2012 (1) TMI 278 - AT - Income Tax

Addition of proportionate interest being interest free loan to its subsidiary concern - commercial expediency for assessee to advance such loan - Held that - Since the ld. CIT(A) while deleting the disallowance has followed the order of his predecessor for A.Y. 2004-05 and since the Tribunal has restored the issue to the file of the A.O. for fresh adjudication, therefore, we deem it proper to restore this issue to the file of the A.O. with a direction to adjudicate the same in the light of the direction of the Tribunal in assessee s own case for A.Y. 2004-05 and in accordance with law after giving due opportunity of being heard to the assessee. The ground raised by the Revenue is accordingly allowed for statistical purposes. Addition of expenditure on corporate club membership fees - Held that - Respectfully following the order of the Tribunal in assessee s own case and in absence of any contrary material brought to our noticeby the ld. D.R. we set aside the order of the ld. CIT(A) on this issue and direct the A.O. to delete the disallowance. Addition u/s 14A - Held that - We restore the issue back to the file of the A.O. with a direction to adjudicate the same afresh in the light of the decision of the Hon ble jurisdictional High Court in the case of Godrej Boye Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly.

Summary

Issues:
1. Disallowance of interest-free loan to subsidiary concern.
2. Disallowance of corporate club membership fees.
3. Disallowance under section 14A of the Act.

Analysis:
1. The appeal involved a dispute regarding the disallowance of an interest-free loan to a subsidiary concern. The Revenue contended that the loan was not for the business purpose of the assessee and lacked commercial expediency. The CIT(A) deleted the disallowance following the precedent set in the AY 2004-05. The Tribunal, considering the past decisions and the purpose of the loan, directed the issue to be reconsidered by the Assessing Officer in accordance with the law and after providing a fair opportunity to the assessee. The Revenue's appeal was allowed for statistical purposes.

2. The first issue in the C.O. pertained to the disallowance of corporate club membership fees. The CIT(A) confirmed the disallowance, but the Tribunal referred to a previous decision in the AY 2004-05 where a similar disallowance was deleted. Following the precedent and absence of contrary material, the Tribunal directed the Assessing Officer to delete the disallowance. The ground raised in the C.O. by the assessee was allowed accordingly.

3. The final issue was the disallowance under section 14A of the Act. Both parties agreed to remand the issue to the Assessing Officer for fresh adjudication in line with a specific decision of the jurisdictional High Court. The Tribunal restored the issue to the AO with directions to re-examine the matter in accordance with the High Court's decision and after providing a fair hearing to the assessee. The ground raised by the assessee in the C.O. was allowed for statistical purposes.

In conclusion, the appeal filed by the Revenue and the C.O. filed by the assessee were allowed for statistical purposes, with various issues being referred back to the Assessing Officer for reconsideration based on legal precedents and directions from the Tribunal.