TMI Blog2017 (10) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 14A r.w.r 8D - sufficiency of own funds - HELD THAT:- We find it is obvious inference that assessee has adequate interest free funds and assessee also earned profits in the current year. All these funds are sufficient enough to take care of the investments considering the principle of presumption, laid down in the case of Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] Therefore, in our view, the order of the CIT(A) on this issue requires reversal on this issue. Accordingly, the ground raised by the assessee to the extent of disallowance of ₹ 27,29,202/- stands deleted. Regarding disallowance made under section 36(1)(iii) read with Rule 8D(2) of the I.T. Rules, 1962, we are of the opinion that the same requires to be confirmed in the absence of any specific arguments on this issue. Accordingly, ground raised by the assessee to this extent is partly allowed. - ITA No.137, 217/PUN/2015 Assessment Year : 2010-11 - - - Dated:- 18-10-2017 - Shri D.Karunakara Rao, AM And Shri Vikas Awasthy, JM Assessee by: Shri Arvind Shonde Revenue by: Dr. Vivek Aggarwal ORDER D. Karunakara Rao, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in appeal before us with the grounds mentioned hereinunder. ITA No.217/PUN/2015 (By Revenue) : 5. We shall now take up the appeal of the Revenue. Grounds raised by the Revenue read as under : 1. The order of the Ld.CIT(A) is contrary to law and to the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of expenditure of ₹ 41,33,000/- u/s.36(1)(iii) r.w.s. 40A(2)(b)(iv) of the I.T. Act made by the Assessing Officer on account of commission paid to working directors and other employees. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has failed to appreciate the fact that there was abnormal increase in payment of commission during the current year as compared to preceding year although there was reduction in profit compared to preceding year. 4. For this and such other reasons as may be urged at the time of hearing, the order of the Ld.CIT(A) may be vacated and that of the Assessing Officer be restored. 5. The appellant craves leave to add, amend, alter or delete any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices rendered in improving the profitability of the company. The commission is part of the overall compensation package paid to the directors. Copies of the income-tax return and form 16 of the four directors and Shri S.B. Shirvale, Production Manager to whom commission has been paid, reveal that all of them have disclosed the commission amounts in their respective returns and paid tax at the highest rate. As is evident, dividend paid by the appellant company in the previous year and subsequent year vis-a-vis the year under consideration is not significantly different in order to say that the profits have been paid as commission. So far as the contention of the Assessing Officer that the commission paid is disallowance u/s.40A(2)(a) is concerned, I find that this contention is not supported by any comparable instance to say that the commission payments were unreasonable. Keeping in view all these aspects, the disallowance is held to be not justified and the ground No. 4 is allowed. 11. From the above, we find that the CIT(A) considered the fact that the commission was paid as per the Board Resolution and Authorisation of the Board of Directors. The CIT(A) also held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted that the exempt income is only ₹ 17,8,000/- whereas the disallowance made by the AO is to the tune of ₹ 27,29,202/-. On the faces of it and considering the settled legal propositions, the same is not legally sustainable. Various decisions are in existence for the proposition that disallowance if any u/s.14A of the Act should not exceed the exempt income which form part of the total income. Further, bringing our attention to the copy of balance sheet placed at page 9 of the paper book, Ld. Counsel submitted that the assessee has interest free funds amounting to ₹ 5.99 crores (share capital + reserves and surplus) and the investments is only to the tune of ₹ 5.43 crores. He also submitted that the interest bearing funds have shown declining trend when compared with the unsecured loans of earlier year (₹ 6.24 crores). He also submitted that the profits for the year works out to ₹ 62 lakhs is also available for the purpose of acquiring the said investments. Referring to the increase in investment he submitted that the said increase is also taken care by the current year s profit and interest free loans available in the mixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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