TMI Blog2022 (8) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... received. As per standard accounting practices, not providing for known expenses/losses would, in fact, distort the operating results of the business concern and it would not reflect true and fair profit of the year. It is the case of the assessee that it has provided for expenses for which services have been availed by it, meaning thereby, the liability to pay for those expenses has already accrued to the assessee. Accordingly, there should not be any reason to disallow the expenses u/s 37(1) of the Act. However, as noticed earlier, the AO has disallowed the expenses for non-furnishing of details that were called for by the AO. Accordingly, in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to furnish the details that were called for by the AO. Accordingly, we restore this issue to the file of the AO for examining it afresh. We also direct the assessee to furnish the details that were called for by the AO. Royalty payment - payments made for purchase of finished goods, purchase of capital goods tangible property, payment of royalty and payments for availing services - AO noticed that the assessee did not deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanations/legal submissions. As rightly observed by Ld DRP, it is the responsibility of the assessee to furnish the details in support of its claim for deduction of expenses. If the assessee fails in its responsibility, then the tax authorities do not have any other option, but to disallow the claim. In the instant case, admittedly, the assessee has not furnished the required details. Accordingly, in the interest of natural justice, we are of the view that the assessee may be provided with an opportunity to furnish the relevant details before the AO. Accordingly, this issue is restored to the file of AO, who may examine this issue afresh. If the assessee fails to furnish the details to the satisfaction of the AO, then the AO may disallow the claim. Disallowance relating to purchase of shrink wrapped software to be deleted Disallowance of payment made to IBM Corporation - HELD THAT:- Disallowance has been made by the AO on the reasoning that the assessee has not proved that the tax was deducted at source from the above said payment. Before us also, the assessee did not furnish any details in this regard. Accordingly, we confirm the disallowance made by the AO. Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed for AY 2009-10 in drawing adverse conclusions in AY 2010-11. However, at the time of hearing, the ld A.R did not press this ground. Accordingly, the ground no.2 is dismissed as not pressed. 5. Ground No.3 relates to the rejection of claim made u/s 10A and 10AA of the Act. The assessee had claimed deduction of Rs.793.18 crores u/s 10A of the Act and Rs.99.07 crores u/s 10AA of the Act in respect of various units. The AO rejected both the claims on the ground that the assessee has failed to comply with various conditions prescribed in those sections for allowing deduction. The violations noted down by the AO are discussed below:- (a) NON-SUBMISSION OF STATEMENT OF WORK(SOW) WITH STPI/SEZ AUTHORITIES:- The assessee has registered only one Master Service Agreement (MSA) dated 1.1.2004 with STPI/SEZ authorities. MSA is a general document and has no specific details regarding exact nature of work to be performed by the assessee. The assessee has claimed that the Document of Understanding (DOU) and Inter Company Agreements (ICA) supports MSA. However, the DOU/ICA were never registered with STPI/SEZ authorities. The AO referred to the Circular dated 17-01-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer software. Hence the assessee is not eligible for deduction u/s 10AA of the Act. (d) EXISTENCE OF TWO TYPES OF INVOICES AND NONFURNISHING OF ACCOUNTING INVOICES TO STPI/SEZ AUTHORITIES:- The AO noticed that the assessee was having two set of invoices, viz., Accounting invoice and Softex invoice. The accounting invoices are raised against various associated enterprises for whom services were rendered. The softex invoices a submitted to STPI/SEZ authorities. The AO noticed that it was not possible to match these two set of invoices completely, as the on site revenue is not declared in SOFTEX form submitted to STPI/SEZ authorities. It was also noticed that the accounting invoices are not submitted to STPI/SEZ authorities for verification of claim of software export. (e) INCOMPLETE DETAILS RELATING TO DATACOM SERVICE PROVIDERS:- The AO held that the assessee has not given satisfactory reply with regard to the details of datacom service providers through whom the data are transmitted, which raised doubt on export of software. (f) NON-APPROVAL OF BANK ACCOUNT MAINTAINED IN FOREIGN COUNTRY:- As per Explanation 2 to sec. 10A(3) of the Act, the sale proceeds sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The AO has summarised his conclusion paragraph 1.5.8 at page 41 of the assessment order:- 1. The detailed discussion made in the previous paragraph has revealed a fact that the assessee company could not substantiate its claim of manufacture and export of computer software from eligible STPI/SEZ unit. Section 10A/10AA gives tax benefit on the profits and gains derived by an undertaking from export of computer software that has been manufactured from eligible STPI/SEZ units. 2. For transmission of data from eligible STPI/SEZ units to outside India contradictory submission has been made by the assessee to different authorities. 3. The scheme of STPI notified by Government of India has been violated thoroughly by IBM India P Ltd. Not even a single software development agreement was registered by IBM India P Ltd with any of the STPI units. For the onsite development of computer software the company has unable to establish the direct nexus between the eligible unit and the client. 4. The DOU s was not registered with any of the STPI/SEZ unit. 5. The ICA given by the company has categorically revealed a fact that the company has rendered some miscellaneous ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 2. Reflect all the credits into the P L account and so called P L account submitted in ROI and subsequently. 3. Copies of all the FIRCs (both front and back side), invoices (accounting invoices and SOFTEX invoices) and SOFTEX regularised against each such FIRC. Reflect all the FIRCs into the books of accounts and P L account. Under which head the corresponding income has been offered. 4. Unit wise offshore contract/onsite contract of software development, corresponding export invoices certified by STPI authorities alongwith SOFTEX forms and link it to FIRC in following format:- . 5. Party wise ledger account of export revenue and match such export revenue with the so called unit wise P L account. 6. The AD bank has confirmed in the reply dated 18-03-2012 that the total Softex regularised by them for the AY 2010-11 was 1042,072,012 US $ (notice dated 16.4.2013). However, the turnover as per Form 56F was much more than the softex. If the company has developed any software and exported the same furnish the evidences like DOU, ICA, evidences for realisation, relevant bank account copies etc. The Ld DRP concurred with the view expressed by AO in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its AE s globally, and that, these were in the nature of software development services. It has been alleged by revenue that, MSA dated 01/01/2004, was the only document registered with STPI/SEZ authorities, which do not specify the scope of work. We place reliance upon Circular no.01/2013, dated 17/01/2013 issued by CBDT, wherein, necessity to have separate master service agreement for each work contract and to what extent it is relevant has been dealt with as under: (2) .. (i) .. (a) (b) (ii). Whether it is necessary to have separate master service agreement (MSA) for each work contract and to what extent it is relevant. As per the practice prevalent in the software development industry, generally two types of agreement entered into between the Indian software developer and the foreign client. Master Service Agreement (MSA) is an initial general agreement between a foreign client and the Indian software developers setting out the broad and general terms and conditions of business under the umbrella of which specific an individual Statement of Work (SOW) are formed. These SOW, is in fact, enumerate the specific scope and nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct or service of similar nature, as may be notified by the board, which is transmitted or exported from India to any place outside India by any means. We note that transfer pricing adjustment proposed by Ld.TPO was in respect of payments received on account of services rendered by assessee under software development segment. Therefore, it cannot be held that services rendered by assessee, does not fall under software development service segment. So, to allege that, assessee was providing miscellaneous services, is like blowing hot and cold at the same time. Revenue has not been able to prove anything contrary by way of documentary evidences on this aspect before us. Therefore, this objection raised by revenue does not hold good in eyes of law and is rejected. (C) NEW BUSINESS COMMENCED BY SPLITTING UP OR RECONSTRUCTION OF EXISTING BUSINESS:- This view of the AO has been rejected by Ld DRP in this year. (D) EXISTENCE OF TWO TYPES OF INVOICES AND NON-FURNISHING OF ACCOUNTING INVOICES TO STPI/SEZ AUTHORITIES:- This objection has been addressed by the co-ordinate bench in AY 2013-14 as under:- (I) Arguments of Counsel have been captured by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees are tacked to respective license to which the employee is tagged. Seat verification tool is used as a framework, in order to control, identify and tag employees to particular STPI/SEZ license for purpose of software development work. Ld. Counsel further submitted that a global rate card to capture hourly cost on an absorption costing principle for India is agreed and finalised on an annual basis. He submitted that the rate card contains details of hourly, employee band wise charge out rates and this so is from the Project and Accounts Controlled Table for purpose of invoice generation. Finally, he submitted that, the System Service Costing Ledger Bridge, calculates labour cost, based on input from, labour hours and rate card of employees in India from project and Accounts Controlled Tables. Other cost elements also flow into the System Service Costing Ledger, which are in the nature of employee reimbursements and project specific expenses. The data from System Costing Ledger then feeds into common intercompany accounting system that generates invoices. C.3. Ld. Counsel submitted that, such common intercompany accounting system/accounting invoices, are for specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02/2019 . Placing reliance on para 10 of the order, Ld. Counsel submitted that, in the absence of any adverse action by SEZ authority, it is incorrect to assume that assessee has not complied with requirements under SEZ Act, 2005. Placing reliance upon decision of Hon ble Supreme Court in case of Gestentner Duplicators Pvt. Ltd vs CIT reported in 117 ITR 1 , it has been emphasised that, it was not open for authorities below to assume any violation under SEZ Act, 2005 so long as the certificates of approval/renewal of a unit is not withdrawn by a process known to law. (II) The co-ordinate bench has decided this issue as under in AY 2013-14:- C.8. We have perused submissions advanced by both sides in light of records placed before us. C.8.1. Upon a query being raised by the bench regarding producing invoices for verification before authorities below, Ld. Counsel on instructions, submitted that, these are huge voluminous documents, which are difficult to compile. However he submitted that, assessee would be in a position to file documents as far as possible to co-relate invoices with SOFTEX forms. C.8.2. Ld. Standing Counsel for revenue placed reliance upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein above has been rejected by SEZ authority. Therefore, respectfully following ratio laid down by Hon ble Supreme Court in case of Gestentner Duplicators Pvt. Ltd vs CIT (supra), it was not open for authorities below to assume any violation under SEZ Act, 2005 so long as certificates of approval/renewal of units are not withdrawn by a process known to law. We are therefore of opinion that this objection raised by Ld.AO does not hold good in test of law. (E) INCOMPLETE DETAILS RELATING TO DATACOM SERVICE PROVIDERS:- The Co-ordinate bench has dealt with this issue in AY 2013-14 as under:- B. No evidence of data transmission and export of software outside India: B.1. Ld. Counsel submitted that, authorities below erred in concluding that, assessee did not transmit or export computer software outside India from its SEZ units. He submitted that, various details were filed before authorities below to prove, manner in which data was transmitted/exported. Ld. Counsel relied on, copies of royalty agreement, export contract and communication with foreign customers, placed in paper book Volume 2 at page 416-696 697-834, filed with authorities below, vide sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched Networking Services in India, as infrastructure of AT T was co-located with VSNL. VSNL was therefore considered to be the parent service provider and was consistently mentioned in SOFTEX form. He submitted that though VSNL was being mentioned in SOFTEX form, the international traffic for software development export services was always being supported through AT T. For assessee in India most of WAN links are owned and managed by AT T and, access links where international traffic is carried out was also through AT T Ld. Counsel submitted that all these evidences/details have been held to be inconsistent by authorities below. However, he again submitted that, for purposes of eligibility under section 10 AA of the Act, this alleged deficiency pointed out by Ld.AO is not of any relevance. B.6. Ld. Standing Counsel for revenue, placed reliance on, observations authorities below. B.7. We have perused submissions advanced by both sides in light of records placed before us. It is observed that, coordinate bench of this Tribunal for assessment year 2008-09 (supra) has already taken a view that declaration on STPI forms should be held to be sufficient in this regard. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that amount of export proceeds from sale of computer software received into foreign currency account maintained outside India, being HSBC (USA), is to be treated as sale proceeds deemed to have been received in India. Ld. Counsel submitted that authorities below do not dispute satisfaction of conditions laid down in section 10 A (1) and (2) of the Act. It is also been submitted that, Ld.AO do not dispute that assessee derived profits from export of computer software and that, export turnover in respect of such activity has also not been disputed by Ld.AO in Transfer Pricing Proceedings. Ld. Counsel thus, submitted that, under such circumstances, Ld.AO cannot reject claim of assessee in totality under section 10A/10AA of the Act. D.5. Ld. Counsel referred to and relied upon date wise events, showing reinstatement of approval by RBI vide letter dated 28/02/2014 which is reproduced as under: Date Particulars 22 Jan1998 Approval granted by the RBI to open and maintain a FCA with HSBC (erstwhile Midland Bank or City Bank), New York, USA (copy enclosed as Annexure 10) 1998 0nwards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions of the Company are in accordance with FEMA and relevant guidelines issued by Reserve Bank of India. Oct 2013 DB submitted DHS audit report (copy enclosed as Annexure 8) to RBI on the process review, sample testing, transaction audit and FEMA guidelines review. Dec 2013 DB submitted a letter to RBI stating, inter-alia, that IBM has largely complied with the provisions of FEMA and other guidelines issued by RBI in this regard (copy enclosed as Annexure 15). 28 Feb 2014 Letter from RBI stating, inter-alia, that after a careful analysis of the audit report submitted by DHS and subsequent clarifications, the FCA facility has been restored (copy enclosed as Annexure 9). D.6. Ld. Counsel submitted that Ld.AO did not agree with submissions by observing as under: .. The submissions made by assessee have been considered. It is seen from the submission that the DB had submitted a letter to RBI stating that IBM has largely complied with the provisions of FEMA and other guidelines issued by RBI. In view of the details available it is clear that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s consideration received towards export of computer software. D.9.3. We note that, Hon ble Bench of this Tribunal in assessee s own case for AY:2008-09 dealt with this objection in light of identical argument raised by Ld. Counsel therein as under: 3.84. We now take up the question with regard to the absence of an RBI approved bank account in which the export sale proceeds have to be deposited outside India. On this aspect, we find that the assessee has been depositing the export proceeds in HSBC account in New York. It was also seen that this bank account had approval only for the period up to 2001, Thereafter, the approval was required to be renewed, but had not been renewed by the assessee. We have also seen that if there had been a RBI approved bank account in which the export proceeds were deposited outside the country, than under Exptanation-2 to -section 10A(3) of the Act the assessee would satisfy the requirements of section 10A(3) of the Act viz., bringing into India the sale proceeds of computer software exported out of India In convertible foreign exchange. 3.85 We have also seen that even before the AO, the assessees put forth a claim that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty to examine as to whether the convertible foreign exchange was brought Into India and that they represent consideration received for export of computer software. The AO in the set aside proceedings before the DRP will be at liberty to rebut such claim of the assessee including the claim that the foreign exchange brought in does not represent safe proceeds of computer software exported out of India. As mentioned in para 3.56 of this order, the assessee should produce before the AO all documents referred to in the letter dated 12.07.2012 of Deutsche Bank to RBI. We give liberty to the assesses to file such documents as may be necessary to establish its claim for deduction u/s. 10A/10AA of the Act Thus, ground Nos. 3 1 to 3.4 raised by the assessee are treated as allowed for statistical purposes. D.9.4. Respectfully following the same, we remand this issue to DRP to verify receipts if sale proceeds of computer software exported out of India, being brought into India in convertible foreign exchange. DRP is at liberty to examine whether, convertible foreign exchange brought into India represents consideration received for export of computer software. Accordingly, this objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought Into India and that they represent consideration received for export of computer software. The AO in the set aside proceedings before the DRP will be at liberty to rebut such claim of the assessee including the claim that the foreign exchange brought in does not represent sale proceeds of computer software exported out of India. As mentioned in para 3.56 of this order, the assessee should produce before the AO all documents referred to in the letter dated 12.07.2012 of Deutsche Bank to RBI. We give liberty to the assesses to file such documents as may be necessary to establish its claim for deduction u/s. 10A/10AA of the Act Thus, ground Nos. 3 1 to 3.4 raised by the assessee are treated as allowed for statistical purposes G.1. Assessee is thus directed to file all relevant documents to substantiate the exports proceeds, brought into India, claimed as deduction under section 10AA. Assessee is directed to file all requisite information, as far as possible, mentioned in paragraph D..6.9.4, hereinabove. Ld.AO is directed to verify these documents and allow deduction to assessee relatable to sale proceeds from export of software development services. Accordingly this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard. We have to therefore proceed on the basis that the revenue has found no fault whatsoever with the various system of accounting maintained by the assessee. E.4.2. For year under consideration, Ld.AO at page 36 of impugned order accepts that, assessee maintained books of accounts in the same manner as in past. We note that Ld.AO sought to rely on statements of CA Sh.J.Majmudar and Sh.T.Ravindra even for asst. year 2008-09. This Tribunal while considering the objection for assessment year 2008-09 (supra) observed as under: 3.82. The AO has also sought to rely on statement of Mr T Ravindra, partner of Krishnaswamy and Co., Who have given reported in form 50 6F certifying the claim of the assessee for deduction under section 10 A of the act. We observe that the deduction under section 10A of the act is dependent on fulfilment of conditions laid down in that section, the statement of auditor cannot alter the claim for deduction under section 10A of the act, if otherwise the conditions laid down in the said section are fulfilled by an assessee. Besides the above, the CA has given a detailed explanation as to how profitability of various STP units have been arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (b) Nature of receipt of proceeds (c) Enquiries made through CBDT on genuineness of transactions to the file of Ld DRP, so that all of them may be examined together. Accordingly, we reject all other objections raised by the AO. After examining the above said three issues, the Ld DRP may issue appropriate directions to the AO on the issue of allowing deduction u/s 10A/10AA of the Act. 6.0 Ground No.4 urged by the assessee relates to the disallowance of expenses to the tune of Rs.400.15 crores u/s 37(1) of the Act. Following expenses have been disallowed by the assessee voluntarily u/s 40(a)(ia) of the Act for non-deduction of tax at source:- S. No. Particulars of Payment Amount disallowed u/s 40(a) 1 Professional fees (sec. 194J) 14,61,90,726 2 Amount payable to contractors/subcontractors (40(a)(ia)) 19,73,13,108 3 Commission (40(a)(ia)) 24,13,57,581 4 Rent 40(a)(ia)) 39,51,02,273 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of obligation. Hence it is imperative for a concern, following mercantile system of accounting, to provide for all known expenses and losses as at the year end, even if the relevant bills have not been received. As per standard accounting practices, not providing for known expenses/losses would, in fact, distort the operating results of the business concern and it would not reflect true and fair profit of the year. It is the case of the assessee that it has provided for expenses for which services have been availed by it, meaning thereby, the liability to pay for those expenses has already accrued to the assessee. Accordingly, there should not be any reason to disallow the expenses u/s 37(1) of the Act. However, as noticed earlier, the AO has disallowed the expenses for non-furnishing of details that were called for by the AO. Accordingly, in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to furnish the details that were called for by the AO. Accordingly, we restore this issue to the file of the AO for examining it afresh. We also direct the assessee to furnish the details that were called for by the AO. 7.0 Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue to DRP for fresh consideration and decision. Respectfully, following the same, we remand the issue to DRP with similar direction to consider the claim of assessee in light of evidences filed, after affording opportunity of being heard in accordance with law. Assessee is directed to file invoices raised in support of payments made by assessee to relevant parties. Assessee is at liberty to file all relevant details/evidences to substantiate its claim. DRP is then directed to verify nature of payment in the light of invoices filed by assessee. DRP is also directed to analyse payment made to non-residents on which tax has not been deducted at source in light of Explanation 2 to section 195 . DRP shall grant proper opportunity of being heard to assessee. The Ld A.R further submitted that the amount of Rs.278.68 crores paid to IBM Singapore is towards purchase of shrink wrapped software and it has been held by Hon ble Supreme Court in the assessee s own case reported as Engineering Analysis Centre of Excellence (2021)(432 ITR 471) that such kind of payments do not fall under the category of Royalty under India- Singapore DTAA. 7.4 We heard ld D.R and perused the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has claimed a sum of Rs.184.22 crores as Reclassification of expenses, but it could not fully furnished details reconciling the above said amount. We notice that the ld DRP has granted relief to the extent of details furnished and confirmed disallowance of Rs.41,12,780/- for want of details. Before us, the assessee could not furnish the details for the above said amount. Accordingly, we have no other option, but to confirm the disallowance of Rs.41,12,780/-. 9.0 Ground No.7 relates to the disallowance of depreciation claimed on leased assets. The AO disallowed claim of depreciation of Rs.132.11 crores claimed on leased assets following the view taken by him in AY 2009-10. The Ld DRP confirmed the view taken by the AO. However, it accepted the alternative plea of the assessee. The relevant observations made by Ld DRP are extracted below:- Having considered the submission, it is noticed by us that the disallowance of depreciation is supported by the judicial pronouncements on which the reliance has been placed by the assessing officer and therefore, we do not find any infirmity in regard to disallowance of depreciation, however, in regard to the alternative claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok 4. However, it is seen that the said explanations are mainly legal submissions and explanations. 10.3 We heard ld D.R and perused the record. We notice that the AO had requested the assessee to furnish:- (a) break-up details of item wise loss/gain in respect of each of the foreign assets/liabilities. (b) the details to show that all the foreign assets/liabilities are revenue assets/liabilities. There should not be any quarrel that the loss arising on account of revaluation of the foreign assets/liabilities in revenue field is allowable as deduction as per the decision rendered by Hon ble Supreme Court in the case of Woodward Governor case. The courts have also held that the loss arising on revaluation of forward contracts, whose underlying assets/liabilities are revenue in nature, is also allowable as deduction. However, unless the assessee submits relevant details before the AO, it will not be possible for the AO to decide about the allowability or otherwise of the claim. We notice that the assessee has submitted the details in a broad manner and further submitted the explanations/legal submissions. As rightly observed by Ld DRP, it is the responsibility of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to TDS.Accordingly, following the above said decision rendered by ITAT in the assessee s own case, has directed the AO to delete the disallowance. 15.1 The contention of the revenue in its ground of appeal is that the above said decision rendered by the ITAT has not reached finality. However, since the Ld DRP has followed the decision rendered by the Tribunal in respect of very same issue in the proceeding initiated u/s 201 of the Act and held that the payments made to IBM Philippines is not liable to TDS in the assessee s own case for the current year, we have no other option but to confirm the decision rendered by Ld DRP. Accordingly, we dismiss this ground of revenue. ASSESSEE S APPEAL FOR AY 2011-12 16. We shall now take up the appeal filed by the assessee for AY 2011-12. Ground No.1 is general in nature. The Ground no.2 is not pressed by Ld A.R. 17. Ground no.3 relates to the disallowance of deduction claimed u/s 10A and 10AA of the Act. Following the decision rendered by us in the preceding paragraph in AY 2010-11, we restore this issue to the file of Ld DRP on the following three issues:- (a) Approval for foreign bank account (b) Nature of recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO with similar directions. 23. Ground No.9 to 12 relate to the addition relating to Transfer pricing adjustment. At the time of hearing, the Ld A.R submitted that the assessee is withdrawing these grounds, since the assessee has entered into APA agreement with CBDT. Accordingly, we dismiss these grounds as withdrawn. 24. Ground no.13 relates to the disallowance made u/s 14A of the Act. The AO noticed that the assessee has made huge investments in shares, but did not make any disallowance u/s 14A of the Act. When enquired, the assessee said that it has not earned any exempt income during this year and hence no disallowance is called for. The AO did not accept the same and accordingly computed disallowance of Rs.3,00,54,490/- as per Rule 8D of IT Rules. 24.1 We heard the parties on this issue and perused the record. The coordinate bench has deleted identical disallowance made in AY 2013-14 on noticing that the assessee did not earn any exempt income, by following the decision rendered by Hon ble Delhi High Court in the case of Cheminvest Ltd vs. CIT (317 ITR 33)(Delhi). Identical view has been expressed by Hon ble Delhi High Court in the case of PCIT vs. IL FS Energy Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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