TMI Blog2015 (11) TMI 1871X X X X Extracts X X X X X X X X Extracts X X X X ..... he P/L account an estimated amount of Rs. 10,000/- could have been incurred in earning the exempt income. Thus both the condition for invoking Rule D was satisfied. The ld AR for the assessee has not brought any material before us as to why the disallowance made u/s 14 A read with Rule D is wrong, thus the addition u/s 14A, made by AO , which was sustained by CIT(A) does not require any interference. - Decided against assessee. - ITA No. 1050/Mum/2013 - - - Dated:- 4-11-2015 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For the Assessee : Shri R. Murlidhar For the Revenue : Shri B.S.Bist (DR) ORDER PER PAWAN SINGH, JM: 1. This appeal is filed by the assessee against the order of CIT(A)-40, Mumbai dated 22.11.2010 by raising the following grounds of appeal: 1. Disallowance of expenses u/s. 14A: The learned A.O. has erred in law and facts by making addition of Rs.62,25,245/- to the total income of the appellant by disallowing expenditure u/s. 14A of the Act read with rule 8D of the Income-tax Rules,1962 without establishing any nexus between the expenditure incurred and the income which does not form part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire stock was unsold and was in stock for the year under consideration and no sales has been recognized during the year. 4. Disallowance of BMC charges of Rs. 24,78,000/-: a. The learned A.O has erred in law and facts in erred in law and facts in disallowing BMC charges of Rs. 24,78,0001-, pertaining to the project named Oberoi International' School by treating it as penal in nature as per Explanation to section 3 7(1) of the Act and not allowing the same uls 3 7( 1) of the Act by ignoring the fact that the same were compensatory in nature and laid out wholly and exclusively for the purpose of business and not for any purpose which is an offence or which is prohibited by law and the Hon'ble Commissioner of Income-tax (Appeals) has erred in confirming the above actions of the learned A.O. b. The Hon'ble Commissioner of Income-tax (Appeals) has further erred in law and facts in rejecting the alternative plea of the appellant that the said expenses of Rs. 24,78,000/- should not be added to the total income, but should be reduced from the capital work in progress as the same were capitalized in the books of accounts of the appellant and not charged to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the Departmental Representative (DR) of the revenue and gone through the material avaialbe on record, the assessee has placed on record and the supporting document in respect of payment of BMC charged and the various receipts along with the various payment receipts made on account of custom duty charges and Notification No. 18 (RE-2008)/2004-09) issued from Ministry of Commerce Industry, Department of Finance along with the balance-sheet and profit loss a/c and audit report and intimation of disapproval u/s 346 of the Mumbai Municipal Corporation, certificate of commencement of project(s), and permission to occupy the completed project. We have further seen the different receipts of payment paid to the office of BMC as regularization charges. 6. The AR of the assessee has relied upon the judgment dated 31.10.2014 in ITA No. 4239/Mum/2011 titled as M/s M.P.Gupta vs. ITO, wherein the coordinate bench of Mumbai Tribunal while relying upon the judgements of Hon ble Supreme Court in the case of Prakash Cotton Mills P. Ltd. vs. CIT[1993] 201 ITR 684 (SC) and CIT vs. Ahmedabad Cotton Mfg. Co. Ltd. [1994] 205 ITR 163 (SC) , held that statutory impost paid as damages, penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be clear on the payment of Rs. 44,00,897/- as levied under various provision of Custom Act. 10. Considering and respectfully following the judgment of Co-ordinate Bench, as discussed above, the disallowance made on account of BMC Charges and Custom charges are deleted. 11. Another ground for our consideration is the disallowance made u/s 14A of IT Act. The AO made the disallowance u/s 14 A ,read with Rule 8D, on an amount equal to one half percent of the average value of the investment, which were appearing in the balance sheet of the assessee on the first day of the previous year , which is shown at Rs.124,50,48,994/- and thus calculating the disallowance @ 0.5% the amount was calculated Rs. 62,25,245/-. 12. The Ld. CIT(A) while dealing with this ground observed as under 4.4 I have gone through the assessment order, perused the submissions and also discussed the case with the ARs of the appellant. The appellant claims that no substantial manpower was required for making investments. It was further submitted that total indirect expenses for the company was Rs.85,14,130/-, which too related to the main business of real estate. However, on perusal of the Profit Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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