TMI Blog2023 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT] ] Deletion of Non-refundable golf club membership fee - Before concluding, we may also note that the record shows that a coordinate bench of this court [ 2019 (1) TMI 602 - DELHI HIGH COURT] , had ruled that insofar as the deletion on account of non-refundable golf club membership fee, was concerned, the said issue was covered against the appellant/revenue by the decision [ 2012 (3) TMI 617 - DELHI HIGH COURT] , in the case concerning DLF Commercial Ltd. The court also noted that the Special Leave Petition (SLP) [ 2013 (3) TMI 792 - SC ORDER] filed against the said decision had been dismissed. - HON'BLE MR JUSTICE RAJIV SHAKDHER AND HON'BLE MR JUSTICE GIRISH KATHPALIA For the Appellant Through: Mr Ruchir Bhatia, Sr. Standing Counsel with Ms Deeksha Gupta, Advocate. For the Respondent Through: Ms Kavita Jha with Mr Aditeya Bali, Advocates. RAJIV SHAKDHER, J. (ORAL): 1. This appeal concerns Assessment Year (AY) 2011-12. 2. Via the instant appeal, the appellant/revenue seeks to assail the order dated 19.06.2018 passed by the Income Tax Appellate Tribunal [in short, Tribunal ]. 3. According to Mr Ruchir Bhatia, learned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. The appellant contended that there is no proximate nexus between earning of dividend income and the expenditure incurred by it. The administrative expenditure has been incurred under different heads but no administrative expenditure has been allocated to the investment portfolio. In my view, there cannot be a concept of free lunch and making or selling the investments cannot be in the nature of any passive activity involving no input. In-fact, in my view a) making of investment b) maintaining or continuing with any investment in a particular share/mutual funds etc. and c) even the time when to exit from one investment to another, all these activities are well coordinated and well informed management decisions, involving not only inputs from various sources but it also involves acumen of senior management functionaries whether they sit in Subsidiary company or Holding company. There are incidental administrative expenses on collecting the information, research etc. which helps; in arriving at particular investment decisions and these expenses, relating to earning of the income are embedded in the indirect expenses. The investments made being consciou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this context that Mr Bhatia states that the CIT(A) also erred in law, which is why the appellant/revenue was in appeal before the Tribunal. 12. Ms Kavita Jha, learned counsel, who appears on behalf of the respondent/assessee, on the other hand, has brought to our notice (something which is not in dispute) that, in the AY in issue, the total exempt-dividend income earned by the respondent/assessee was Rs. 71,71,43,933/-. 12.1 It is pointed out by Ms Jha that out of the aforementioned amount, Rs. 70,52,50,000/- was received by the respondent/assessee from its 100% subsidiary namely DLF Commercial Developers Limited (SEZ Div). The balance amount, Ms Jha points out, was received from the following companies: Party Amount of Dividend Income EIH Limited Rs. 2,13,217/- Galaxy Mercantiles Limited Rs. 1,09,56,994/- Reliance Communication Limited Rs. 68,000/- DLF India Limited Rs. 4,25,000/- Kotak Mutual Fund Rs. 2,30,772/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to note: 12.6. To understand this line of reasoning, it would be apposite to extract the relevant part of Section 14A of the Act. [Expenditure incurred in relation to income not includible in total income. 14A. [(1)] For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to 86 [sic] income which does not form part of the total income under this Act.] [(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :] [Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.3. Furthermore, in our view, because the appellant/assessee had itself offered an amount which could be disallowed under Section 14A of the Act, the onus shifted onto the revenue to ascertain, after examination of the accounts, as to whether or not the appellant's/assessee's claim was correct. It is only after the aforesaid exercise was conducted, could the AO have taken recourse to the prescribed method i.e. Rule 8D of the Rules, for determining the expenditure, which, according to him, needed to be disallowed under Section 14A of the Act. 13.4. We would assume, for the moment, that the revenue could take recourse to Rule 8D of the Rules in both AYs, i.e. 2007-2008 and 2008-2009, although, as indicated above, it could have been triggered perhaps only in AY 2008-2009. [Emphasis is ours] 18. Having heard learned counsel for the parties, according to us, reasons given by the Tribunal in deleting the disallowance are unimpeachable. The facts, as noted above, are not in dispute. Concededly, the interest-free funds available to the respondent/assessee were more than the investments made in the AY in issue. Furthermore, as noted by the Tribunal, the AO had not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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