TMI Blog2019 (4) TMI 1871X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. If the expenditure already voluntarily disallowed by the assessee is found to be reasonable, the Assessing Officer in any case could not have resorted to rule 8D of the Rules. Disallowance of deduction u/s 37(1) - compensation for premature termination of the lease agreement - HELD THAT:- Tribunal noted that the assessee had terminated lease and licence in respect of two warehouses from Paras Commercial Centre. The lessor deducted a sum towards compensation for premature termination of the lease agreement. The Tribunal in such facts held that the early termination of the lease was a business decision and the expenditure incurred in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in view of the fact that the decision of this court in the case of Kotak Securities Limited . [ 2011 (10) TMI 24 - BOMBAY HIGH COURT] has been reversed by the Supreme Court in the case of CIT v. Kotak Securities Ltd.. [ 2016 (3) TMI 1026 - SUPREME COURT] - Resultantly, on the merits also, the Revenue would have no ground to succeed. Revenue appeal dismissed. - Income Tax Appeal No. 229 of 2017 - - - Dated:- 2-4-2019 - Akil Kureshi And Sarang V. Kotwal JJ. For the Appellant : Suresh Kumar JUDGMENT 1. This appeal is filed by the Revenue to challenge the judgment of the Income-tax Appellate Tribunal ( the Tribunal for short). 2. The following questions are presented for our consideration : (a) Whether on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of ₹ 14.61 lakhs in the case of the assessee in relation to indirect expenses for earning exempt income at 0.5 per cent. of the average investments. The Tribunal in further appeal by the assessee retained ₹ 6.61 lakhs by giving relief to the assessee to the extent of ₹ 8 lakhs on the ground that rule 8D cannot be applied blindly when the assessee had hardly incurred any expenses in relation to the dividend earned and substantial investments were made temporarily in order to park the idle funds. 4. Learned counsel Mr. Suresh Kumar for the Revenue argued that once in the facts of the case, rule 8D applies, the Tribunal, thereafter had no discretion to restrict or reduce the disallowance. Once in terms of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is found to be reasonable, the Assessing Officer in any case could not have resorted to rule 8D of the Rules. 6. Question No. (b) pertains to the disallowance of deduction of a sum of ₹ 45.16 lakhs claimed by the assessee under section 37(1) of the Act. The Tribunal noted that the assessee had terminated lease and licence in respect of two warehouses from Paras Commercial Centre. The lessor deducted a sum of ₹ 45.16 lakhs towards compensation for premature termination of the lease agreement. The Tribunal in such facts held that the early termination of the lease was a business decision and the expenditure incurred in relation to the same was wholly and exclusively for the purpose of business. We find no error in the view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In view of the above facts, the appeal of the assessee on this ground is allowed and the Assessing Officer is directed accordingly. 8. Thus, the Tribunal on facts held that the assessee had not claimed any double benefit and the bad debt was required to be allowed as an admissible deduction under section 36(1) of the Act. We see no error in the view of the Tribunal. 9. The last question, i.e., question No. (d) pertains to the disallowance under section 40(a)(ia) of the Act on account of non-deduction of tax at source by the assessee while making payment to Videsh Sanchar Nigam Limited towards leased line charges. On merits, the Revenue had placed reliance on a decision of this court in the case of CIT v. Kotak Securities Ltd. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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