TMI Blog2017 (2) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... The disallowance has been made on finding of the fact that the assessee has made certain investments out of borrowed funds. In our considered opinion, since the assessee has not earned any exempt income, no disallowance u/s. 14A read with Rule 8D is called for. Our view is also fortified by the decision of the Hon ble High Court of Gujarat in the case of Corrtech Energy Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] held that the Tribunal had recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. Hence, no disallowance could be made u/s. 14A. Deduction of amortization of value of stock options to employees - HELD THAT:- As relying on First Appellate Authority derive support from the findings of the Special Bench of the Tribunal in the case of Biocon Ltd [ 2013 (8) TMI 629 - ITAT BANGALORE] amount being remuneration to employees by way of Employees' Stock Option Plan debited to profit and loss account is an allowable expenditure u/s 37(1). - ITA. No. 1378 & 1412/AHD/2014 - - - Dated:- 10-2-2017 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER For the Appellant : Shri S. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertainment tax receipt of ₹ 57,31,329/- in respect of Crystal Palm (Rajasthan) is concerned, the ld. CIT(A) observed that the policy under which the State of Rajasthan has granted is different from old policy applicable to Jaipur. The assessee strongly contended that the exemption provided is to attract investors to invest in State of Rajasthan and is applicable on new investments and therefore, on the basis of principles laid in earlier years in respect of various units entertainment tax subsidy under new policy is also capital receipt in state of Rajasthan. However, the ld. CIT(A) observed that the assessee has not furnished the copy of Rajasthan Investment Promotion Scheme of 2003. The ld. CIT(A) further observed that the assessee could not demonstrate how the assessee is fulfilling the conditions of this new scheme and how it is entitled for exemption in respect of entertainment tax receipts as the necessary documents and correspondences with the concerned authorities of Rajasthan Government for constructing Multiplexes are not furnished. The ld. CIT(A) accordingly treated ₹ 57,31,329/- as revenue receipt. 8. Aggrieved by this, the assessee is before us. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Nagpur2 (Maharashtra) 11,372,664 First year of claim. However, same facts as in Pune and Nariman Point apply. The applicable policy covered in favour of the appellant by IT AT, Ahmedabad's Common Order for AY2003-04 to 2005- 06 7 Darjeeling (West Bengal) 2,633,719 Held to be a capital receipt not exigible to tax for Assessment Years 2008-09 to 2009-10. The applicable policy covered in favour of the appellant by IT AT, Ahmedabad's Common Order for AY 2003-04 to AY 2005-06. 8 Raja hat (West Bengal) 4,050,745 First year of claim. However, same facts as in Salt Lake, Darjeeling and Burdwan apply. The applicable policy covered in favour of the appellant by ITAT, Ahmedabad' 9 Indore 2 (Madhya Pradesh) 5,641,334 First year of claim. However, same facts as in Indore apply. 10 Crystal Palm (Rajasthan) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall constructed, subject to the condition that commercial exhibition of films in such cinema hall was required to be started by 31-3-2000. *In the scheme of the Rajasthan Entertainments and Advertisements Tax Act, 1957, where entertainment tax is determined and recoverable from the proprietor of the entertainment and is levied with reference to the number of admissions to the entertainment, when the State Government had exempted such proprietor of new cinema hall from payment of entertainment tax on the given condition, the object was clearly to promote the construction of new cinema halls. * Merely because the amount was not directly meant for repaying the amount taken for construction of the cinema hall, its purpose could not be considered to be other than that of promoting construction of new cinema hall. As held consistently by the Courts, the source of funds for construction of such cinema hall is irrelevant; and it would also not matter if the grant would be available after the business has been set up. * In the totality of the circumstances; and particularly looking to the scheme of the Act of 1957 as also the object and purport of the exemption notification, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration. The disallowance has been made on finding of the fact that the assessee has made certain investments out of borrowed funds. In our considered opinion, since the assessee has not earned any exempt income, no disallowance u/s. 14A read with Rule 8D is called for. Our view is also fortified by the decision of the Hon ble High Court of Gujarat in the case of Corrtech Energy Ltd. 372 ITR 97. Held that the Tribunal had recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. Hence, no disallowance could be made u/s. 14A of the I.T. Act. 20. Respectfully following the aforementioned ratio of the Hon ble Jurisdictional High Court, we set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition of ₹ 83,58,340/- .Ground no. 2 is allowed. 21. In the result, the appeal filed by the Assessee is allowed. ITA No. 1412/Ahd/2014 Revenue s appeal 22. The first ground relates to the deletion of the addition of ₹ 10,12,57,729/- treating the same as capital receipt not exigible to tax. 23. This issue has been considered by us in ITA No. 1378/Ahd/2014 (supra) qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Bench) in the case of Biocon Ltd. Vs DCIT, reported in [2013] 55 taxmann.com 335 (Bangalore). As per the appellant in this referred case the Hon'ble ITAT Special Bench, Bangalore has held that when a company undertakes to issue shares to its employees at a discounted premium on a future date, the primary object of this exercise is not to raise share capital but to earn profit by securing the consistent and concentrated efforts of its dedicated employees during the vesting period. Such discount is construed, both by the employees and company, as nothing but a part of package of remuneration. In other words, such discounted premium on shares is a substitute to give direct incentive in cash for availing the services of the employees. This submission of the appellant is found to be tenable. In this referred case the Hon'ble ITAT Special Bench, Bangalore while deciding the similar issue at Para 9.2.7 of its order has held that by undertaking to issue shares as discounted premium, the appellant does not pay anything to its employees, but incurs obligation of issuing shares at discounted price on a future date in lieu of their services which is nothing but an expenditure u/s 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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