Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (11) TMI 411

..... this was business expenditure and this should have been allowed. The Assessee has received the interest of ₹ 1,07,57,930/-. It was submitted that the amount of interest paid by the Assessee should have been allowed to be set off against the interest deposited with the Department and taxed in the hands of the Assessee. The argument was that the interest paid to and received from is the same party i.e. Government of India and therefore, both transactions should be taken together. We do not find that the Tribunal has, in permitting this exercise, in any way violated any of the provisions of the Income Tax Act, 1961. It was a peculiar situation between the Assessee and the Department. The Tribunal has followed the similar exercise in the case of very Assessee on the prior occasion as well. Disallowance under section 14A of the Act read with Rule 8D - HELD THAT:- AO is directed to recomputed the disallowance u/s 14A of the Act afresh under normal provisions of the Act. Accordingly, the grounds raised by the assessee as well as by the revenue in this regard are allowed for statistical purposes subject to directions mentioned hereinabove. Disallowance u/s 14A while computing the boo .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 019 - Shri Saktijit Dey, JM And Shri M. Balaganesh, AM For the Assessee : Ms. Arati Vissanji For the Revenue : Shri R Manjunatha Swamy ORDER PER M. BALAGANESH (A.M) : These cross appeals in ITA No.3192/Mum/2013 & ITA No. 3508/Mum/2013 for A.Y.2008-09 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-6, Mumbai in appeal No.CIT(A)6/IT-231/2010-11 dated 25/02/2013 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 24/12/2010 by the ld. Dy.Commissioner of Income Tax 2(3), Mumbai (hereinafter referred to as ld. AO). Since, the issues involved are identical in all these appeals, they are taken up together and disposed off by this common order for the sake of convenience. 2. Set off of Interest on Income Tax Refund with Interest charged on income tax demands Ground No.1 of Assessee Appeal The brief facts of this issue is that the assessee received interest from income tax department to the tune of ₹ 43.81 crores and also paid interest to income tax department on its tax demands to the tune of ₹ 6.57 crores. The assessee sought to set off the interest paid on income .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ot see how this order can be cited _as .precedent inasmuch as the Assessee before the Tribunal and before us paid interest to the Income Tax Department amounting to ₹ 10,26,906/-. The Assessee claimed that this was business expenditure and this should have been allowed. The Assessee has received the interest of ₹ 1,07,57,930/-. It was submitted that the amount of interest paid by the Assessee should have been allowed to be set off against the interest deposited with the Department and taxed in the hands of the Assessee. The argument was that the interest paid to and received from is the same party i.e. Government of India and therefore, both transactions should be taken together. 5. We do not find that the Tribunal has, in permitting this exercise, in any way violated any of the provisions of the Income Tax Act, 1961. It was a peculiar situation between the Assessee and the Department. The Tribunal has followed the similar exercise in the case of very Assessee on the prior occasion as well. In such circumstances we are of the opinion that the second question also does not raise any substantial question of law. 2.2. Respectfully following the said decision, the ground no .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... The assessee submitted before the ld CITA that the ld AO erroneously adopted the figures of Asst Year 2007-08 and accordingly had computed the wrong disallowance figure at ₹ 341.38 crores supra. The ld CITA observed that the ld AO vide letter dated 28.12.2011 intimated him that enhancement is required to be made to the disallowance made u/s 14A of the Act. Accordingly, vide orffice letter dated 5.1.2012, the ld AO was directed u/s 250(4) of the Act by the ld CITA to make further enquiries on the enhancement of addition u/s 14A of the Act. The ld AO sent a remand report dated 15.10.2012 by which the disallowance u/s 14A of the Act read with Rule 8D of the Rules was computed at ₹ 601.55 crores after taking the correct figures pertaining to the year under consideration. The said remand report was forwarded to the assessee vide office letter dated 2.11.2012 by the ld CITA. The assessee made detailed submissions vide letter dated 10.12.2012. The ld CITA observed that assessee had submitted that there is a nexus between amounts borrowed during the year which have been deployed in bank fixed deposits. Accordingly, the interest paid on such borrowings which amounted to ₹ .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... less than ^ one crore under certain other heads. Thus, it is clear that the expenditure of * 138.59 has not been directly incurred towards arning of exempt income. The expenditure of ^ 138.59, therefore, is not to be considered as direct penseJor the purpose of Rule 8D(2)(i) on estimate basis. h^-(iii) "As pointed out by the AO in the remand report, the interest expenditure of * 39.73 Crore are direct interest expenditure on account of investment in shares of Tata Realty and Infrastructure Ltd. The interest of ₹ 39.73 Crores is required to be considered under Rule (iv) The appellant submits that for computing the disallowance under Rule 8D(2)(ii), the Interest Expenditure should be considered as under: (Rs. In crores) Gross Interest Expenditure 478.37 Less: Disallowance u/s.43B (net) 17.29 As per Para 2.4.1 above 89.74 107.03 371.34 Less: Disallowed under Rule 8D(2)(i) 39.73 Interest Expenditure to be considered for disallowance under Rule 331.61 3.5. Aggrieved, both the assessee as well as the revenue are in appeal before us. 3.6. We have heard the rival submissions and perused the materials available on record including the judicial pronouncements that were cited by bo .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... nce in the light of the said Special Bench decision. Accordingly the Additional Ground No.2 A raised by the assessee is allowed for statistical purposes. 4. The Ground Nos. 3(i) ; 3(ii) and 4 were stated to be not pressed by the ld AR at the time of hearing before us for which necessary endorsement has been made in our file. Accordingly, the Grounds 3 and 4 raised by the assessee are dismissed as not pressed. 5. The Ground Nos. 1 & 6 raised by the revenue are general in nature and does not require any specific adjudication. 6. The Ground No. 4 raised by the revenue is challenging the action of the ld CITA in treating sale of 2% shares of Tata Consultancy Services Ltd (TCS) as Long Term Capital Gains as against business income taxed by the ld AO. 6.1. During the year under consideration, the assessee sold 2% shares of TCS and arrived at long term capital gains. Since TCS shares were listed in stock exchange and the said shares were sold in the open market after suffering due securities transaction tax (STT), the long term capital gains derived by the assessee thereon was claimed as exempt u/s 10(38) of the Act by the assessee in the return of income in the sum of ₹ 2749.84 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... sue allowed the ground of the assessee and accordingly held that gains on sale of 2% of TCS shares should be treated as long term capital gains only eligible for exemption u/s 10(38) of the Act. Aggrieved, the revenue is in appeal before us. 6.3. We have heard the rival submissions. We find that the revenue appeal for the Asst Year 2007-08 was dismissed by this tribunal on technical aspect and no finding was given thereon on merits of the addition. Hence it would be imperative on our part to adjudicate the impugned issue in dispute before us on merits. It is not in dispute that the assessee has been reflecting the investments made in TCS ltd together with other group companies under the head Investments‟ in its balance sheet. It is not in dispute that the assessee in the past had been selling certain shares held by it in the group companies and the gains received therefrom were offered to tax as long term capital gains and the same was accepted by the revenue as such. The ld AR even stated that the claim of long term capital gains were accepted by the revenue in earlier years even earlier to the STT regime. Hence the introduction of STT had not made the assessee to change the .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ins to the net dividend received from Tata International AG Switzerland of ₹ 1,40,88,871/- . We find that the assessee had submitted that the net foreign dividend of ₹ 1,40,88,871/- has been subjected to tax both in India as well as in Switzerland. This fact is not in dispute before us. Since the Indian tax applicable to the net foreign dividend amounts to ₹ 47,88,807/- which is in excess of ₹ 15,65,430/-, the assessee should be granted credit for double income tax of ₹ 15,65,430/-. We find that the ld AR had argued that this issue is settled in favour of the assessee in its own case for Asst Year 1995-96 in ITA No. 629 / Mum/ 2003 dated 13.1.2006 and also by the decision of Hon‟ble Jurisdictional High Court in the case of CIT vs Ambalal Kilachand reported in 210 ITR 844 (Bom). Per Contra, the ld DR submitted that for Asst Year 2000-01, the tribunal had decided the same issue against the assessee. But the ld DR did not file the copy of the said tribunal order relied upon by him in the grounds. In the absence of the said order, we do not have any option but to direct the ld AO to decide the impugned issue in the light of tribunal order passed for .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||