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TMI Blog2019 (10) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Rs. 13,12,995/- under section 14A of the I.T. Act. The assessee filed return of income declaring total income of Rs. 27,86,65,480/-. The A.O. noted that assessee company belongs to Escort Group of Companies. The main source of income of the company is also on account of 'Royalty received by the company from Escort Group of companies from the logo which escort group is using. For this logo Escort Group has paid a sum of Rs. 28,15,54,300/- to the company and that constitute the primary source of income of the 'assessee company. The other source of income of company is on account of deposits of surplus funds in the bank. The third source of the company is from letting out of machinery which the company has given to the Escort Group and the last source of income is on account of investments in various equity shares. The income from investment in equity comes to Rs. 98,81,855/- which is claimed as exempt. The A.O. noted that against the three source of income, company has claimed administrative and selling expenses Rs. 26,25,989/- The assessee has received exempt dividend income of Rs. 69,08,245/- whereas it has added back only Rs. 10,000/- as disallowance under section 14A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,701/- [PB-32]. The authorities below without any reasons have disregarded the fresh calculation made by assessee. The A.O. shall have to record the satisfaction to that effect which is not done in the present case and, therefore, no disallowance could be made by the A.O. Learned Counsel for the Assessee relied upon decision of Hon'ble Supreme Court in the case of Maxopp Investments Ltd., Dated 12.02.2018 in which it was held that "Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, Suo motu disallowance under section 14A was not correct. It will be in those cases where assessee in his return has himself apportioned, but, the A.O. was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to that effect." Learned Counsel for the Assessee, therefore, submitted that addition is wholly unjustified. 5. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 6. After considering the rival submissions, we are of the view that addition is wholly unjustified. The assessee has various sources of income and mostly from the Group Company. The assessee has received exempt dividend in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1 of appeal of Assessee is partly allowed. 7. On Ground No.2, assessee challenged the disallowance out of Office expenses of Rs. 4,82,925/- and office maintenance expenses of Rs. 5,73,216/-. 8. During the course of assessment proceedings it was seen that assessee company is paying office Rent amounting Rs. 8,40,000/- to M/s. Ritu Nanda Insurance (P) Ltd. being a related party of the assessee company. The assessee company was required to show cause as to why rent expenses and office maintenance expenses be not disallowed under section 40A2(b) of the I.T. Act, 1961. The Assessee company explained that it is using office infrastructure facilities belonging to M/s. Ritu Nanda Insurance Services Pvt. Ltd. For this purpose, the assessee pays Rs. 70,000/- per month for use of such facilities. In addition, the proportionate electricity charges are also paid. The assessee company has also made payments to M/s. Technovative Engineers Pvt. Ltd. for providing manpower in the nature of helper, assistants and drivers. The said company has been entrusted with task of housekeeping, day to day maintenance, job of equipments, handling of mails and mails delivery, managing electrical and communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fair market value of the property and A.O. has not verified how the rent and office expenses are unreasonable, therefore, whole addition is unjustified. 10. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 11. We have considered the rival submissions. In this case, the A.O. found that assessee has been paying rent and office maintenance expenses. The assessee was found to have paid rent to M/s. Ritu Nanda Insurance Pvt. Ltd., who is a related party to the assessee. It was also found that M/s. Ritu Nanda Insurance Pvt. Ltd., was also paying monthly rent of Rs. 4,76,100/- from May, 2010 for this Office space. The office space is utilised by 16 companies including related party and the assessee. It is, thus, clear that assessee company sharing office space with M/s. Ritu Nanda Insurance Pvt. Ltd., along with other group related parties. It is not a denying fact that assessee was using office space for the purpose of business and at the time of visit of the Inspector also assessee was found to have using the office space on rent and that assessee was also paying maintenance charges. The A.O. disallowed the amounts in question by applying the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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