TMI Blog2022 (3) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of 10% of horticulture expenses as element of personal use - CIT-A deleted the addition - HELD THAT:- Tribunal is of considered opinion that assessee is not a private entity but a Multi State Cooperative Society registered under Multi State Co-operative Society s Act, 2002 and thereby bound by statutory provisions with regard to utilization of funds so there cannot be any presumption of use of the funds for any private use. Ld FAA rightly observed that Ld. AO while making the disallowance has failed to bring on record any specific finding that element of personal nature is involved in these expenses Assessee is engaged in the manufacturing of chemical fertilizers and certainly the premises of the assessee require maintenance of extensive green channels and green belts for balancing environmental hazards which are quite probable, due to the nature of activities of the assessee company. The ld. F.A.A has taken into consideration the requirements laid by Central Pollution Control board and Environment Protection Laws to justify the expenses. There is no prudence in expecting the assessee to maintain log book for employee wise / premise wise expenditure, as expenditure wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the year under consideration assessee has changed its stand by revising the return and excluding the above dividend income with the sole intention to avoid excess payment of tax due to the fact that there was revision in the tax rate in Oman with effect from 1.1.2010 from 30% to 12% which ultimately deprived the assessee of tax credit to the extent of 18% i.e. 30% tax rate in India minus 12% tax rate in Oman in respect of the deemed tax payable in Oman on the above dividend income. 2.3 It was observed by the Ld. AO while passing the assessment order that as per Article 25(2) of the DTAA with Oman, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the Sultanate of Oman, whether directly or by deduction which shall not exceed that part of the income tax, computed before the deduction is given, which is attributable to the income which may be taxed in the Sultanate of Oman. In view of these provisions, it was held by the Ld. AO that assessee is eligible for credit of taxes paid or payable in Oman in terms of Article 25(2) and 25(4) of the DTAA. 2.4 Thus in respect of dividend income from Joint venture wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oman cannot alter the nature of income from taxable to exempt (and thus come under the sweep of section 14A) even if finally after taking the tax credit, there is no tax liability to pay any Indian taxes. Ld. FAA also observed that this issue has also been dealt at length by its Ld. Predecessor vide his order for AY 2008-09 and 2009-10 and has decided the Issue in favour of the appellant. Accordingly, it was held that investment in the appellant s PE in Oman since held taxable in India shall be treated accordingly and as per law for working out disallowance u/s 14A. 4. Next Ld. AO had made a disallowance to the extent of 10% of horticulture expenses totaling sum of ₹ 60,70,000/- treating them personal in nature on the ground of non-maintenance of log book. 4.1 The ld. F.A.A. observed the submissions and various judicial pronouncements relied upon by the Ld. AR and held that Ld. AO while making the disallowance has failed to bring on record any specific finding that element of personal nature is involved in these expenses and addition is based upon the fact that no employee wise / premise wise log book has been maintained by the assessee in respect of these expenses. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and covered by order dated 25.01.2021 passed by Delhi Bench of Tribunal in assessee s own case for assessment year 2011-12 in ITA No. 6083/Del/2017 and order dated 15.05.2018 passed by Delhi Bench of Tribunal in assessee s own case for assessment year 2009-10 in ITA No. 4490/Del./2014 and order dated 30.11.2016 read along with order dated 05.04.2018 passed by Delhi Bench of the Tribunal in assessee s own case for assessment year 2008-09 in ITA No. 2394 and 3012/Del/2013. It was also submitted that assessee has on its own made disallowance equivalent to exempt dividend income. 8. In regard to ground no. 3 and 4 it was submitted that Horticulture expenses were made around plant and township maintained by the assessee and they are allowable u/s 37(1) of the Act and there is no element of personal expense in the hands of assessee company. Reliance was placed on the judgment of Hon ble Delhi High Court in Gujarat Nargian Ltd. vs. DCIT citation 67 SOT 325 (Delhi) and GAIL India Ltd. vs. DCIT ITA No. 4454/Del/2013 (Delhi Tribunal) also Sayaji Iron and Engineering Company vs. CIT 253 ITR 749 (Guj.). 9. Giving thoughtful consideration to the matter on record and going thro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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