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TMI Blog2014 (6) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... s are brought on record, order of the FAA has to be treated as final and conclusive – Decided against Revenue. Deletion of disallowance of Mutual Fund expenses – Held that:- Following ING Investment Management (India) Private Limited Versus The ACIT, Ward 10(1), Mumbai[2014 (6) TMI 353 - ITAT MUMBAI] - there is also no dispute on the genuineness of expenditure before the lower authorities – the enabling provision for debiting the expenses above 6% limitation provided under SEBI Rules is being considered - the relief granted by CIT(A) does not call for any interference – Decided against Revenue. Deletion of disallowance of foreign travel expenses – Held that:- Following ING Investment Management (India) Private Limited Versus The ACIT, Ward 10(1), Mumbai[ 2014 (6) TMI 353 - ITAT MUMBAI] - the CIT(A) observed that the disallowance made by the AO on account of foreign traveling expenses and expenses incidental to foreign travel are deleted in the facts and circumstances where no specific adverse material is not in possession of the AO – Decided against Revenue. Deletion of disallowance of information technologies expenses – Held that:- Following ING Investment Management (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in deleting the addition made by the AO in respect of disallowance of Mutual Fund expenses of Rs. 3, 72, 75, 643/- 4. On the facts and the circumstances of the case, the Ld. CIT (A) erred in deleting the addition made by the AO in respect of disallowance of foreign travel expenses of Rs. 19, 39, 693/- 5. On the facts and the circumstances of the case, the Ld. CIT (A) erred in deleting the addition made by the AO in respect of disallowance of Rs. 1, 13, 51, 364/- being information technologies expenses. 6. The Appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored. 7. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. Grounds of appeal filed by the assessee, read as under : On the facts and in the circumstances of the case, the learned CIT(A) has legally erred in disallowing re-imbursement of office license fees amounting to Rs. 1, 484, 572 (Rs. 2, 663, 899 less amount on which tax has been deducted at source of Rs. 1, 179, 327/- under section 40(a)(i) to its group company Optimix Technologies Pvt. Ltd. The Appellant prays that the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssues before us. Hence, we admit the new evidence produced by the assessee, under Rule 29 of the Tribunal Rules. ITA No. 7842/Mum/2011-AY. 2008-09: 2. Assessee-company, engaged in the business of asset management, filed its return of income on 30. 09. 2008, declaring loss of Rs. 35, 35, 12, 947/-. AO finalised the assessment order u/s. 143(3) of the Act, on 30. 11. 2010, determining the total income at Rs. (-)29. 89 Crores. First Ground of appeal pertains to deleting the addition in respect of disallowance of Rs. 10, 17, 315/-made by the AO, u/s. 14A of the Act. During the assessment proceedings AO found that the assessee had received dividend of Rs. 2, 225/- which was claimed as exempt. He did not accept the claim made by the assessee that it had not incurred any expenditure for earning the exempt income. He worked out the disallowance u/s. 14A, as per formula provided in Rule 8D as under: (i)Direct expenses Rs. Nil (ii)Indirect expenses Rs. Nil (iii)Administrative and Managerial Expenses being 0. 5% of average Investments at Rs. 20, 35, 83, 000/- Rs. 10, 17, 315 Rs. 10, 17, 315 In the above working of average investments the AO considered opening balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 ING Vsysa Liquid Fund Super-Institutional Plan - Growth Option - 687 13 ING Liquid Plus Scheme Institutional Growth Option - 1, 256 Total 76, 516 3, 30, 655 As per the FAA, in the above table only the investments appearing at SN. 1 to5 had yielded or would yield exempt income, that the other investments(appearing at SN. 6-13)would yield taxable income, that the said investments were not required to be considered for working the disallowan - ce u/s. 14A of the Act, that the opening and closing balances of investments yielding exempt income worked out at Rs. 47, 000/- only, that 0. 5% of same worked out at Rs. 235/- as offered by the assessee itself in return/computation of income. Finally, he held that the assessee had correctly worked out and offered disallowance u/s. 14A in return of income, that same was strictly as per formula provided in Rule 8D. He deleted the disallowance made by AO. 2. 2. Before us, Departmental Representative (DR)supported the order of the AO. Authorised Representative (AR) argued that provisions of Sec. 14A of the Act r. w. Rule 8D were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the submissions of the assessee and the assessment order he held that the assessee had informed to the AO that it had incurred expenses towards sponsorship of Prasanna Rao in various championship and it has deducted TDS on such expenses, that similar issue was allowed by him in the appeal, filed by the assessee, for AY. 2006-07, that he had held in that appeal that the expenditure incurred on sponsor -ship was allowable as business expenditure since there was no element of income included in the said expenses. 3. 2. Before us, DR supported the order of the AO. AR argued that expenditure was incurred for business purposes, that TDS was deducted by the assessee for the payment made. 3. 3. We have heard the rival submissions and perused the material before us. We find that in the assessment year 2006-07, FAA had deleted the addition made by the AO on identical facts and the department had not agitated the matter before the Tribunal. Thus, the issue has attained finality as the AO had accepted the decision of the FAA. Till new and distinguishing facts are brought on record, order of the FAA has to be treated as final and conclusive. Upholding his order, we decide ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is in accordance with the provisions of section 52 of the said Act. In this regard Ld. Counsel for the assessee mentioned that there is no dispute on the facts relating to the quantification and percentages. There is also no dispute on the genuineness of expenditure before the lower authorities. The only limited issue for adjudication is whether the expenses in excess of 6% can be booked to the accounts of the assessee. As per the assessee s counsel, this issue should be allowed in favour of the assessee considering provisions of subsection (5) of section 52 of the Act and other decisions in force. 4. 2. Before us Ld. CIT-DR draw our attention to certain erroneous assumption of the Ld. CTT(A) that requires rectification. On perusal of the said provision of sub-section (5) of section 52 of the SEBI Regulations we find that the same reads as under: (5) Any expense other than those specified in sub-regulations (2) and ( 4) shall be borne by the asset management company (or trustee or sponsors) Like the one above, there are other residual provisions in the said section 52 of the said Act that provides and enables the AMC like the present assessee to bear the expenditure in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On hearing the parties and after perusing the facts of the present case, in view of the above finding, this ground 2 of the revenue is dismissed. As the facts are similar to the facts of the earlier years, so, respectfully following the order of the coordinating bench we decide ground no. 4 against the AO. 6. Last ground of appeal deals with deleting the addition in respect of disallowance of Rs. 1, 13, 51, 364/-under the head information technologies expenses. AO found that the assessee had debited a sum of Rs. 1, 84, 56, 364/- on account of information technology expenses in the books of accounts, that it included IT infrastructure fees, amounting to Rs. 71, 05, 000/-, also. The assessee was required to explain the nature of said information technology expenses along with supporting evidence, who submitted details vide letter dtd. 16. 11. 2010. From the details filed by it, the AO found that expenses comprised of annual maintenance contracts, information service expenses, internet and data communication charges, internet charges, etc. Vide letter dtd. 16. 11. 2010 the assessee further informed to the AO that in todays time the technology changes rapidly and that no b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued that similar issue was deliberated upon in the earlier year and was restored back to the file of the AO. We find that Tribunal, in the order for the assessment year 2006-07, has dealt with the issue as under: 6. Ground No. 3 of revenue s appeal relates to disallowance of nontechnical expenses (IT expenses) of Rs. 1, 53, 92, 923/-. In this regard Ld. Counsel mentioned that an identical issue came up for adjudication by the Tribunal for the assessment year 2004-05 in assessee s own case and the said order of the Tribunal dated 29/1/2011 was not available to the Ld. CIT(A) while deciding the issue. Referring the SB decision in the case of Amway India Enterprise, 111 ITD 1 12 (Del)(SB), Ld Counsel mentioned that the issue requires remanding for deciding the issue afresh. For supporting the above, Ld. Counsel brought to our attention para 14 to 17 and read out the following lines: Respectfully following the above decision of the Special Bench of the Tribunal we set aside the order passed by the revenue authorities on this account and send back the matter to file of the Assessing Officer who shall decide the issue afresh in the light of the directions of the Tribunal (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted thereon, the AO asked the assessee as to why the same should be not disallowed. Vide its letter dtd. 16. 11. 2010, assessee explained to the AO that OTPL was occupying part of the premises on leave and license basis, that it was agreed between the appellant and OTPL to share the office license cost on the basis of floor area, that OTPL paid the total amount to the vendor, that OTPL recovered share of the assessee which amounted to Rs. 26, 63, 899/-, that the amount paid to OTPL was in the nature of pure reimbursement and hence no tax was required to be deducted from the said amount. The AO was not convinced with submissions of the assessee. He held that the assessee had not been able to prove with any documentary evidences of the working that it was merely reimbursement and that it had paid only the cost incurred by the holding company, that the payment made to OTPL was in the nature of expenses covered by sec. 194C/ 194J of the Act, that the assessee should have deducted tax on sum paid to OTPL towards the license fee. Finally, a sum of Rs. 26, 63, 899/- was disallowed by AO u/s. 40(a)(ia) of the Act. 7. 1. During appellate proceedings, the assessee filed its written su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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