TMI Blog2014 (1) TMI 1899X X X X Extracts X X X X X X X X Extracts X X X X ..... ent included in this year in assessee computation, in case the same was assessed in A.Y. 2005-2006. With this direction, the ground is considered as allowed for statistical purposes. Disallowance u/s 14A - Major disallowance is on the issue of expenditure relatable to Floriculture business which was claimed as exempt - HELD THAT:- We are of the opinion that the entire disallowance made by the A.O. cannot be sustained. However, keeping in view that assessee has earned substantial amount of dividend on investments and also keeping various Coordinate Bench decisions on similar issue in the relevant A.Y., we are of the opinion that 2% of the amount earned as dividends can be considered as expenditure related to exempt income. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Provisions where arms length price is to be determined, whether the agreement is approved or not. Keeping that in mind, we are of the opinion that the decision relied on by the learned Counsel, does not apply to the facts of the case. As decided earlier, the restriction on the royalty amount is limited to ₹ 44,24,184/-. - ITA.No.1450/Hyd/2010 - - - Dated:- 22-1-2014 - SHRI B.RAMAKOTAIAH AND SHRI SAKTIJIT DEY, JJ. For Appellant: Mr. Y. Ratnakar For Respondent: Mr. D. Sudhakar Rao ORDER B. RAMAKOTAIAH, J. This appeal by assessee is against the order of the Assessing Officer consequent to the directions of the Dispute Resolution Panel (in short DRP ), Hyderabad passed under section 143(3) read with sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 30 onwards of the order. He referred to the issue and submitted that the A.O. may be directed accordingly. 6. On perusal of the order of the CIT(A), the CIT(A) seems to have accepted that out of ₹ 24.53 crores received by the assessee as a total consideration of Block-B1, ₹ 6.03 crores did not accrue during that year. Therefore, to that extent, the ground does not survive. However, whether the Order of the CIT(A) was accepted by the Revenue or not is not known to us. Therefore, A.O. is directed to consider exclusion of the amount brought to tax, to the extent included in this year in assessee computation, in case the same was assessed in A.Y. 2005-2006. With this direction, the ground is considered as allowed for statist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as well as the employees of the company definitely spent man-hours to not only decide on the investments but to fill the relevant forms, to conclude statutory obligations and to follow-up regularly on investments. Accordingly, he has confirmed part of the amount in the year. Considering the facts of the case and Orders on the issue, we are of the opinion that the entire disallowance made by the A.O. cannot be sustained. However, keeping in view that assessee has earned substantial amount of dividend on investments and also keeping various Coordinate Bench decisions on similar issue in the relevant A.Y., we are of the opinion that 2% of the amount earned as dividends can be considered as expenditure related to exempt income. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame agreement for the same services rendered, the entire royalty paid at ₹ 3,00,01,312/- was disallowed in next A.Y. 2007- 2008 and the very same factual position was placed before the DRP. The DRP in that year has allowed the royalty on the internal sales/domestic sales whereas, the royalty on export sales were restricted to 1%. 13. Learned Counsel referred to the relevant portion of the DRP order dated 20.09.2011 for A.Y. 2007-2008 wherein it was held that given the above internal CUP information there is no need for the TPO to have disallowed the royalty payments and determine CUP as NIL. Accordingly, the objection relating to royalty payment on domestic sale was allowed and with regard to royalty payment on export sales the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and examined the documents placed on record. As far as the issue of royalty on domestic sales is concerned, as rightly pointed out by the learned Counsel, the DRP in later two years has examined the internal CUP and allowed the royalty on the domestic sales. Keeping in view the factual position as examined by the DRP and also the Order of the TPO for A.Y. 2009-2010, we are of the opinion that there is no need to disallow the royalty payment on domestic sales. Therefore, the claim of ₹ 2,14,28,108/- is allowable based on the above facts. 16.1. Coming to the export sales, the learned Counsel relied on the various factors for allowing the entire claim. However, considering the fact that same issue was also examined by the DRP in A.Ys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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