2011 is as regards to the order of CIT(A) dismissing the ground relating to allowance of interest under section 244A of the Act as not applicable. The assessee, in all these three years, have raised identical worded grounds and facts are also exactly identical. The relevant ground raised in AY 2003-04 in ITA No. 2416/Mum/2011 reads as under: - 2. The Learned CIT(A) has erred in law and on facts in dismissing the ground relating to interest u/s 244A as not appealable. The Learned CIT(A) ought to have given directions to the assessing officer to compute interest u/s 244A as per the provisions of law. 5. At the outset, the learned Counsel for the assessee drew our attention to the co-ordinate bench of ITAT Pune decision in the case of Sandvik Asia Limited vs. CIT in ITA No 1420/PN/2005 for AY 1997-98 vide order dated 21.10.2015, wherein Tribunal after considering the decisions of Hon ble Bombay High court in the case of Caltex Oil Refini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. A right of appeal is a creature of the statute conferred on the assessee by section 30(I) of the Act. The said right, which is substantive, cannot be taken away unless it is expressly provided. 12. The order passed by the CIT [Appeal] had virtually set aside the earlier order of assessment. Therefore, a fresh assessment was required to be made which the Assessing Officer did and directed refund but omitted to pass an order directing payment of interest. Therefore, it was an order passed under section 143[3] of the Act. It cannot be disputed that an appeal against an order passed under section 143[3] is permissible. It is altogether a different matter that the entitlement to interest arises out of section 244[1A] of the Act. A Civil Court may pass or refuse to pass an order for payment of pendente lite interest under section 34 of the Code of Civil Procedure. But it cannot be contended that the decree is one passed under section 34 of the Code of Civil Procedure. We are as such of the opinion that the learned CIT fell into a grievous error in proceeding on the basis that it was an appeal against an order refusing to grant interest undersection 244 [1A] of the Act. The appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed above, it is held that the order resulting in payment of interest u/s 244A of the Act is appealable. We are of the considered view that the Commissioner of Income Tax (Appeals) has erred in not adjudicating the appeal of the assessee on merits. We deem it appropriate to remit the file back to the Commissioner of Income Tax (Appeals) with a direction to decide the issues raised by the assessee in first appeal on merits, in accordance with law. 6. When this was pointed to the learned CIT DR, he could not controvert the above co-ordinate Bench decision. As the issue has already been adjudicated by the co-ordinate Bench in the case of Sandvik Asia Limited (supra) and held that non granting of interest under section 244A of the Act is appealable. Hence, we direct the AO to compute the interest applicable to assessee under section 244A of the Act as per the Provisions of the Act. We direct the AO accordingly. Similarly, we decide this issue in all the three years and the direct the AO accordingly for three years. 7. The next common issue in these three appeals of Revenue for AYs 2003-04, 2004-05 and 2005-06 in ITAs No. 2737,2738 2739/Mum/2011 is as regards to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1) and not under section 37(1) and that even under section 37, the said payment is not of the nature contemplated by the legislature while enacting the explanation to sec. 37(1) as the said payment does not represent any protection money, extortion, hafta, bribery, etc. Hence, it will not be appropriate to call the said payment having been made in contravention of law. There is merit in the AR s contention that the RBI directions are not law and that by not imposing any fine on the appellant, the RBI has effectively condoned the breach of its norms. In view of the above discussion, the disallowance made by the AO is deleted and this ground is allowed. Aggrieved, now Revenue is in appeal before us. 9. At the outset, the learned Counsel for the assessee filed copy of Tribunals in assessee s own case for AY 2001-02 in ITA No. 1721/Mum/2012 4095/Mum/2013 vide order dated 21.08.2018, wherein Tribunal exactly identical facts has allowed the claim of the assessee rejecting the grounds taken by the Revenue vide Para 33 as under: - 33. We have heard both the parties and perused the material on record. The facts with regard to the impugned dispute are that the assessee bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act is incorrect. Therefore, we are of the considered view that the AO was erred in disallowing interest expenditure of ₹ 57.79 crores u/s 37(1) of the Act. The Ld.CIT(A), after considering relevant submissions, has rightly deleted addition made by the AO. We do not find any error in the order of Ld.CIT(A). Hence, we are inclined to uphold the finding of Ld.CIT(A) and reject ground taken by the revenue. 33. In the result, appeals filed by the assessee are partly allowed, for statistical purpose and the appeals filed by the revenue are partly allowed. 10. When this was pointed out to the learned CIT DR, he could not controvert the findings of Tribunal in assessee s own case for earlier assessment year as reproduced above. As the issue is squarely covered, respectfully following the Tribunal findings in earlier year, as there is no change in the facts, we confirm the order of CIT(A) deleting the addition. Similarly, we decide this issue in all the three assessment years and the direct the AO accordingly for three assessment years. 11. The next common issue in these three appeals of Revenue for AYs 2003-04 to 2005-06 in ITAs No. 2737,2738 2739/Mum/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company in respect of corporate membership held by the company in its own name, depending on business under certain executives have been nominated by the Member of the of the company. The AO disallowed the same and CIT(A) deleted the same by observing in Para 9.5 as under: - 9.5 I have considered the facts of the issue and the written submission made by the AR and find merit in them. The AR has exhaustively brought out the legal position including the decision of the ITAT Mumbai in the case of DCIT vs. M/S Bank of America Securities (India) Pvt. Ltd. [2020-TIOL-630-ITAT-Mum] in which the various High Court decisions in the matter including the jurisdictional High Court judgement in the case of Otis Elevators Co. (India) Ltd. have been considered before giving a finding that admission/ entrance fee paid towards corporate membership of the club is an expenditure incurred wholly and exclusively for the purpose of business and not towards capital account. Hence, in view of the legal position brought out by the AR, the said expenditure is held as allowable revenue expenditure and this ground is allowed. Aggrieved, now Revenue came in appeal before Tribunal 17. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 511 disallowed as under: - 5.10 Consistent with the department stand on this issue as also applied to assessee s own case in earlier assessment years, the proportionate interest as worked out in the without prejudice statement filed by the assessee amounting to ₹ 2,05,27,000/- is held to be the expense disallowable under section 14A, being the expense incurred by the assessee for earning the exempted dividend income. 5.11 Further to the above, as held in the earlier assessment years in the assessee s own case, a certain amount of disallowance towards expenses (other than interest) such as salary, travelling, conveyance, telephone office maintenance etc. is certainly allocate for earning to the tax free income. With the same set of circumstances prevailing in this year also, I consider that an amount of 2,90,440/- being 2% of dividend income of ₹ 1,45,21,992/- earned as attributable to earning the dividend income (apart from interest) and accordingly disallow the same under section 14A. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) confirmed the same. Aggrieved, now assessee is in second appeal before Tribunal. 21. Before us, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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