TMI Blog2019 (1) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... ort) pertains to assessment year 2011-12 and arises from the order of the Income Tax Appellate Tribunal dated 19.06.2018. 2. First issue which relates to addition of ₹ 3.46 crores on account of golf club membership fee, is accepted by the Counsel for the appellant-Revenue, that is covered against them vide decision dated 30.3.2012 passed in ITA No.180/2012 in the case of DLF Commercial Developers Ltd. An SLP against the said decision was also dismissed. (Pursuant to the order of merger, the golf club has merged with DLF Home Developers Ltd.) 3. Accordingly, no substantial question of law arises from disallowance of ₹ 3.46 crores made by Assessing Officer ( AO , for short) on account of golf club membership fee. 4. The second issue relates to disallowance of more than ₹ 80.66 crores made by the AO under Section 14A of the Act, by applying Rule 8D of the Income Tax Rules, 1962 ( Rules, for short). 5. The AO on the aforesaid question had observed: 7. On perusal of the comparative Balance Sheets as on 31.03.2010 31.03.2011, it is noticed that the assessee company has shown to have invested its funds in equity shares, which stand at ₹ 2,73,331. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8D for and from A.Y. 2008-09 onwards. In view of the above, the disallowance u/s 14A r.w. rule 8D as computed as under:- Clause Particulars Amount (In Lakhs) i. Expenditure directly related to exempt income NIL ii. Disallowance of interest expenditure A. Interest expenditure incurred during the year 36,150.41 B. Average Value of Investment 2,73,331.69 + 1,78,239.36 2,25,785.53 C. Average of total assets 12,48,368 + 11,01,824/2 Disallowance = A*B/C 36,150.41* 2,25,785.53/ 11,75,096 11,75,096 6,946.01 6,946.01 iii. Aggregate of Opening and Closing value of Investment (Average Value of Investment) V*% of above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afide business purpose in the companies/concerns engaged in real estate business. The balance sheet shows that the appellant is having interest free funds in the form of paid up share capital of ₹ 92,66,765/- lacs and Reserves and Surplus of ₹ 2,03,26,935/- lacs aggregating to ₹ 2,95,26,935/- lacs. The appellant has made the investment of ₹ 2,73,326.57 lacs in shares and securities and mutual funds. The above figures show that the interest free funds of ₹ 2,95,26,935/- lacs were sufficient for making the investment of ₹ 2,73,32,657/- lacs. It is also seen from the investment schedule of the appellant that the companies/concerns in which the investments were made were mainly engaged in real estate activities. From the discussion made above, it is clear that the contention of the appellant is right that it has not utilized any interest bearing funds for making the investments in subsidiary companies, partnership firms and mutual funds in view of the enough interest free funds available with the appellant. The appellant further submitted that the funds borrowed on interest were utilised for the real estates projects of the appellant. There is no nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 lacs under clause (iii) of Rule 8D(2) of the Rules holding that assessee must have incurred administrative costs for earning the exempt income. Respondent-assessee must have incurred expenditure for earning exempt income, which were debited to the profit and loss account. Accordingly, disallowance of ₹ 11.28 crores was upheld. 8. The Revenue and the respondent-assessee preferred cross-appeals before the Trial Court on the question of disallowance under Section 14A of the Act. The Tribunal on this aspect has accepted the appeal preferred by respondent-assessee and dismissed the appeal preferred by the Revenue relying upon the decisions of the Bombay High Court in CIT-2, Mumbai vs. HDFC Bank Ltd. (2014) 49 taxmann.com 335 (Bombay) and decision of the Supreme Court in Godrej Boyce Manufacturing Company Ltd. vs. DCIT, (2017) 394 ITR 449 SC and decision of Delhi High Court in HT Media Ltd. vs. Principal Commissioner of Income Tax-IV (2017) 399 ITR 576. 9. The second issue, in our opinion, is already covered by the decision of the Supreme Court in Maxopp Investment Ltd. vs. CIT (New Delhi) [2018] 402 ITR 640 (SC) in which, it is inter-alia held as under:- 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich would apply to all cases where exempt income is earned. An order passed by AO is, therefore, not in terms of the mandate of Section 14A(2) of the Act. 12. Regarding the aforesaid position, we do not find that any substantial question of law arises from the second issue. 13. The appeal is dismissed without any costs. However, before signing the above order, we noticed observations made by the Commissioner of Income Tax (Appeals) in para 7.3, which read as under:- Accordingly, I am of the considered view that appellant has incurred various indirect expenses for earning the exempt income and such expenses have been debited in the profit and loss account. There may not be a direct head relating to investment expenditure but all indirect expenses debited to profit and loss account indirectly relates to investment activities also. The Assessing Officer may not have given any finding in this regard but the powers of the CIT (Appeal) are co-terminus with that of the Assessing Officer, therefore, I am satisfied that the appellant has incurred various indirect expenses on administration which are indirectly related to investment activities and earning of the exempt incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
