TMI Blog2024 (2) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, in the absence of any change in the factual matrix and legal preposition, we affirm the order of the ld. CIT(A) on this issue. Disallowance u/s 14A r.w.r. 8D - assessee had made investments in mutual funds - HELD THAT:- The coordinate bench ITAT Delhi in assesse s own case for AY 2012-13 [ 2020 (1) TMI 1668 - ITAT DELHI] held that the disallowance u/s 14A is to be restricted to only those investments which have actually yielded tax exempt income during the year. Since the matter stands adjudicated in the case of the assessee from the earlier years, in the absence of any change in the factual matrix and legal preposition, we affirm the order of the ld. CIT(A) on this issue. Nature of expenses - ROC Fee - expenditure incurred for increase in authorized share capital by issuing bonus shares - AO had disallowed the aforesaid ROC fee expenditure by considering that it this expenditure directly related to expansion of capital base is capital expenditure - HELD THAT:- The assessee submitted that expenditure incurred for issue of bonus shares should be allowable expense since there was no flow of fresh funds or increase in the capital employed. It could not, therefore, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the order of the ld. CIT(A). Appeal of the Revenue on this ground is dismissed. - SHRI SAKTIJIT DEY, HON BLE VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER For the Appellant : Sh. S.K Aggarwal, CA For the Respondent : Sh. Amit Katoch, Sr. DR ORDER Per Dr. B. R. R. Kumar :- The present appeal has been filed by the Revenue against the order of Ld. CIT(A)-4, New Delhi dated 27.03.2019 for the A.Y. 2013-14. 2. The Revenue has raised the following grounds of appeal are as under:- 1. Whether on the facts circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,46,80,000/- made by Assessing Officer on a/c of Employee Stock Option Scheme compensation, holding that the expenditure is eligible for deduction u/s 37 (1) of the I T Act, being revenue in nature? 2. Whether on the facts circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 65,99,444/- made by the AO on account of disallowance u/s 14A of the Income Tax Act, 1961 (the Act) read with the provisions of Rule 8D of the Income Tax Rules, 1962 ( the Rules). 3. Whether on the facts cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ESOP compensation basis grant which were exercised. The Assessing Officer had disallowed the compensation by holding that ESOP compensation is not a revenue expenditure, amount of expenditure is not an actual expenditure, and SEBI guideline are not prerogative for determining the allowability of expense. 9. The Ld. CIT(A) deleted the said addition of INR 1,46,80,000 vide para 6.11 on page 132 of the Paper book Vol 1 entirely. Relevant extract of the same is as below: 6.11 Since, appellate authorities in the appellant's own case for preceding assessment years including Hon'ble ITAT, on this issue, has followed the decision of Biocon Lid. (supra) while deciding the issue, the AO is directed to verify the quantum of deduction based on guidelines laid down by the Hon 'ble Spl. Bench in the said decision. Needless to say, the deduction would be restricted to and would not exceed the claim made by the appellant in its P L account i.e. Rs 1,46,80,000/-. Subject to above observation, the ground of appeal is allowed. 10. Since the matter stand adjudicated in the case of the assessee for the AY 2007-08 to AY 2012-13 by the coordinate bench of the Tribunal relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Average Value (C) ={(A+B)/2} 68,55,33,050 2,00,54,21,928 Disallowance u/s 14A (D)= (C*.5%) 34,27,665 1,00,27,110 Expenses incurred on exempt income 80,763 80,763 Total 14A Disallowance 35,08,428 1,01,07,873 Net of disallowance already done by Respondent (1,01,07,872-35,08,428) 65,99,444 14. We find that the Ld. CIT(A) deleted the addition of INR 65,99,444 (para 7.4 on page 133 of the Paper book Vol.1) 15. Relevant extract of the same is as below: 7.4 I find that the method so adopted by the appellant company is in accordance with the binding decision of jurisdictional High Court in the case of ACB India Ltd. (2015) 62 taxmann.com 71 (Delhi) in which it has been held that disallowance needs to be worked out by taking 0.5% of average value of only those investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The AO had disallowed the aforesaid ROC fee expenditure INR 30,05,853 vide para 5 of the assessment order by considering that it this expenditure directly related to expansion of capital base is capital expenditure. The Ld. CIT(A) deleted the addition holding as under: 8.3 On perusal of the computation of income, it is noticed that the appellant company has itself made a disallowance of proportionate amount of Rs 2,70,812/- pertaining to the proportionate ROC fees incurred for increase in authorised capital which is not used for the purpose of issue of bonus shares. Thus, no disallowance beyond Rs 2,70,812/- is justified in this case in view of the above judicial pronouncements. 8.4 Thus, in totality of the facts and circumstances the case and in law, disallowance of Rs 30,05,853/-made by AO is deleted. The ground of appeal is allowed. 20. The assessee submitted that expenditure incurred for issue of bonus shares should be allowable expense since there was no flow of fresh funds or increase in the capital employed. It could not, therefore, be said that the company had acquired benefit or advantage of enduring nature. Hon ble Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of a suit. Such expenditure, in my opinion, does not create an asset or an advantage which makes it capital in nature. Accordingly, addition of Rs.6,86,326/- made by the AO is deleted. The ground of appeal is allowed. 24. In the case of DCIT vs USV Ltd (ITA No.453/Mum/2009), wherein, in similar facts and circumstances as in the case of the assessee, it was held that the expenses paid to trademark attorney is a revenue expenditure. 25. In view of the facts and circumstances of the case and judicial pronouncements relied upon the fee paid to legal professionals in relation to trademark matters is revenue in nature expenditure and allowable as business expenditure. Hence, we affirm the order of the ld. CIT(A) on this issue. Creditors - stale cheques : 26. During the year under consideration an amount of INR 21,87,126/- included as Stale Cheque under Sundry Creditors in relation to payments made through cheques to the various parties but not credited to the account reasons known to the payee. 27. As per the policy of the company with respect to stale cheques which are not presented/demanded for more than 3 years are recognised as income. During the year unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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