TMI Blog2021 (5) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee u/s. 143(1) - HELD THAT:- We are unable to accept to this proposition made by the ld. AR for the reason that the section 154 order dated 11/12/2009 was only rectification of intimation u/s. 143(1) of the Act. Hence, effectively refund is granted to the assessee only u/s. 143(1). Hence, we hold that interest u/s. 234D of the Act is leviable. In our opinion, the order passed u/s. 143(1) and 154 of the Act are to be read together. Accordingly, the ground No. 2 raised by the assessee is dismissed. Disallowance u/s. 14A of the Act r.w.r. 8D(2) of the Rules while computing book profits u/s. 115JB of the Act - HELD THAT:- Since, we have tinkered with the identification of actual expenses incurred by the assessee for the purpose of earning exempt income by including few more expenses, while giving directions to ld. AO to recompute disallowance under normal provisions of the Act, the same disallowance so re-computed should be made under Clause(f) of Explanation 1 to Section 115JB(2) of the Act. Accordingly, the additional ground No. 1 raised by the assessee vide letter dated 09/08/2017 is partly allowed for statistical purposes. Claim of deduction u/s. 35DD - AR argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from closing hours of 31/03/2007 (the appointed date). As per the scheme of demerger, approved by Hon'ble High Court, the manufacturing undertaking was demerged into Bajaj Holding Investment Ltd. (Now known as Bajaj Auto Ltd.), the strategic business undertaking (including financial services wind mills) was demerged into Bajaj Finserve Ltd. The Erstwhile Bajaj Auto Ltd. i.e. the present assessee company, was renamed as Bajaj Holdings Investment Ltd. and it retained the investment activities. 2.2. We find that during the relevant assessment year, the assessee had earned ₹ 51,85,31,679/- as dividend from domestic companies and ₹ 1,50,49,575/- as dividend from mutual funds which was claimed as exempt u/s. 10(34) and 10(35) of the Act respectively. We find that assessee had made suo-moto disallowance of ₹ 10 lakhs u/s. 14A of the Act towards expenses incurred for the purpose of earning aforesaid exempt income. We find that the ld. AO ignored the workings made by the assessee and directly proceeded to invoke the computation mechanism provided in Rule 8D(2) of the Rules for working out the disallowance as under:- i) Disallowance under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing disallowance u/s.14A on a reasonable basis Amount (Rs.) Total Expenditure 57,597,446.38 Less Expenditure not connected with investment activity Auditors Remuneration 1,300,000.00 KPMG International audit fees and expenses 1,009,965.00 Other consultancy and certification fees 190,779.00 Demerger Expenses Account 17,368,276.90 Annual report printing and CD expenses 13,161,796.02 Advt- financial results 8,829,766.00 Shareholders and board meeting expenses 114,838.12 Listing fees 176,900.00 Charges paid for Maintenance of Bajaj Bhawan i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,000- Previous Year ₹ 3,000) - Profit on Sale of Investments, net* 2,128.0 Surplus on redemption of Securities* 26.1 Provision for Diminution in value of investments written back, net 44.8 Other Income Rent 2.4 Total 3,553.3 *Including on Current Investments ₹ 163.3 million 2.8. From the above, it could be seen that exempt income earned by the assessee is only ₹ 51.85 Crores and taxable income is ₹ 303.48 Crores, hence it would be totally unfair to disallow the entire expenses debited in the profit and loss account as was done by the ld. CIT(A). We find that assessee had already disallowed a sum of ₹ 185,36,813/- in the return of income out of the total expenditure to the extent of ₹ 5,75,97,446/- in the profit and loss account. Certainly, the remaining expenditure of ₹ 3,89,63,187/- would be attributed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that return of income for the A.Y. 2008-09 was filed by the assessee company on 30/09/2006. This return was duly processed u/s. 143(1) of the Act determining tax payable at ₹ 31,59,99,089/- on 24/07/2009. Later, this intimation was sought to be rectified by order passed u/s. 154 of the Act on 11/12/2009 by the ld. AO wherein the ld. AO determined refund of ₹ 2,23,92,800/-. This refund was subsequently withdrawn when order was passed u/s. 143(3) of the Act by the ld. AO as ultimately pursuant to completion of scrutiny assessment had resulted in tax payable. Consequently, interest u/s. 234D of the Act was charged. We find that the ld. AR before us argued that interest u/s. 234D of the Act could be charged only when refund has been granted to the assessee u/s. 143(1) of the Act. In the instant case, he argued that refund was not granted u/s. 143(1) of the Act but instead granted vide order u/s. 154 of the Act dated 11/12/2009. Accordingly, it was the submission of the ld. AR that the charging provision u/s. 234D of the Act itself fails and hence, cannot be levied. We are unable to accept to this proposition made by the ld. AR for the reason that the section 154 order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5DD of the Act. 6.1. We have heard rival submissions and perused the materials available on record. We find that the ld. AR argued that demerger took in A.Y. 2008-09 but expenditure on demerger took place in A.Y. 2009-10. He argued that since the 'appointed date' is always given retrospective effect by the Hon'ble High Court while approving the scheme of demerger, the expenses though incurred in A.Y. 2009-10 would be eligible for deduction from the year of demerger on amortization basis @20% in each year. He also placed reliance on the decision of the Co-ordinate Bench of this Tribunal in the case of Excel Industries Ltd., vs. DCIT in ITA No. 2825, 2841/Mum/2007, ITA No. 532, 671 1622/Mum/2009 dated 15/06/2012 in support of his argument. We find that this decision is directly applicable in favour of the assessee, but the quantum of allowability of expenses u/s. 35DD need to be determined factually by the ld. AO. Infact, the ld. CIT(A) in para 2.3.2 of his order had also recorded the fact that assessee had incurred expenditure towards demerger to the tune of ₹ 148,94,622/- and had disallowed the same voluntarily in the return of income. Hence, this goes to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riance in figures. 12. We find that assessee has raised additional grounds of appeal. All these additional grounds were never raised before lower authorities and are raised for the first time before us. The facts relevant for adjudication of these additional grounds are already on record. Moreover, these are legal issues and hence, they are admitted by us and taken up for adjudication. 13. The first additional ground raised by the assessee vide letter dated 09/08/2017 is with regard to disallowance made under rule 8D(2) of the Rules while computing book profits u/s. 115JB of the Act. This is similar to additional ground No. 1 raised by the assessee for A.Y. 2008-09 and the decision rendered for A.Y. 2008-09 shall apply with equal force for this assessment year also except with variance in figures. 14. The additional ground No. 2 raised by the assessee vide letter dated 09/08/2017 is with regard to taxability of interest on refund u/s. 244A of the Act. 14.1. We have heard rival submissions and perused the materials available on record. We find that for the A.Y. 1992-1993, originally the interest on refund u/s. 244A of the Act was determined at ₹ 4,91,08,102/-. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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