TMI Blog2018 (5) TMI 2081X X X X Extracts X X X X X X X X Extracts X X X X ..... and such an exposition to remove the hardships and rigours has to be reckoned retrospectively. Thus, we hold that such a notification issued by the CBDT is not only curative and declaratory but also shows the intention of the Government that payment of bank guarantee commission etc. to the schedule bank, no TDS provisions should be applicable, and therefore, such notification would apply even prior to 1st day of January, 2013 - assessee has already filed certificates from all the Schedule Banks that the bank guarantee commission received has been offered as income on which due taxes has been paid, therefore, in view of second proviso to Section 40(a)(ia) which has been held to be applicable retrospectively by the Hon ble Jurisdictional High Court in Ansal Land Mark Township (supra), no disallowance u/s.40(a)(ia) can be made. Addition of expenditure paid to various organisation towards sales promotion and advertisement, holding it to be expenses in the nature of Corporate Social Responsibility - HELD THAT:- The assessee being a public sector undertaking and is governed by Ministry of Urban and Development and is also guided by the Office Memorandum issued by the Department of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, we hold that in absence of mandatory requirement of Section 14A (2), AO could not have applied Rule 8D, and therefore, disallowance made by the Assessing Officer cannot be sustained. Hence, ground no.1 raised by the Revenue is dismissed. Addition u/s 80IA - HELD THAT:- We find that ld. CIT (A) has mainly directed the Assessing Officer to verify the condition specified in Section 80IA and allow the same to the assessee. Even if such a claim has been made by the assessee at the appellate stage, then ld. CIT (A) is well within his jurisdiction and power to entertain such a plea and decide in accordance with law. Hon'ble Supreme Court in the case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] as referred in the grounds of appeal by the Revenue itself lays down that such a power to entertainment the claim does not impinge upon the ld. CIT(A). Thus, we do not find any infirmity in such a direction by the ld. CIT (A) and same is affirmed. Accordingly, the ground raised by the Revenue is dismissed. - I.T.A. No.756/DEL/2015 Assessment Year: 2011-12, I.T.A. No.1598/DEL/2015 Assessment Year: 2011-12 - - - Dated:- 14-5-2018 - SHRI AMIT SHUKLA, JUDICIAL MEMBER SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification does not cover the definition of interest u/s.2(28A) of the Act and therefore, exemption provided u/s.194A(3)(iii)(a) is not applicable to such payments. Accordingly, he disallowed a sum of ₹ 88,88,542/- and added back to the income of the assessee after invoking the provision of Section 40(a)(ia). 5. Ld. CIT (A) too has confirmed the said disallowance on the ground that notification cannot have a retrospective effect and guarantee commission paid to the scheduled bank is covered u/s.194H and hence TDS should have been deducted. 6. After hearing both the parties and on perusal of the impugned orders, we find that assessee is engaged in the business of civil contracts and to get these contracts, assessee corporation approaches the other PSUs, Government Organizations, State Electricity Board, etc., through tenders and in terms of the tender, assessee has to either deposit earnest money or submit bank guarantee to such organizations. The bank charges for bank guarantee paid by the assessee have been claimed as expenditure. Before us the ld. counsel for the assessee has submitted that similar payment of bank guarantee commission has been allowed to the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UCTION IN CERTAIN CASES - SPECIFIED PAYMENT UNDER SECTION 197A (1F). NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)]/SO 3069(E), DATED 31-12- 2012. In exercise of the powers conferred by sub-section (IF) of section 197A of the Income- tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely:- (i) bank guarantee commission; (ii) cash management service charges; (iii) depository charges on maintenance of DEMAT accounts; (iv) charges for warehousing services for commodities; ( v ) underwriting service charges; ( v i ) clearing charges (MICR charges); ( v i i ) credit card or debit card commission for transaction between the merchant establishment and acquirer bank. 2. This notification shall come into force from the 1st day of January, 2013. Though the said notification came into force from 1st day of January, 2013, but it only clarifies that the payment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer inferred that such an Office Memorandum and the expenditure is appropriation of profits after tax and cannot be allowed as expenditure. 10. Learned CIT (A) too has confirmed the said disallowance on the ground that no commercial expediency has been established by the assessee in connection with such an expenditure and in view of Explanation 2 to Section 37(1) inserted w.e.f. 01.04.2015, the said expenditure incurred for Corporate Social Responsibility is not allowable. 11. Before us, the details of expenditure incurred by the assessee on account of office memorandum issued by the Department of Public Enterprises are as under: Sr. No. Particulars Purpose Amount 1. Paid to DTC Advertisement 54,00,000 2. For Durgabari Sale Promotion 99,16,940 3. For SPCA NOIDA Advertisement 9,15,000 4. For Tithva, Rajasthan School Advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er department or organization for advertisement or sales promotion, then whether assessee s name and publicity in such advertisement is appearing or not needs to be verified. Accordingly, we restore this matter to the file of the Assessing Officer to see whether for incurring such an expenditure given to various departments or organization for advertisement and sales promotion purpose or publicity, the name of Assessee Corporation is appearing in such advertisement and publicity/ or is for commercial expediency. With these directions, we restore this issue to the file of the Assessing Officer for fresh adjudication. Thus, the grounds raised by the assessee are partly allowed for statistical purposes. 15. Coming to the Revenue s appeal, following grounds have been raised:- (1) Whether on the facts and in the circumstances of the case in law, the ld. CIT (A) erred in deleting the disallowance made u/s.14A of the IT Act, 1961. (2) Whether on the facts and in the circumstances of the case in law, the ld. CIT (A) erred in directing the Assessing Officer to verify whether the conditions specified in section 80IA are fulfilled by assessee and if the conditions are fulfilled, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been made for the reason that assessee has not taken any secured or unsecured loan for making any investment and; secondly, the interest expenditure debited is on account of delayed payment made to the contractors. Thus, there could not have been any question of disallowance of interest under Rule 8D (2)(ii). 19. In so far as indirect expenditure is concerned, assessee has already suo motu disallowed expenditure of ₹ 73.75 lacs as per the detailed working given and also submitted that investment in JVs has no exempt income either in present or in future. Learned Assessing Officer without examining the nature of accounts and the assessee s claim of expenditure allocable has simply proceeded to mechanically apply Rule 8D and made the disallowance, without even recording his satisfaction having regards to nature of accounts maintained by the assessee and expenditure debited to the profit and loss account. To invoke Rule 8D, it is sine qua non that Assessing Officer must record his satisfaction having regard to the nature of expenditure debited in accounts maintained so as to see whether any expenditure has been incurred which could be said to be attributable for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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