TMI Blog2016 (12) TMI 1800X X X X Extracts X X X X X X X X Extracts X X X X ..... law, after giving a reasonable opportunity to the assessee. Disallowance while computing profit u/s 115JB - HELD THAT:- Explanation 1(c) to Section 115JB of the Act clearly says that other than ascertained liability, it has to be increased over and above the book profit. The assessee now claims that mere pendency of writ petition before the High Court cannot be said that the liability is not an unascertained liability. The fact remains that the liability to pay the electricity tax would depend upon the decision that may be taken by the Madras High Court in the writ petition said to be pending. As on today, even though there was a liability and demand raised by the concerned authority, the High Court stayed the recovery and the payment of electricity tax would depend upon the decision that may be taken by the High Court. Therefore, as on today, it is not an ascertained liability. Hence, it has to be increased as provided in Explanation 1 to Section 115JB of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance of proportionate interest expenses on the funds diverted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relating to disallowance of club expenses of ₹ 1,17,478/- is dismissed as not pressed. 5. Now coming to next ground of appeal with regard to disallowance made under Section 14A of the Income-tax Act, 1961 (in short 'the Act') read with Rule 8D of the Income-tax Rules, 1962. 6. Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that while computing the profit of the assessee, the Assessing Officer disallowed ₹ 4,83,96,673/-. According to the Ld. counsel, there was no investment during the year under consideration. Therefore, the third limb of Rule 8D is not applicable at all. The assessee has not incurred any direct expenditure for earning exempt income. Therefore, the first limb of Rule 8D is also not applicable. Referring to second limb, the Ld.counsel submitted that the investment was made in the subsidiary companies and group companies. Therefore, there cannot be any disallowance of expenditure. The Ld.counsel further submitted that the assessee itself disallowed a sum of ₹ 17,59,411/-, therefore, further disallowance cannot be made. 7. We heard Sh. Pathlavath Peerya, the Ld. Departmental Repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2000-01. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh and bring on record shareholding pattern of the companies in which the investment was made by the assessee and how the companies outside India are subsidiary companies of the assessee and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. 9. The next ground of appeal is with regard bad debts written off to the extent of ₹ 8,22,569/-. The Ld.counsel for the assessee very fairly submitted that he is not pressing this ground. The Ld.counsel has also made endorsement in the appeal folder. The Ld. D.R. has no objection to dismiss this ground as not pressed. Accordingly, the ground raised by the assessee with regard to disallowance of bad debts to the extent of ₹ 8,22,569/- is dismissed as not pressed. 10. Similarly, the ground relates to disallowance of depreciation is also not pressed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payment of tax liability is an ascertained liability. Hence, according to the Ld. D.R., it has to be increased over and above the book profit computed under the provisions of Companies Act. 14. We have considered the rival submissions on either side and perused the relevant material available on record. Explanation 1(c) to Section 115JB of the Act clearly says that other than ascertained liability, it has to be increased over and above the book profit. The assessee now claims that mere pendency of writ petition before the High Court cannot be said that the liability is not an unascertained liability. The fact remains that the liability to pay the electricity tax would depend upon the decision that may be taken by the Madras High Court in the writ petition said to be pending. As on today, even though there was a liability and demand raised by the concerned authority, the High Court stayed the recovery and the payment of electricity tax would depend upon the decision that may be taken by the High Court. Therefore, as on today, it is not an ascertained liability. Hence, it has to be increased as provided in Explanation 1 to Section 115JB of the Act. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds were borrowed and whether there was any nexus between borrowed funds and investment made in Dubai and Jordon. The shareholding pattern of those companies is also not known. Since these facts were not available on record and the same were also not examined by earlier Bench of this Tribunal during the assessment year 2000-01, this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the authorities below are set aside and disallowance of proportionate interest expenses on the advance made to group companies are remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh and bring on record the shareholding pattern of the companies at Dubai and Jordon and how much advances were made and also find out whether the income from the group companies in which advances were made, is taxable in India, and the object for which the money was advanced and utilization of funds by the companies which received the funds from the assessee and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. 19. In the result, the appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
