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TMI Blog2014 (4) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance u/s 14A r.w Rule 8D of the Rules – Held that:- A specific dissatisfaction was recorded by the AO in the assessment order regarding the correctness of the disallowance offered by the assessee u/s 14A of the Act and even the reasons for the same were given by the AO - Rule 8-D was not applicable in A.Y. 2007- 08 when the additional disallowance made u/s 14A of the Act - As per Rule 8D, if the AO is not satisfied with the disallowance computed by the assessee u/s 14A of the Act, he can compute the disallowance to be made u/s 14A of the Act by applying the Rule and there is nothing to suggest that either the AO or the CIT(A) is required to point out any specific expenditure incurred for earning the dividend income in order to make a disallowance u/s 14A read with Rule 8-D of the Income tax Rules, 1962 – thus, there was no merit in the ground raised by the assessee – Decided against Assessee. Disallowance of expenses on lease rent paid for vehicles – Claim for depreciation on vehicles and finance charges paid on lease finance assets - Held that:- The decision in JM FINANCIAL SERVICES PVT LTD Versus ADDL COMMISSIONER OF INCOME TAX. MUMBAI [2013 (8) TMI 821 - ITAT MUMBAI] fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible asset being membership of BSE/NSE membership card. In the assessment completed u/s 143(3) of the Income Tax Act, 1961, the A.O. disallowed the claim of the assessee for depreciation on BSE and NSE card following the stand taken in the assessments completed in assessee s own case for the earlier years. On appeal, the ld. CIT(A) confirmed the disallowance made by the A.O. on this issue following the order of the Tribunal in the case of Sino Securities Pvt. Ltd. Vs. ITO rendered vide its order dated 23-11-2011 in ITA No. 6264 6394/Mum/2009. 4. At the time of hearing, the ld. Representatives of both the sides have agreed that the issue involved in ground No. 1 of assessee s appeal relating to its claim for depreciation on BSE and NSE card is squarely covered in favour of the assessee by the decision of the co-ordinate Bench of this Tribunal rendered in assessee s own case for A.Y. 2007-08 vide its order dated 28-6-2013 passed in ITA No. 3112 3117/Mum/2011 wherein a similar claim of the assessee for depreciation on BSE and NSE card has been allowed by the Tribunal following the decision of the Hon ble Supreme Court in the case of Techno Shares and Stock Ltd. Vs. CIT repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-D aggregating to Rs. 29,99,638/-. Accordingly, the difference of Rs. 26,54,970/- was added by the A.O. to the total income of the assessee on account of further disallowance u/s 14A of the Act. 7. The disallowance made by the A.O. u/s 14A of the Act was disputed by the assessee in the appeal filed before the ld. CIT(A) and after considering the submissions made on behalf of the assessee and the material available on record, the ld. CIT(A) confirmed the disallowance made by the A.O. u/s 14A read with Rule 8-D for the following reasons given in para 4.3 to 4.5:- 4.3 1 have considered the arguments of the AO as well as of the ld. A.R. I find that the AO has justifiably invoked the provisions of Rule 8D to determine the quantum of expenses which has to be disallowed u/s.14A with respect to earning of exempt income. The assessee had not maintained separate accounts of expenses incurred for earning of exempt income. Further, as the assessee had not maintained any separate records on account of expenditure having been incurred for earning of dividend income the AO blindly cannot be fastened with any burden to discover such expenditure of establish nexus of such expenditure with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as of the Ld. AR. It is very clear that for calculating the disallowance u/s.14A for earning tax free income, from A.Y.2008-09, the A.O. may take recourse to the calculation as subscribed in Rule 8D. This contention has been upheld by the Hon ble Mumbai High Court in the case of Godrej Boyce Manufacturing ( a. Ltd. vs. DUT 328 ITR 81. As the Assessing Officer as not satisfied with the working of the disallowance worked out by the assessee. he has rightly proceeded to work out the disallowance as per sec.14A Rule SD. Hence, I find that the A.O. has rightly applied the provisions of sec.14A read with Rule SD. Hence, this ground of appeal of the appellant is dismissed. 8. We have heard the arguments of both the sides and also perused the relevant material available on record. The first contention raised by the ld. Counsel for the assessee is that the disallowance u/s 14A of the Act has been made in the case of the assessee by applying Rule 8-D without recording any dissatisfaction by the A.O. as regards the disallowance offered by the assessee u/s 14A of the Act. Relying inter alia on the decision of Hon ble Bombay High Court in the case of Godrej Boyce manufacturing C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of vehicles taken on lease as per Accounting Standard -19 issued by the Institute of Chartered Accountants of India and claimed depreciation thereon. In the computation of total income, the assessee, however, disallowed and added back the depreciation claimed on lease vehicles. The assessee also disallowed finance charges in respect of lease vehicles and claimed only lease rent amounting to Rs. 34,21,651/-. The A.O., however, disallowed the claim of the assessee for deduction on account of lease rent following the assessment order passed in assessee s own case for A.Y. 2007- 08. He also did not accept the alternate claim of the assessee for depreciation and finance charges on the lease assets. On appeal, the ld. CIT(A) upheld the action of the A.O. on this issue following his appellate order in assessee s own case for A.Y. 2007-08. 11. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar issue was involved in assessee s own case for A.Y. 2007-08 and the Tribunal vide its order dated 28-6-2013 (supra) has restored the same to the file of the A.O. for the following reasons given in para N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and confirmed by the ld. CIT(A) on account of entrance fees paid to the club for corporate membership. 15. In its profit and loss account file along with the return of income, entrance fee of Rs. 33,99,000/- and subscription of Rs. 30,800/- paid to the Cricket Club of India was debited by the assessee. According to the A.O., the assessee however could not establish that the payment of the club membership has resulted in promotion of its business with any cogent evidence. He held that the membership of the club was personal privilege entitling the member to use and enjoy the property of the club and all other amenities, benefits and facilities provided therein. He held that there was nothing brought on record by the assessee to show that the club fee was paid for business consideration. He therefore held that the expenditure on payment of club fee was not wholly and exclusively incurred by the assessee for the purpose of its business and the same accordingly was disallowed by him. On appeal, the ld. CIT(A) confirmed the disallowance made by the A.O. on this issue to the extent of Rs. 33,90,000/- being the entrance fee paid to the club relying on the decision of Hon ble Kerala Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the decision in the case of CIT vs. Nestle India Ltd. (2008) 296 ITR 682 (Delhi) and in the case of Otis Elevator Co. (India) Ltd. Vs. CIT (1992 195 ITR 682 (Bom.).Respectfully following the decision of Hon ble Delhi High Court in the case of Samtel Color Ltd. (supra) as well as the decision of co-ordinate Bench of this Tribunal in the case of Development Credit Bank Ltd. (supra), we delete the disallowance made by the A.O. and confirmed by the ld. CIT(A) on account of entrance fee paid by the assessee for Corporate membership of Cricket Club of India and allow ground No. 5 of assessee s appeal. 17. As regards the issue involved in ground No. 6 relating to disallowance made by the A.O. and confirmed by the ld. CIT(A) on account of registration expenses of Rs. 8,17,961/- incurred on registration of leased vehicles, the ld. Representatives of both the sides have agreed that the same is consequential to the main issue involved in ground No. 3 of the assessee s appeal. Since the issue involved in ground No. 3 of the assessee s appeal is restored by us to the file of the A.O., we restore this consequential issue also to the file of the A.O. for deciding the same afresh depending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trading activity and the claim of the assessee for rebate u/s 88E of the Act was restricted by him to Rs. 89,78,208/-. 20. The matter was carried before the ld. CIT(A) and after considering the submissions made on behalf of the assessee as well as the material available on record, the ld. CIT(A) decided this issue vide para 8.3 of his impugned order as under:- 8.3 I have gone through the submissions of the appellant and the assessment order. It is no doubt true that certain portion of common expenses like electricity, salary and other items must he attributable to the share trading income. It would be incorrect to say that no portion of indirect expenses is attributable towards the share trading income. Considering the circumstances, I am of the opinion that a sum of Rs.22,l0,259/- allocated by the appellant should be considered towards the indirect expenses for earning trading income and a further sum of Rs. 10,00,000/- can be reasonably allocated as expenses the share trading income. Accordingly, the indirect expenses to be attributed to earning share trading income is determined at Rs. 32,10,259/-, is considered as indirect expenses for earning share trading income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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