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TMI Blog2024 (2) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings, the Assessing Officer noticed that the assessee has earned exempt income by way of dividend amounting to Rs. 3,67,80,000/- in the year under consideration. Whereas, the assessee has not disallowed any expenditure attributable to the earning of such income. Noticing this, the Assessing Officer called upon the assessee to explain, why disallowance under section 14A of the Act read with Rule 8D should not be made. In response to the query raised by the Assessing Officer, the assessee furnished a detailed reply justifying its claim that no disallowance under section 14A read with Rule 8D can be made. The Assessing Officer, however, was not convinced with the submissions of the assessee. Accordingly, he proceeded to compute disallowance under Rule 8D read with section 14A of the Act. While doing so, he disallowed an amount of Rs. 4,23,24,958/- under Rule 8D(2)(ii) towards interest expenditure. Further, he disallowed an amount of Rs. 35,66,390/- under Rule 8D(2)(iii) towards administrative expenditure. Thus, in aggregate, he disallowed the amount of Rs. 4,58,91,348/-. The assessee contested the disallowance before learned first appellate authority. After considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disallowance made by the assessee is incorrect, having regard to the entries made in the books of account. Therefore, in our view, the decision in case of Coforge Ltd. (supra) would not be apply to the facts of the present appeal. Thus, we are unable to accept assessee's contention that the Assessing Officer has not recorded any satisfaction, which invalidates the disallowance under section 14A read with Rule 8D. However, we find substantial merit in the alternative contention of learned counsel for the assessee that the disallowance under Rule 8D(2)(iii) should be computed with reference to investments giving rise to exempt income during the year and not the entire investment, which might give rise to exempt income in further. The Assessing Officer is directed to recompute the disallowance under Rule 8D(2)(ii) accordingly. Grounds are partly allowed. 6. In ground nos. 4 & 5, the assessee has challenged the disallowance of depreciation on leasehold property claimed as amortization. 7. In course of assessment proceedings, the Assessing Officer noticed that the assessee has debited an amount of Rs. 9,79,782/- to profit and loss account towards depreciation of a leasehold l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted for ready-reference:- "13. "Ld. Counsel has tried to impress upon this bench that payments made to lessor are in nature of advance rents. However, there is no material on record to show that assessee has made these payments as advance rent for future years to secure any reduction in rent payable for future years or for any other business consideration. We are, therefore, unable to appreciate arguments advanced by Id. Counsel that these advances paid are towards advance rent. Even from the terms of agreements, it is not clear as to whether advances paid has been adjusted against future rent or whether these are in the nature of security deposits which are refundable in nature on termination of agreements. Both parties before us have expressed their intention regarding issue being re-adjudicated by assessing officer de novo. Accordingly, we are inclined to set aside this issue to Ld. AO for fresh adjudication. Ld. AO shall investigate upon and take all necessary steps to ascertain true nature of alleged lease premium paid by assessee in the three agreement made as per law. Needless to say that assessee would cooperate with assessing officer and provide with all necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l years, took a view that there is cessation of liability in respect of such creditors. Accordingly, he disallowed the amount of Rs. 85,612/- While deciding the issue, learned Commissioner (Appeals), having factually verified that certain creditors have been written off and amounts have been added back to the income in subsequent years and in respect of certain creditors payments have been made, deleted the addition. 17. Before us, learned Departmental Representative has failed to bring any material on record to controvert the aforesaid factual finding of learned first appellant authority. That being the case, we decline to interfere with the decision of learned first appellate authority. Ground raised is dismissed. 18. In ground no. 4, the Revenue has challenged deletion of disallowance of Rs. 1,77,232/- under section 40(a)(ia) of the Act. 19. As could be seen from the facts on record, the assessee has paid custody and listing fees to NSE, BSE, NSDL and CDSL. Being of the view that such payments are for technical services coming within the purview of section 194J of the Act, the Assessing Officer observed that the assessee was required to deduct tax at source. Since, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue raised in ground nos. 1 and 2 of ITA No. 5020/Del/2017 decided by us supra. Following our decision therein, we dismiss the grounds. 27. Ground no. 3 relates to deletion of disallowance of Rs. 14,11,211/- representing delayed payment of employees contribution to Provident Fund (PF) and Employees State Insurance. As fairly submitted by learned counsel appearing for the assessee, the issue is squarely covered against the assessee in view of the decision of Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. Vs. CIT-1 in Civil Appeal No. 2833 of 2016. Thus, following the ratio laid down by Hon'ble Supreme Court in the aforesaid decision, we uphold the disallowance made by the Assessing Officer. 28. In ground no. 4, the Revenue has challenged the disallowance of Rs. 1,30,323/- representing static creditors. This issue is identical to the issue raised in ground no. 3 of ITA No. 5020/Del/2017 decided by us in the earlier part of the order. Following our decision therein, we uphold the order of learned first appellate authority on the issue. Ground raised is dismissed. 29. In the result appeal is dismissed. 30. To sum up, assessee's appeal are partly allowed. Whereas, Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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