TMI Blog2011 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... l by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals) dated 30.5.2011 pertaining to assessment year 2008-09. 2. The grounds raised read as under:- 1. That on the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in restricting the disallowance u/s 14A to Rs. 40,556/- (@2% of dividend income) and not applying Ruled 8D of the Income Tax Rules which is mandatory from A.Y. 2008-09. 2. That on the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred by ignoring the ratio decided in case of Godrej and Boyce Manufacturing Co. Ltd. DCIT (2010) 234 (Bom.). 3. That on the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the disallowance made by the Assessing Officer on account of Director s Travelling without considering whether any identifiable benefit accrued to the business. 4. That on the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred by ignoring the fact that the assessee did not provide any material to support that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPVs can be disallowed u/s 14A r.w. Rule 8D because it cannot be termed as expense /interest incurred for earning exempted income. In view of the facts mentioned above:- (i) Interest expenses amounting to Rs. 2,96,731/- have been directly found to be incurred for earning exempt income and hence disallowed u/s 14A. (ii) Further, the company has earned dividend in respect of investments made and some administrative expenses like management s salary, telephone, stationery, postage expenses, etc. must have been incurred thereon. Keeping in view the aforesaid, I am of the opinion that addition of Rs. 40,556/- calculated @ 2% of the dividend earned has to be made i.e. 2% of Rs. 2,027,812/-. Hence, addition made by the Assessing Officer is upheld to the extent of Rs. 3,37,287/- (Rs. 2,96,731/- + Rs.40,556/-.) This ground of appeal is partly allowed. 5. Against the above order the Revenue is in appeal before us. 6. We have heard the rival contentions in light of the material produced and precedent relied upon. 6.1 Ld. Departmental Representative relied upon the order of the Assessing Officer. 6.2 Ld. counsel of the assessee supported the order of the Ld. Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Ld. Commissioner of Income Tax (Appeals), hence, we uphold the same. 7. Apropos next issue Director s Travelling Assessing Officer on this issue noted that assessee has claimed Director s Travelling of Rs. 21,24,882/-. Assessing Officer observed that from the examination of the details it was observed that for following visits made no correspondence or material has been submitted to the support the expenditure is a business expense. S.No. Visits Expenditure incurred 1. Mr. K.S. Bakshi, Managing Director Visited London/USA during May/June, 2007 Rs.2,95,292/- 2. Mr. K.S. Bakshi, Managing Director Visited USA in June, 2007. Rs. 41,748/- Total Rs. 3,37,040/- Assessing Officer held that in the absence of proper supporting document for this expenditure, the amount of Rs.3,37,040/- is disallowed. 8. Before the Ld. Commissioner of Income Tax (Appeals) assesse submitted as under:- In our submission dated 10.8.2010 to Assessing Officer, we have submitted detailed chart in which all relevant information regarding Director s travelling i.e. Name of the Directors, Destination, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of sale of equipment amounting to Rs.37,80,000/- for which liability was debited to party as recoverable and not debited in P L A/c. This is to bring to your kind notice that the liability outstanding was regarding A.Y. 2006-07, the details of the case are as follows:- - Assessee company had received a sum of Rs. 3,04,19,803/- on account of work contract executed and on account of sale of earth moving equipment worth Rs. 37,80,000/- (on which VAT @4% i.e. 1,51,200/- has not been deposited). - Assessee company had entered into a contract agreement with M/s Simplex Infrastructure Ltd. or executing the construction and development work at Central Park II in the capacity of principal contractor and sub-contractor. - As per agreement and assignment deed M/s Simplex Infrastructure Ltd. was liable to perform the said agreement. - It was contended by assessee that, as during the execution of the works property in goods has been transferred only once i.e. at the time of execution of works at the hands of sub-contractor i.e. M/s Simplex Infrastructure, hence if the sub-contractor has discharged his tax liability in respect of work executed, no tax was payable by the main contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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