TMI Blog2016 (4) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... ursement of property taxes to Precision Component(P) Ltd.(PCPL) - HELD THAT:- As A.R. contended the reimbursement of property tax partakes the character of rent only. There is merit in its said contention also. Hence, what is required to be seen is as to whether to aggregate amount of rent plus reimbursements compares well with the earlier years payment. If it does not compare well, then it is the duty of the assessee to justify the payment, this issue required fresh examination at the end of Assessing Officer. Accordingly we set aside the order of learned CIT(A) on this issue and restore this issue to the file of Assessing Officer for fresh examination. Expenditure incurred upon the advertisement and promotion - HELD THAT:- Keeping in view of the argument advanced by the learned representative of the parties and perusing the record, it is observed that this matter of controversy, has already been adjudicated by the Income Tax Appellate Tribunal in the assessee s own case [ 2008 (4) TMI 535 - ITAT MUMBAI] Moreover, this matter of controversy has also been adjudicated by the Hon ble Bombay High Court in assessee s own case for the A.Y. 1998-99 wherein, such expenditure ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JIT SINGH, JM For The Assessee : Shri Porus Kaka Shri Divesh Chawla For The Department : Shri Sumit Kumar ORDER PER AMARJIT SINGH, JM: This order shall dispose of both the appeals together bearing ITA No. 4818/M/10 titled as Star India Pvt. Ltd. Vs Addl CIT Rg. 11(1) and ITA No. 4675/M/10 titled as Addl. CIT Rg. 11(1) Vs Star India Pvt. Ltd. being the parties are the same and the matter of controversy is also similar in nature which can be conveniently adjudicated by a single order. The said appeals are pertaining to the A.Y. 2006-07. 2. The assessee is in the profession of producing procuring television programmes and supplying the same to the overseas media companies, agent for advertisement sales for overseas media companies and carries on channel subscription business. The return of income of the assessee for the assessment year 2006-07 was finalized by the A.O. vide order dated 07.12.2009 assessing the total income of ₹ 166,20,10,410/-. Feeling aggrieved, the assessee filed an appeal before learned Commissioner of Income Tax (Appeal) 8, Mumbai [hereinafter referred to as the CIT(A) ], who passed the order dated 22.03.2010 in question. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue, the revenue has also taken the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-3, Mumbai has erred in directing the Assessing Officer to allow entire expenditure incurred for advertisement and promotion at ₹ 57,78,45,583/- ignoring the fact that the same has also benefitted the foreign associated enterprises. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-3, Mumbai has erred in holding that the commission would accrue to the assessee on the date of actual receipt of commission or on the payment by the client directly to the principal and not on the raising of invoices. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)- 3, Mumbai has erred in directing the Assessing Officer to allow depreciation @ 60% on computer peripherals, treating the same as computers, though the same is not specified in the Act. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)- 3, Mumbai has erred in directing the Assessing Officer to delete the disallowance made u/sl4A r.w.Rule8D of the Act with respect to interest expense, ignori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on its own liability and not on behalf of or as an agent for its shareholders. In the hand of the shareholder as the recipient of dividend, income by way of dividend does not form part of the total income by virtue of the provisions of s.10(33). Income from mutual funds stands on the same basis; (iii) The provisions of sub-ss (2) and (3) of s. 14A of the IT Act, 1961 are constitutionally valid; (iv) The provisions of r. 8D of the IT Rules as inserted by the IT (Fifth Amendment )Rules, 2008 are not ultra vires the provisions of s. 14A, more particularly sub-s. (2) and do not offend Art. 14 of the Constitution; (v) The provisions of r.8d of the IT Rules which have been notified w.e.f. 24th March, 2008 shall apply with effect from asst. yr. 2008-09; (vi) Even prior to asst. yr. 2008-09, when r.8D was not applicable, the AO has to enforce the provisions of sub-s (1) of s. 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the term of license agreement. Under normal circumstances, such kind of violation of agreement does not happen. However, the assessee has drawn support from a letter claimed to have been signed by the assessee and the land lord, which states that the assessee here in should reimburse the property tax. We notice that the monthly rent paid by the assessee was ₹ 1,16,000/-. However, the property tax reimbursed by the assessee works out to ₹ 30,63,248/-, which works out to about 26 months of rent. This proportion appears to be highly disproportionate and beyond human conduct and probabilities. A tenant, under normal circumstances would not agree to bear such a high cost. Hence there appears to be merit in view taken by tax authorities. However, we notice that they have taken adverse view without conducting any enquiry. The learned A.R. contended the reimbursement of property tax partakes the character of rent only. There is merit in its said contention also. Hence, what is required to be seen is as to whether to aggregate amount of rent plus reimbursements compares well with the earlier years payment. If it does not compare well, then it is the duty of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the same but the Hon ble Tribunal in his judgment dated 13.07.2006 cited as Star India Pvt. Ltd. Vs. ACIT [2006]103 ITD 73, Mumbai found justifiable to tax an amount at the time of receipt and appeal against the said order was dismissed by the Hon ble Bombay High Court in ITA No.165 of 2009 dated 24.03.2009. No doubt in the said circumstance the ground raised by revenue does not seems justifiable therefore we have arrived at this conclusion that the learned CIT(A) has passed the order correctly and judiciously on this issue which does not require to be interfered with at this appellate stage. Hence, this issue is in decided in favour of the assessee and against the revenue. ISSUE NO. 3:- 10. The revenue has raised an objection on account of allowance of depreciation @ 60% on computer peripherals like rack, printer, port, routers, cord etc. This controversy has been decided by the Tribunal in case filed as DCIT Vs. Datacraft India Ltd. cited as (2011)9 ITR (Trib) 712 (Mumbai)(SB) and by the Hon ble High Court of Delhi while the deciding the case of CIT Vs. BSES Rajdhani Powers Ltd. The plea which has been taken by the revenue is that the depreciation which has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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