TMI Blog2020 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... pt income or the investment made are from the income generated from the business of assessee, therefore, no interest disallowance under Rule 8D(2)(ii) is warranted against the assessee. So far as disallowance under section Rule 8D(2)(iii) is concerned, the Assessing Officer have made disallowance @ .5% of average value of investment. In our view, the Assessing Officer has correctly made the disallowance of indirect expenses by applying the formula of Rule 8D. Therefore, we upheld the disallowance of .5% of average value of investment. The assessing officer is directed to allow the setoff of suo moto disallowance offered by the assessee. Thus, the assessee gets part relief on this ground of appeal Addition of Pooja Expenses - HELD THAT:- In assessee s own case for preceding year when no variance is brought to our notice. Thus, respectfully following the same, we direct the Assessing Officer to delete the disallowance of Pooja Expenses. Addition of Club Expenses - HELD THAT:- Considering the decision of Tribunal on similar ground of appeal in assessee s own case for preceding year when no variance is brought to our notice. Thus, respectfully following the same, we direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith rule 8D. - ITA No. 279/Mum/2013, ITA No. 1007/Mum/2014 - - - Dated:- 17-1-2020 - Shri Shamim Yahya, Accountant Member And Shri Pawan Singh, Judicial Member For the Appellant : Smt. Arati Vissanji with Shri Amol Patankar (AR) For the Respondent : Shri Sunil K. Jha (CIT-DR) ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This set of three appeals, out of which two cross appeal for Assessment Year 2009-10 and appeal by assessee for Assessment Year 2008-09 are directed against the assessment order passed under section 143(3) r.w.s. 144C passed in pursuance of direction of ld. Dispute Resolution Panel (ld. DRP). Mumbai dated 04.09.2012 for Assessment Year 2008-09 and dated 28.10.2013 for Assessment Year 2009-10 respectively. In all appeals, the parties have raised certain common grounds of appeal, therefore, all the appeals were clubbed, heard and are decided by common order for the sake of brevity and convenience. In appeal for Assessment Year 2008-09, the assessee has raised the following grounds of appeal related with various additions/disallowances: Ground A: Disallowance U/S 36(1)(iii) - ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etty (128 ITR 294). The claim of assessee was not accepted by Assessing Officer. 3. The assessee exercised its option for filing objection before the ld. DRP. The DRP after hearing the assessee granted partial relief on guarantee commission restricting the same @ 1.5% of the loan amount. However, all other additions/disallowances were upheld. On receipt of direction of ld. DRP, the Assessing Officer passed the final assessment order under section 143(3) r.w.s 144C(13) dated 21.11.2012. Aggrieved by the various additions/ disallowances made in pursuance of direction of ld. DRP, the assessee has filed present appeal before this Tribunal. 4. We have heard the submission of ld. authorised representative (AR) of the assessee and ld. departmental representative (DR) for the revenue and perused the material available on record. At the outset of hearing, the ld. AR of the assessee submits that most of the grounds of appeal raised by assessee are covered in favour of assessee by the decision of Tribunal either in case of assessee for earlier years or other decisions of Tribunal or higher courts. 5. Ground No.1 relates to disallowance under section 36(1)(iii). The ld. AR of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable both, interest-free and overdraft and/or loans are taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds are sufficient to meet the investments. Therefore, in view of the decision of jurisdiction High Court as referred above, we are of the view that the assessee has sufficient interest free fund available with the assessee and therefore, no interest disallowance under section 36(1)(iii) was justified. Hence, the ground A (1 2) of appeal raised by assessee is allowed. 8. Considering the decision of Tribunal on similar set of fact and respectfully following the same, the disallowance under section 36(1)(iii) are deleted. 9. Ground No. B relates to disallowance under section 14A of ₹ 91,30,772/-. The ld. AR of the assessee submits that during the relevant period under relevant to the assessment year consideration, the assessee earned dividend income of ₹ 2.41 crore from subsidiary company and ₹ 23,849/- from mutual funds. The assessee offered suo moto disallowance of DMAT charges of ₹ 105,400/- and ₹ 100,128/- being .4% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own interest free funds for the earning exempt income or the investment made are from the income generated from the business of assessee, therefore, no interest disallowance under Rule 8D(2)(ii) is warranted against the assessee. So far as disallowance under section Rule 8D(2)(iii) is concerned, the Assessing Officer have made disallowance @ .5% of average value of investment. In our view, the Assessing Officer has correctly made the disallowance of indirect expenses by applying the formula of Rule 8D. Therefore, we upheld the disallowance of .5% of average value of investment. The assessing officer is directed to allow the setoff of suo moto disallowance offered by the assessee. Thus, the assessee gets part relief on this ground of appeal. In the result, this ground of appeal is partly allowed. 12. Ground No. C relates to Pooja Expenses. The ld. AR of the assessee submits that this ground of appeal is covered by the decision of Tribunal for A.Y. 2007-08, wherein on similar disallowance was allowed subject to verification by lower authorities. 13. On the other hand, the ld. DR for the revenue supported the order of lower authorities. 14. We have considered the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and have gone through the orders of authorities below. We have noted that the assessee has claimed club Expenses of ₹ 79,170/-. The assessee claimed club expenses of ₹ 7,07,477/-. The Assessing Officer disallowed the expenses by following the decision of earlier years. The ld. DRP directed the Assessing Officer to allow the club membership fees only. The club membership fees was only ₹ 6,04,00/-, accordingly, the Assessing Officer disallowed the balance amount (₹ 7,07,477 6,04,000). We have noted that in assessee s own case for A.Y. 1982-83 similar disallowances was allowed vide order dated 21st January 1992 in R.A No. 2569(Bom.)/1991 in ITA No. 6154/Bom/1987. Similar relief was granted to the assessee in appeal for A.Y. 1990-91 in ITA No. 7619/Bom/1993 dated 13.02.2002. We have further noted that after the decision of Hon ble Bombay High Court in Otis Elevator Co. Ltd. (supra), this issue is no more res-integra wherein the Hon ble High Court while considering the question of law about the allowance of club fees incurred/paid to employees, allowed the question in favour of assessee. Therefore, respectfully following the decision of Hon ble Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee commission @ 0.5% p.a. for the period of guarantee. In the result, this ground of appeal is partly allowed. 23. Ground No. F relates to treatment of receipt received on transfer of TDR. The ld. AR of the assessee submits that during the assessment, the assessee vide letter dated 26.12.2011 requested the Assessing Officer not to adjust the gain on sale of TDR. The request of assessee was not accepted by Assessing Officer. The ld. DRP upheld the action of Assessing Officer by taking view that assessee had computed cost of acquisition and declared a LTCG in the return and the prayer of assessee of assessee is that capital gain is not taxable was rejected. The ld. AR of the assessee further submits that during the relevant period the assessee sold TDR for ₹ 5 crore. The details of purchaser is placed on record as per details on page no. 290 of Paper Book. Out of the total amount of TDR certain amount was paid to two companies namely Foseco Ltd. of ₹ 56,44,445/- and Premium Energy Transmission Ltd. of ₹ 82,22,255/- as part of TDR belongs to those companies. Balance consideration declared in the return and LTCG adjusted against brought forward capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Pruthvi Brokers Shareholder Ltd. (supra). We are also in agreement with the submission of ld. AR of the assessee that acquiescence cannot take away the right of the parties for the relief that he is entitled, where tax is levied or collected without authority of law. Therefore, considering the facts of the case, we admit the additional ground/claim raised by assessee about the receipt of income received on transfer of capital asset/TDR. Considering the fact that we have admits the additional ground/claim of assessee, therefore, we deem it appropriate to restore the issue to the file of Assessing Officer to decide this issue afresh in accordance with law. Needless to order that before passing the order, the Assessing Officer shall grant sufficient opportunity to the assessee to substantiate its claim. In the result, this ground of appeal is allowed for statistical purpose. 27. Ground No. G relates to unutilized Cenvat credit of ₹ 2.27 crore. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee by the decision of Tribunal in assessee s own case for A.Y. 2007-08, wherein similar ground of appeal was restored back to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance under section 14A to book profit under section 115JB. The ld. AR of the assessee submits that in A.Y. 2007-08, the Tribunal has directed that computation under clause (f) of Explanation (1) to section 115JB(2) is to be made without resorting to computation/disallowance under section 14A. 35. We have considered the submission of parties and perused the order of lower authorities. We have noted that similar ground of appeal in A.Y. 2007-08, the co-ordinate bench has passed the following order:- 13. We have considered the submission of both the parties and have gone through the orders of authorities below. We have noted that this ground of appeal is covered in favour of assessee by the decision of Special Bench in Vireet Investment (P) Ltd. (supra), wherein Special Bench of Delhi Tribunal that the computation under clause (f) of Explanation 1 to section 115JB (2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D. Therefore, respectfully following the decision of Special Bench, we direct the Assessing Officer to follow the decision of Vireet Investment Ltd. (supra) and pass the order for adjustment under section 115Jb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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