TMI Blog2021 (8) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided before us. In view of this, we send the issue back to the file of the ld. Assessing Officer directing the AO to examine the claim of the assessee for depreciation on this asset to the extent of cost of building. Assessee is directed to submit the relevant details before the Assessing Officer. With respect to the up-gradation of complex in Agartala and school construction in Rajkot, we find that both these expenditure are not for the purposes of business and, therefore, neither they can be allowed under Section 37(1) of the Act nor any depreciation can be allowed on these assets as they are not used for the purpose of the business of the assessee. Accordingly, ground No. 5 of the appeal of the assessee is partly allowed with above direction. Disallowance u/s 14A r.w.r.8D - assessee has claimed exemption of dividend income - assessee has disallowed suo moto a sum - HELD THAT:- We find that assessee has investment in joint ventures and liquid funds amounting to in all to ₹ 22,359 lakhs. From the joint ventures no exempt income is received during the year. Total dividend is from liquid funds. The assessee has share capital and pre-reserve to the extent of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents : Gaurav Pundir , Sr. D. R. ORDER Per Prashant Maharishi , AM 1. These are the cross appeals filed by the assessee as well as the ld. Assessing Officer against the order of the ld. Commissioner of Income Tax (Appeals)-39, New Delhi, dated 7.03.2017 for Assessment Year 2012-13. 2. Assessee has raised following grounds of appeal and the Revenue has raised following grounds of appeal: I.T.A. No. 4287/Del/2017 - (By the assessee) Selection of case for scrutiny under CASS is bad in law 1. The ld. Commissioner of Income Tax (Appeals) - 39, New Delhi [hereafter the CIT(A)] failed to appreciate the fact that the submissions, of the Assessee that the case of the Assessee was selected for scrutiny under CASS, have not been disputed by the ld. AO as well the CIT(A); 2. The ld. CIT(A) erred in holding that even under CASS the AO selects the case after keying in the criteria, particularly without any supporting evidence; 3. The ld. CIT(A) erred in holding that even under CASS the independence of the AO to select case for scrutiny remains; 4. The ld. CIT(A) erred in holding that he is not in agreement with the contentions of the Assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 25,00,000/- claimed by the assessee as Corporate Social Responsibility (CSR) expenditure incurred on awareness campaign ignoring the contents of Explanation 2 to section 37(1) of the Act? 4. The brief facts of the case shows that assessee is a Government of India Undertaking working under the Ministry of Urban Development executing various types of civil and electrical projects all over India and abroad. 5. The assessee filed its return of income on 19.09.2012 at ₹ 316,99,33,720/- which was revised to ₹ 298,60,80,260/-. The assessment under Section 143(3) of the Income Tax Act, 1961 (the Act) was made on 31.03.2015 wherein following three disallowances were made: a. Disallowance under Section 14A of the Act of ₹ 72,72,713/-; b. Disallowance of ₹ 1,92,30,000/- on account of non-deduction of tax on bank guarantee charges paid to various banks; c. Disallowance of CSR expenditure of ₹ 2,20,84,000/-. 6. Assessee preferred an appeal before the ld. CIT (Appeals). The ld. CIT (Appeals) after considering the remand report filed by the ld. Assessing Officer deleted the disallowance under Section 14A of the Act. The disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the items of CSR expenditure held by the ld. CIT (Appeals) the claim of the assessee is that these are Revenue in nature and even otherwise if held to be capital expenditure the ld. CIT (Appeals) should have allowed depreciation to the assessee. The assessee submitted that the training expenses of ₹ 1,42,29,282/- the same was paid for construction of temporary structure for training institute and, therefore, same was to be allowed as Revenue expenditure or depreciation should have been allowed. Further with respect to the expenditure of ₹ 7,90,583/- on up-gradation of complex in Agartala and a sum of ₹ 7,77,923/- incurred on repair of school buildings at Rajkot also cannot be said to be an expenditure for business purposes. The claim of the assessee is that this expenditure were incurred to maintain good relationship with the Govt. and to get the new business and on the school sign-board of the assessee is shown. All these expenditure should have been allowed to the assessee. 11. The ld. AR submitted that these expenditure should have been allowed to the assessee as deduction. He submitted a written note. The ld. CIT (Appeals) vehemently supported the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 8,39,21,124/-. The assessee has disallowed suo moto a sum of ₹ 68,67,942/-. Assessing Officer held that this is not the correct application of method in accordance with Rule 8D. Therefore, he worked out the total disallowance of ₹ 1,41,40,655/- applying provision of Rule 8D and computing disallowance u/s. 8D(2) (i), (ii), and (iii) and made the net addition/disallowance of ₹ 72,72,713/-. The ld. CIT (Appeals) deleted the disallowance. 17. The ld. CIT - DR supported the order of the Assessing Officer and the ld. AR submitted a detailed note stating that the disallowance made by the ld. AO is incorrect. He submitted that investment in joint venture and tax free income generating securities is less than the amount of share capital and free reserve owned by the assessee. He submitted that total investment made by the assessee is ₹ 22,359/- lakhs whereas the total own funds are ₹ 79,549 lakhs. Thus, no disallowance of interest can be made under 8D(2)(i) and (ii). With respect to administrative expenditure under Section 8D(2)(iii), he submitted that the Assessing Officer has computed 0.5% of all investments of the assessee whether exempt income earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x at source on bank guarantee commission paid to banks, the disallowance has been correctly made by the ld. AO. The ld. CIT (Appeals) has incorrectly held that the Notification applies to the assessee during this year also. 20. The ld. CIT - DR supported the order of the Assessing Officer and the ld. AR submitted that the bank guarantee commission is paid to the bank is part of the interest, covered by the Notification of the CBDT and, therefore, no tax is required to be deducted on such bank guarantee charges. He, therefore, supported the order of the ld. CIT (Appeals). 21. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that the issue is squarely covered in favour of the assessee in assessee's own case for assessment year 2011-12 in ITA. No. 756 (Del) of 2015 and 1598 (Del) of 2015 dated 14.05.2018 wherein the co-ordinate bench has clearly held that the Notification issued by the CBDT was to remove the rigorous of TDS and for unnecessary hardship. Therefore, it was held that the Notification issued also applies to assessment year 2011-12 though it is stated to be applicable with effect from 1.01.2013. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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