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2018 (4) TMI 697 - AT - Income TaxDisallowance of loan processing charges - CIT-A allowed the claim - Held that - CIT(A) allowed the deduction claimed by the assessee on the ground that the assessee availed loan of ₹ 75 lakhs ₹ 55 lakhs ₹ 60 lakhs totaling to ₹ 1.9 lakhs from Corporation Bank for which the bank charged 1% of the loan towards loan processing charges and these amounts were charged on 28.04.2010, 18.09.2010 and on 16.03.2010 and all three dates fall within the year under consideration and the loan was also in the nature of cash credit. He accordingly allowed the claim of deduction. We find no infirmity in the same especially when assessee has availed cash credit from the bank and bank charged processing charges during the impugned assessment year. - Decided against revenue Disallowance of expenses u/s 14A read with Rule 8D - Held that - assessee has not received any dividend income during the year could not be controverted by the Revenue. Therefore, we find no infirmity in the order of the ld. CIT(A) deleting the disallowance u/s 14A r.w. rule 8D on the ground that the assessee has not earned any exempt income during the year. - Decided against revenue Addition on account of repairs and maintenance u/s 37 - Held that - We find the assessee has shown rent receipt of ₹ 2,12,50,000/-. Therefore, it is not coming out clearly from the order of the ld. CIT(A) as to how he arrived at the conclusion that the repair and maintenance expenses related to the new premises at Ajmol Khan Road, Karolbagh. Since the factual details are not coming out clearly, therefore, considering the totality of the facts of the case, we deem it proper to restore this issue to the file of the Assessing Officer with a direction to adjudicate this issue afresh. Disallowance made by the Assessing Officer u/s 40A(2)(b) under the head salary - Held that - No infirmity in the order of the ld. CIT(A) as he has given justifiable reasons while deleting or sustaining the disallowance u/s 40A(2)(b) made by the Assessing Officer. He has considered the qualification of the concerned persons and the nature of job/responsibility of each of the persons and accordingly he has come to a conclusion that the salary paid to Aradhana Mehra, Roshni Mehra and Pawan Mehra are justified where the salary paid to remaining persons are not justified. We do not find any infirmity in the finding given by the ld. CIT(A) on this issue. Accordingly, the order of the ld. CIT(A) is upheld and the ground raised by the Revenue and the assessee is dismissed. Addition to interest paid to the specified persons as per the provisions of section 40A(2)(b) - Held that - So far as disallowance of interest on advances paid to Mehra Sons Jewelers Pvt.Ltd., Namita Mehra and Sakshi Mehra are concerned, the ld. CIT(A) has given a categorical finding that these advances are for business purpose or salary advance for which no disallowance of interest is called for. So far as advances to other parties are concerned, ld. CIT(A) has given a finding that the assessee could not substantiate with evidence regarding the justification of diversification of interest bearing funds for which he sustained the disallowance of interest. Under these circumstances and in view of the detailed reasoning given by the ld. CIT(A) on this issue, we find no infirmity in his order on this issue
Issues:
1. Disallowance of loan processing charges claimed by the assessee. 2. Disallowance of expenses under section 14A of the Income Tax Act related to exempt income. 3. Disallowance of repairs and maintenance expenses claimed by the assessee. 4. Disallowance of salary under section 40A(2)(b) of the Income Tax Act. 5. Disallowance of interest paid to specified persons under section 40A(2)(b) of the Income Tax Act. 1. Disallowance of Loan Processing Charges: The Revenue disallowed ?1,90,000 claimed by the assessee for loan processing charges. The CIT(A) allowed the deduction as the charges were related to a loan availed within the assessment year. The Tribunal upheld the CIT(A)'s decision, stating that the charges were for a cash credit from the bank during the relevant assessment year, hence dismissing the Revenue's appeal. 2. Disallowance of Expenses under Section 14A: The Revenue disallowed ?62,21,309 under section 14A due to exempt income from investments. The CIT(A) deleted the disallowance as no exempt income was earned. The Tribunal upheld the CIT(A)'s decision based on the factual finding that no exempt income was received during the year, in line with the decision of the Delhi High Court. 3. Disallowance of Repairs and Maintenance Expenses: The AO disallowed ?1,58,231 of repair and maintenance expenses claimed by the assessee. The CIT(A) allowed the claim for new premises occupied by the assessee, but the Tribunal found unclear details and directed the issue back to the AO for fresh adjudication. 4. Disallowance of Salary under Section 40A(2)(b): The AO disallowed ?20,40,000 of salary under section 40A(2)(b). The CIT(A) partially upheld the disallowance, allowing salary based on qualifications and responsibilities. The Tribunal found the CIT(A)'s reasoning justifiable, upholding the decision and dismissing both the Revenue and assessee's appeals. 5. Disallowance of Interest Paid to Specified Persons: The AO disallowed ?10,47,593 of interest paid to specified persons under section 40A(2)(b). The CIT(A) sustained part of the disallowance, and the Tribunal upheld the decision based on lack of evidence for business justifiability, dismissing both the Revenue and assessee's appeals. In conclusion, the Tribunal dismissed the assessee's appeal and partly allowed the Revenue's appeal for statistical purposes, upholding various decisions made by the CIT(A) regarding the disallowances and deductions under different sections of the Income Tax Act.
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