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TMI Blog2021 (9) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 14A of the Act r./w rule 8D of the Rules should not be made with reference to the income claimed as exempt. The assessee submitted that no disallowance under rule 8D is warranted as the company has substantial own funds of Rs. 994.37 crore of which the investments made by the company are of Rs. 552.,69 crore only. The assessee submitted that the major investments of the company during the year amounts to Rs. 58.89 crore. The other investments of the company are investments in foreign companies which do not yield any income which is not chargeable to tax. He submitted that similar investments which do not exist being sold out do not yield any exempt income. The Assessing Officer considering the submissions of the assessee noticed that assessee company has made huge investments of Rs. 3,39,52,80,000 and held that it is inconceivable that such a huge investment profile is managed without it services of an accountant keeping track of investment made or communicating with the mutual fund investment intermediaries, or without utilizing printing and stationery or telephone, etc. Consequently, the Assessing Officer made disallowance under section 14A r/w rule 8D and worked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai Bench, rendered in assessee's own case for the assessment year 2009-10 in UTV Software Communications Ltd. v/s ACIT, ITA no.1258/Mum./ 2015, order dated 11th December 2018, wherein the Tribunal decided the issue in favour of the assessee by observing as follows:- "6. After hearing both the sides, we have gone through the assessment order and noted that the AO has simply invoked the provisions of section 14A of the Act read with Rule 8D(2)(ii). Even there is no whisper that how the administrative expenses are linked to these exempt incomes. We find that this issue is squarely covered in favour of assessee and against the Revenue by the decision of Hon'ble Supreme Court in the case of Maxopp Investment Ltd. (supra), wherein Supreme Court held as under: - "41. Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in assessee's own case for the assessment year 2009-10, wherein the commission on guarantee fee was restricted to 0.5%. The learned Counsel also relied upon the decision of the Hon'ble Jurisdictional High Court in Everest Kanto Cylinders Ltd. (supra). 15. Considered the rival submissions and perused the material on record. We find that this issue is covered by the decision of the Co-ordinate Bench of the Tribunal rendered in assessee's own case for the assessment year 2009-10 in UTV Software Communications Ltd. v/s ACIT, ITA no.1258/Mum./2015, order dated 11th December 2018, wherein the commission on guarantee fee was restricted to 0.5%. "10. At the outset, the learned Counsel for the assessee stated that the Hon'ble Bombay High Court in the case of Everest Kento Cylinder Ltd. (Supra) has upheld the guarantee commission at 0.5%, which is already declared by assessee while bench marked the commission rate for workout ALP. Hon'ble Bombay High Court in Everest Kento Cylinder Ltd. (supra) held as under: - "10. Having considered submissions of Mr. Malhotra for the revenue and Mr. Pardiwalla for the assessee, we are of the view that the order of the Tribunal as regards disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration by restricting the commission on guarantee fee @ 0.5%. Consequently, we uphold the order passed by the learned CIT(A) by dismissing the ground no. 2 to 2.11, raised by the Revenue. 17. The issue raised in grounds no.3 to 3.8, relates to charging of interest on share application money. 18. The Transfer Pricing Officer held that since the shares are not allotted within a reasonable period, the share application money is in the nature of temporary funding till the allotment is made. The Transfer Pricing Officer proposed interest rate @ 14% and calculated the adjustment of Rs. 3,47,57,513. The Assessing Officer followed the directions of the Transfer Pricing Officer. 19. The learned CIT(A) held that the transfer pricing adjustment cannot be made on such capital account transactions in view of the decision of the Hon'ble Jurisdictional High Court in Vodafone India Services Pvt. Ltd. v/s Union Of India, ITA no.871 of 2014, judgment dated 10th October 2014. 20. The learned Departmental Representative relied upon the order of the Transfer Pricing Officer and the Assessing Officer. 21. The learned Counsel for the assessee while supporting the observations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax must be found specifically mentioned in the Act. In the absence of there being a charging Section in Chapter X of the Act, it is not possible to read a charging provision into Chapter X of the Act. We can do no better than refer to the following observations of the five Member Bench of the Apex Court in CIT v. Vatika Township (P.) Ltd. [2011] 49 taxmann.com 249:- 'Tax laws are clearly in derogation of personal rights and property interests and are, therefore, subject to strict construction, and any ambiguity must be resolved against imposition of the tax. In Billings v. U. S, the Supreme Court clearly acknowledged this basic and long-standing rule of statutory construction: Tax Statutes .... should be construed, and, if any ambiguity be found to exist, it must be resolved in favour of the citizen. Eidman v. Martinez 184 U.S. 578, 583; ... Again in Unites States v. Merriam, the Supreme Court clearly stated at pages 187-88: "On behalf of the Government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed, rather than with legal forms or expressions. But, in statutes levying taxes, the literal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case the Court held that the transaction cannot be brought to tax. The present facts are on a higher pedestal as there is no charging provision to tax issue of shares at premium to a non-resident, then the occasion to invoke the computation provisions does not arise. We, therefore, find no substance in the aforesaid submission made on behalf of the Revenue." 23. In view of the above, we are of the opinion that share application money being capital account transaction is outside the purview of section 92 of the Act and the transfer pricing adjustment cannot be made on capital account transactions as per the decision of the Hon'ble Jurisdictional High Court in Vodafone India Service Pvt. Ltd. (supra). Since the issue for our adjudication is squarely covered by the aforesaid decision of the Hon'ble Jurisdictional High Court cited supra, wherein the issue has been decided in favour of the assessee and against the Revenue for the reasons stated therein, respectfully following the same, we do not find any reason much less cogent reason warranting interference in the order of the learned CIT(A) in granting relief to the assessee. Accordingly, upholding the order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the learned Counsel appearing for the parties and perused the material on record. Insofar as disallowance under section 40(a)(ia) of the Act is concerned, we find that provisions of section 40(a)(ia) of the Act are applicable in case of non-deduction of TDS. Provisions of section 40(a)(ia) of the Act are not applicable in case of short deduction of TDS and for this proposition, in our considered opinion, the learned CIT(A) has perfectly relied upon the findings given by the Hon'ble Jurisdictional High Court in Vodafone India Services Pvt. Ltd. (supra). In the present case, the assessee has deduction TDS under section 194C of the Act and deposited the same with the Government. Since the conditions of section 40(a)(ia) of the Act are fulfilled, provisions of section 40(a)(ia) of the Act in not applicable. Consequently, the order of the learned CIT(A) is hereby upheld by dismissing the grounds no.4 to 4.2, raised by the Revenue. 30. The issue arose out of grounds no.5 to 5.2, relates to excess claim of expenses due to write-off at Rs. 15,04,60,771. 31. The Assessing Officer was of the opinion that there is no doubt that the said expense has been debited to the Profit & Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excess claim of Rs. 15,04,60,771. 34. The learned Counsel for the assessee relied upon the observations of the learned CIT(A). He submitted that the discount on the issue of commercial paper is an allowable as revenue expenditure and is allowed in the first year when the liability is actually incurred i.e., discount given. In support of his arguments, the learned Counsel relied upon the following case laws:- i) Taparia Tools Ltd. v/s JCIT, [2015] 55 taxmann.com 361 (SC); ii) JCIT v/s Mukund Ltd., [2007] 291 ITR 249 (SB) (Mum.); and iii) CIT v/s Amar Ujala Publication Ltd., [2016] 72 taxmann.com 159 (Del.). 35. We have considered the rival submissions of the learned Counsel appearing for the parties and perused the material on record in the light of the decisions relied upon. There is no dispute that the expenses claimed by the assessee are revenue in nature. In our considered opinion, since the income on account of withdrawal from business restructuring reserve is recorded in the current year, the corresponding expense on account of discount on commercial paper cannot be allowed in the subsequent year, as held by the Assessing Officer, and the Assessing Officer ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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