TMI Blog2015 (12) TMI 1784X X X X Extracts X X X X X X X X Extracts X X X X ..... ot found to be excessive and the purpose and the occasion on which the expenditure was incurred is not disputed. Disallowing legal expenses - disallowance made on the ground that the assessee was not able to substantiate these expenses with the help of complete evidences - Held that:- It is noted that this issue has been sent back by the Tribunal in A.Y. 2009-10 to the file of the AO with some directions. We find it appropriate to send this issue back to the file of the AO in pursuance to the order. We also direct the AO to follow the directions as given by the Tribunal in A.Y. 2009-10 as far as may be applicable on the facts of the case of this year. With these directions this issue is sent back to the file of the AO. Thus, ground no. 2 is allowed for statistical purposes. Disallowance of expenses incurred by the assessee on foreign travelling - Held that:- It is noted by us that these expenses pertained to the foreign visit of Mr. Sanjay Gupta, director, of the company, on the ground that no evidence was submitted to establish business purpose for incurring these expenses. Before us also no such evidence has been produced and therefore, we have no option but to confirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es at all. The assessee also could not get proper opportunity to explain this issue with proper evidences. There has been lot of development in the legal position with respect to all the contentions raised by the Ld. Counsel. These judgments which have been relied upon by the Ld. Counsel were not available before the AO/DRP. Therefore, for thrashing out the facts properly, and to meet ends of justice and in all fairness, we deem it appropriate to send this issue back to the file of the AO who shall decide this issue afresh. Needless to add, the AO shall offer proper opportunity to the assessee to file requisite details and documents, as per law. The AO shall take into account complete factual material and shall also consider the judgments as may be available at the time of deciding this issue afresh. With these directions, this issue is sent back to the file of the AO. This ground is allowed for statistical purposes. Notional interest on the amount routed by the assessee company through its Dubai subsidiary for the purpose of its business - Held that:- This issue is entirely dependent upon the A.Y.2009-10 which has been disposed by the Tribunal. We have gone through the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production and distribution of films. It has 100% subsidiary called K. Sera Sera Productions FZ-LLC which is incorporated in Dubai and engaged in preproduction, film/TV distribution, film/TV rights management and film/TV post-production in the sector of film entertainment/production and post- production. In the assessment order, the AO has disallowed the film preview expenses amounting to ₹ 19,189/- on the ground that these are not supported by any bills or third-party vouchers. The assessee has stated that it had submitted requisite details and ledger of Film Preview Expenses. The expenses were incurred for purchasing movie tickets for preview show of the movies and other expenses incurred for preview show. The DRP endorsed the observations of the AO. It is noted by us that in A.Y. 2009-10, this issue had reached up to Tribunal, wherein, vide order dated 10.06.2015 in ITA No. 321/M/2014, these expenses have been allowed, the relevant para of the Tribunal's order is reproduced hereunder: We have considered the rival contentions as well as the material on record. There is no dispute that the assessee has released three new films during the year and prior to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t able to substantiate these expenses with the help of complete evidences. It is noted that this issue has been sent back by the Tribunal in A.Y. 2009-10 to the file of the AO with some directions. We find it appropriate to send this issue back to the file of the AO in pursuance to the order. We also direct the AO to follow the directions as given by the Tribunal in A.Y. 2009-10 as far as may be applicable on the facts of the case of this year. With these directions this issue is sent back to the file of the AO. Thus, ground no. 2 is allowed for statistical purposes. 5. Ground No. 3: In this ground, the assessee has challenged the action of AO in making disallowance of expenses of ₹ 23,100/- incurred by the assessee on foreign travelling. 5.1 During the course of hearing it was fairly stated by the Ld. Counsel of the assessee that this issue has been decided against the assessee by the Tribunal in A.Y. 2009- 10, and in this year also there is no change in facts. 5.2 We have gone through the orders of the lower authorities. It is noted by us that these expenses pertained to the foreign visit of Mr. Sanjay Gupta, director, of the company, on the ground that no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r support from the judgment of Hon'ble Gujarat High Court in the case of Sayaji Iron and Engg. Co. (supra). Thus ground no. 4 is allowed. 7. Ground No. 5: This ground deals with the action of the lower authorities in disallowing u/s 36(1)(iii), proportionate interest expenditure of ₹ 9,62,071/- incurred by the assessee. 7.1 During the course of hearing, it has been submitted by the Ld. Counsel of the assessee that assessee had in its possession ample funds as compared to the interest free loan given by the assessee, and therefore, the disallowance has been wrongly made by the lower authorities. It has been further submitted by him that assessee has deep interest in the subsidiary company to which loan was given. Reliance has been placed on the judgment of Hon'ble Supreme Court in the case of S.A. Builders vs CIT, 288 ITR 1(SC).. 7.2 On the other hand, Ld. CIT, CIT-DR has relied upon the order of the AO and submitted that proportionate disallowances should be made in the hands of the assessee on account of interest expenses. 7.3 We have gone through the orders of the lower authorities and considered submissions made by both the sides. Brief facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be said that no disallowance would be made if the amount has been advanced for the strategic business needs. The assessee has submitted copy of resolution signifying its business necessity. Taking in to account all the aforesaid facts and circumstances of the case, we find that the said disallowance is not sustainable as per law and facts of the case and therefore, the same is directed to be deleted. Thus, ground no. 5 is allowed. 8. Ground No. 6: In this ground, the assessee has challenged the disallowance of ₹ 1,02,71,832/- made u/s 14A, read with rule 8D. It has been submitted by the Ld. Counsel that no disallowance was made by the AO in draft assessment order. Disallowance has been made u/s 14A by the DRP by making enhancement of income. It has been further argued by the Ld. Counsel that since no disallowance was made by the Ld. AO, the DRP has no powers under the law to make any fresh disallowance. This disallowance is beyond the scope of law. It has been further submitted by him that even on merits, the disallowance was not sustainable. It is submitted that no exempt income has been received during the year, the assessee has ample surplus funds and investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied on all these issues at all. The assessee also could not get proper opportunity to explain this issue with proper evidences. There has been lot of development in the legal position with respect to all the contentions raised by the Ld. Counsel. These judgments which have been relied upon by the Ld. Counsel were not available before the AO/DRP. Therefore, for thrashing out the facts properly, and to meet ends of justice and in all fairness, we deem it appropriate to send this issue back to the file of the AO who shall decide this issue afresh. Needless to add, the AO shall offer proper opportunity to the assessee to file requisite details and documents, as per law. The AO shall take into account complete factual material and shall also consider the judgments as may be available at the time of deciding this issue afresh. With these directions, this issue is sent back to the file of the AO. This ground is allowed for statistical purposes. 9. Ground No. 7: In this ground, the assessee has challenged the action of lower authorities in adding a sum of ₹ 4,22,12,216/- as notional interest on the amount routed by the assessee company through its Dubai subsidiary for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts in the current year are identical to those in the preceding year, we do not find any reason to differ from the DRP in the preceding year Hence no interference is called for so far as the decision of the AO/TPO in this regard is concerned. This objection is rejected. 9.6 It may thus be noted from the orders of the lower authorities that order of A.Y.2009-10 has been simply followed in this year while making this addition. Thus, this issue is entirely dependent upon the A.Y.2009-10 which has been disposed by the Tribunal. We have gone through the order of the Tribunal and find that the disallowance was made in the assessment year2009-10 on loan given to the same party. In this year, no fresh loan has been given rather amount of loan has been reduced on account of part payments received back from the said party. It is noted from the order of the DRP that opening balance due from the said party at the beginning of the year was ₹ 106.52 crores which was reduced to ₹ 73.96 crores at the end of the year. It is further noted that Hon'ble Tribunal in A.Y. 2009-10, after making detailed discussion held that the addition was illegal and therefore the same was del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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