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TMI Blog2014 (1) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... j & Boyce Mfg. Co. Ltd. v. Dy. CIT, the provisions of Rule-8D cannot be applied to the assessee for the assessment year under consideration 2005-2007 - 2% of the exempt income was considered as reasonable disallowance u/s 14A - This figure is approximately works out to 5% of the investments as on 31.3.2005 – Decided against Revenue. Depreciation on leasehold premises - Held that:- The asset was never put to use till date - It is not legally correct that the leased premise was capitalized and added to the block of assets - Such ineligible asset, which hass not fulfilled the conditions of section 32 of the Act should not have been included in the block of assets - Decided against assessee. - I.T.A. No.2465/M/2011 & I.T.A. No.9156/M/2010 - - - Dated:- 31-10-2013 - B.R. MITTAL AND D. KARUNAKARA RAO, JJ. For the Appellant : Dhanesh Bafna and Arpit Agarwal. For the Respondent : Neeraj Pradhan and Ajeet Kumar Jain. ORDER:- PER: D. Karunakara Rao There are two appeals under consideration. I.T.A. No.2465/M/2011 (AY: 2005 -2006) is filed by the Revenue and the I.T.A. No.9156/M/10 (AY: 2006 -2007) is filed by the assessee. Since, the issues involved in these two app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. The assessee relied on various TP Guidelines of Organization for Economic Cooperation and Development (OECD) in favour of such counting principle and submitted that ALP principle need not be invoked in such circumstances. CIT (A) considered the same and allowed the claim of the assessee and deleted the adjustment as seen from para 2.10 of the impugned order. 5. During the proceedings before us, Ld DR relied on the order of the AO and the TPO and submitted that every transaction has to be independently benchmarked. However, there is no specific submission by the Ld DR to counter the reasoning given by the CIT (A) while granting the relief to the assessee. 6. We have heard both the parties on this issue and perused the orders of the Revenue Authorities. It is a fact that the assessee has not charged from AE. Further, it is also equally true that AE charges counting fees also on the transactions of the assessee. If both are taken into account quantitatively, it is the claim of the assessee that the assessee will put to losses and the same is not accounted by the income fact of figures. These kind of accounting issues are outside the scope of TP principles as discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence. Accordingly, ground no.1 raised by the Revenue is dismissed. 8. Ground no.2 relates to the disallowance of expenditure u/s 14A of the Act. Relevant facts in this regard are that the assessee earned dividend income of Rs. 56,42,139/- and claimed exemption. AO invoked the provisions of section 14A read with Rule-8D of the IT Rules, 1962 and computed the disallowance at Rs. 9,09,636/-towards administrative expenses. No disallowance was made under clause (i) and (ii) of Rule-8D(2) on account of directly related expenditure and interest expenditure. 9. During the proceedings before the CIT (A), assessee submitted that investments are substantially reduced from Rs. 26.18 Crs to Rs. 2.4 Crs and the investments are met out of own funds. Without prejudice, assessee submitted that there is an error in the calculations to the extent that taxable income was also considered partly. If the appropriate calculations are made, the disallowance under Rule-8D would be 7,14,417/-and not Rs. 9,09,636/-as determined by the AO. CIT (A) held that in view of the judgment in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT, the provisions of Rule-8D cannot be applied to the assessee for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id judgment of the Bombay High Court (supra). 13. We have heard both the parties on this issue and perused the material place before us as well as the cited decisions by the Ld Counsel. On hearing both the sides and considering the precedents as well as the binding judgment, we find that the order of the CIT (A) does not call for any interference. Accordingly, ground no.2 raised by the Revenue is dismissed. 14. In the result, appeal of the Revenue is dismissed. I.T.A. No.9156/M/2010 (AY: 2006-2007) (By Assessee) 15. This appeal filed by the assessee on 30.12.2010 is against the order of the Dispute Resolution Panel-II, dated 24.9.2010 for the assessment year 2006-2007. 16. Briefly stated relevant facts of the case are that the assessee filed the return of income for the AY 2006-07 declaring the total income of Rs. 33.40 Crs. Assessment was completed u/s 143(3) of the Act and the assessed income was determined at Rs.33,61,97,858/-. During the assessment proceedings AO made certain additions on account of TP adjustment of Rs. 2,70,074/- and disallowance u/s 14A amounting to Rs. 6,62,699/- etc. 17. At the outset, Ld Counsel mentioned that ground no.1 related to incorrect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel filed a copy of the invoice No. A/0103/06, dated 8th March, 2006 and mentioned that the said copy of the invoice was not filed before the Revenue Authorities as there is no demand from them. In this regard, he prayed for remanding the matter to the AO for fresh adjudication and deciding the issue after granting a reasonable opportunity of being heard to the assessee. Accordingly, ground no.5 is allowed for statistical purposes. 21. Ground no.6 relates to the disallowance of depreciation of Rs. 2,20,817/-relating to leasehold premises. Lower authorities disallowed the same for the reasons that the said premise was acquired by the assessee perpetual lease basis. However, he fairly submitted that the asset was not put to use not only during the year but also till date. The said premise was not used as the same is not fit for commercial use. During the proceedings before us, it was discussed about the allowability of the depreciation when the asset is admittedly unused, though the six years are lapsed till date. In this regard, Ld Counsel argued that the asset once included in the block of assets, the same will loose its individual identity, therefore, the depreciation should b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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