TMI Blog2024 (1) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... g the decision of Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held that such disallowance is not sustainable when the interest free advances given by the assessee to its suppliers were for less than interest free fund available with the assessee. No merit in this grounds of appeal, therefore, this ground of appeal of the revenue is dismissed. Disallowance of Lease rental in respect of the unexpired period of lease - HELD THAT:- During the course of appellate proceedings before us as discussed above, the assessee has filed additional evidences comprising copies of lease agreements and copies of security deposits ledger from the books of the assessee. After considering the submission of the assessee that relevant documents as referred above were not easily available because of cyber attack which affected the relevant record maintained on the computer system, we admit the additional evidences filed by the assessee vide its submission dated 28.09.2022 to decide the issue on merit. In view of the additional evidences filed by the assessee, we observe that this issue is required to be decided denovo after examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of ₹ 78,89,09,920/- was filed on 30.11.2011. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 07.09.2012. The assessee company was engaged in the business of Media Planning, buying and implementing activities. The assessment u/s 143(3) of the Act was finalized on 18.03.2014 and total income was assessed at ₹ 84,44,95,940/-. Further facts of the case are discussed while adjudicating the grounds of appeal filed by the revenue and the assessee as follows. The Revenue s appeal ITA No. 3087/Mum/2023 Grounds of appeal of the revenue are as under: 1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance if interest claim of Rs. 49557893/- u/s 36(1)(iii) of the Act merely on the ground that the assessee had more funds than that advanced without charging any interest ignoring the fact that the assessee had debited the interest on loans taken and not charged any interest on loans given and the assessee could not substantiate that the interest free loans/advances given were out of non interest bearing funds?. 2. The appellant prays that the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration the assessee had given interest free loans/advances of ₹ 74,18,84,627/- to the suppliers and during the year, the assessee itself had received interest free advances from its suppliers to the amount of ₹ 99.19 Crore as against the advances of ₹ 74.80 Crore made by it to its suppliers which had been adjusted against the supply of goods. Further, we have noticed that the assessee was having sufficient interest free fund in the form of share capital and free reserves to the amount of ₹ 116,75,74,590/- as against amount of advances made by the assessee. In view of the above facts decision of the Hon ble Bombay High Court in the case of Reliance Utilities and Power Ltd. referred supra in this order that if there are funds available both interest free and over draft and/or loan taken then a presumption would arise that investment would be out of the interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments. The ITAT, Mumbai in the case of the assessee itself for A.Y. 2014-15 as referred supra vide ITA No. 3088/Mum/2019, after following the decision of Hon ble Bombay High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Income tax Appellate Tribunal to decide this appeal according to the law. For the above and other grounds and reasons which may be submitted during the course of hearing of this appeal, the Appellant requests that the appeal be allowed as prayed. Ground No. 1 Disallowance of Lease rental in respect of the unexpired period of lease amounting to ₹ 42,70,000/-. 8. During the course of assessment, the AO found that the assessee had debited deposits written off amounting to ₹ 42,70,000/-. On query, the assessee explained that the said deposits were written off as irrecoverable for the reason that assessee had vacated the lease premises prior to the expiry of lease and had to bear lease rentals in respect of the unexpired period of lease. However, the AO had not agreed with the submission of the assessee, he was of the view that all the deposits which were written off by the assessee were on account of security deposit of premises which was taken on rent by the assessee and assessee claimed to have vacated the premises before the completion of leas period, however, the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee explained that the impugned deposit was given in advance at the time of taking different premises on lease and rent by the assessee, however, the assessee had vacated those lease premises on short notice before expiry of the lease period, therefore, property owners have forfeited the lease deposits. The lower authorities have not accepted explanation of the assessee for the reason that assessee has not furnished the relevant supporting copies of agreement containing terms and condition of taking the premises on lease. 13. During the course of appellate proceedings before us as discussed above, the assessee has filed additional evidences comprising copies of lease agreements and copies of security deposits ledger from the books of the assessee. After considering the submission of the assessee that relevant documents as referred above were not easily available because of cyber attack which affected the relevant record maintained on the computer system, we admit the additional evidences filed by the assessee vide its submission dated 28.09.2022 to decide the issue on merit. In view of the additional evidences filed by the assessee, we observe that this issue is required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant wishes to modify ground no. 8 which are already part of the additional grounds of appeal filed before your Honours. The ground no. 8 of the original additional grounds of appeal deals with the dividend distribution tax (DDT) paid by the Appellant to its Dutch shareholder, Berkeley Square Holdings BV, which is liable to tax as per India - Netherlands Treaty read with the most favored nation ('MFN') clause in the protocol of the treaty. In this regard, the Appellant wishes to raise the modified additional grounds of appeal in line with the following: The Hon'ble Special Bench in case of Total Oil India Pvt. Ltd. (ITA No. 6997/Mum/2019) dated 20 April 2023 has specifically stated that dividend shall be deemed to be taxed in the hands of shareholders for the assessee's covered under India-Hungary DTAA. Since there is a MFN clause in the protocol of India-Netherlands tax treaty, the Appellant wishes to seek benefit of India-Hungary tax treaty for the scope. Further, for the purpose of beneficial rate of 5%, the Appellant would like to apply Article 10(2) of India-Slovenia Treaty (as per MFN clause in the protocol of the India- Netherl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in a DTAA a Protocol with one nation, requires same treatment in respect to a matter covered by its terms, subsequent to its being entered into when another nation (which is member of a multilateral organization such as OECD), is given better treatment, does not automatically lead to integration of such term extending the same benefit in regard to a matter covered in the DTAA of the first nation, which entered into DTAA with India. In such event, the terms of the earlier DTAA require to be amended through a separate notification under Section 90. (c) The interpretation of the expression is has present signification. Therefore, for a party to claim benefit of a same treatment clause, based on entry DTAA between India and another state which is member of OECD, the relevant date is entering into treaty with India, and not a later date, when, after entering into DTAA with India, such country becomes an OECD member, in terms of India's practice. 89. In view of the foregoing analysis and conclusions, it is held that the reasoning and findings in the impugned orders cannot survive; they are set aside. The revenue's appeals, therefore, succeed and are allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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