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TMI Blog2015 (9) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... d and since certain additions were made during A.Y. 200607 and 200809 by the Assessing Officer u/s.14A and nothing has been brought on record as to the outcome of the same including the quantum, therefore, we do not find any infirmity in the order of the CIT(A) upholding the disallowance made u/s.14A r.w. Rule 8D for the impugned assessment year. - Decided against assessee. Disallowance of foundation day expenses being excessive - Authorised Representative of the assessee agreed for disallowance of 20% of the aforesaid expenses - Held that:- The assessee itself has agreed before the AO for disallowance of 20% of such expenses which according to the AO was on the higher side. Nothing was brought before us to show that there was no acceptance by the assessee for such offer or the assessee was in possession of relevant bills and vouchers justifying such expenditure. We therefore uphold the order of the CIT(A) on this issue and the ground raised by the assessee is dismissed. - Decided against assessee. Adhoc disallowance of various expenses - Held that:- We direct the AO to restrict such disallowance to 5% of the expenses claimed as against 10% disallowed by him and upheld by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2010-11 while dismissing the grounds raised by the assessee has observed as under : 3. The Ld. Counsel for the assessee at the outset submitted that the issue stands decided against the assessee by the decision of the Tribunal in assessee s own case for the immediately preceding assessment year. We find the Tribunal in assessee s own case vide ITA No.849/PN/2013 order dated 11082014 for A.Y. 200910 has decided the issue by observing as under : 6. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer disallowed an amount of ₹ 33,37,059/being excess interest paid to the Directors, Members and related parties by invoking the provisions of section 40A(2)(b) of the I.T. Act. While doing so, he had also considered the offer of the assessee for addition of ₹ 33,37,059/for taxation . The assessee after giving in writing to the Assessing Officer regarding the reasons for payment of excess interest @21% to the specified persons has categorically stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related parties by paying exorbitant rate of interest for which the Assessing Officer disallowed the excess interest paid to the related parties by invoking the provisions of section 40A(2)(b) of the I. T. Act. Since the assessee itself has agreed for the addition of ₹ 33,37,059/to tax being excess interest paid to the related parties covered u/s.40A(2)(b), therefore, the CIT(A) in our opinion was fully justified in upholding the addition made by the Assessing Officer. The grounds raised by the assessee are accordingly dismissed. 4. Facts being similar, therefore, following the decision of the Tribunal the above grounds by the assessee are dismissed. 5. Facts being similar, therefore, following the decision of the Tribunal in assessee s own case for A.Y. 2009-10 as well as A.Y. 2010- 11 the above grounds by the assessee are dismissed. 6. Ground of appeal No.4 by the assessee reads as under : 4) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the disallowance made by A.O. of ₹ 93,288/resorting to provisions of S.14A r.w.r. 8D of the I. T. Rules, 1962. There is no finding to the effect that any expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the same is negligible and cannot be correctly ascertained . 10.1 We further find similar disallowances were made in the assessment orders passed for A.Yrs. 200607 and 200809 by the Assessing Officer and nothing was brought to our notice as to the outcome of such disallowance made by the Assessing Officer. The relevant observations of the Assessing Officer at para 4.2 and 4.3 of the assessment order read as under : 4.2 Since the explanation of the assessee as above was not acceptable in pursuance to the provisions of section 14A of the Act rwr 8D of the I, T. Rules, 1962, and further that disallowance was made in this regard in the assessment orders passed for A. Y. 200607 and 200809 by the A.Os. on 05/12/2008 and 23/12/2010 respectively, vide Annexure to the notice u/s 142(1) of the Act dt. 30/08/2011, the assessee company was asked to explain as under: Please refer to the assessment order passed for A. Y, 200607 and 200809 by the AOs on 05/12/2008 and 23/12/2010. Please state as to why identical view should not be taken for disallowance of interest on payments s towards share application money and also disallowance of proportionate expenses for exempted income (i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses of ₹ 12,68,794/being excessive and the addition of ₹ 2,53,759/be deleted. 13. After hearing both the sides, we find the assessee has incurred foundation day expenses of ₹ 12,68,794/- and debited the same to the profit and loss account. On being asked by the AO to furnish the relevant details the assessee submitted as under : With regard to the Foundation Day expenses of ₹ 12,68,794/, we would like to bring to your honour kind attention that, said expenses were incurred on account of the Foundation Day in the year under assessment being the completion of 50 years since the inception of the company. The company had conducted a Golden Jubilee ceremony during the year under consideration. The details of the same are enclosed herewith for your honour kind perusal . 14. During the course of assessment proceedings, the AO further noted that the expenditure amount appears to be on the higher side for which he asked the assessee as to why 20% of such expenses should not be disallowed. Since the Authorised Representative of the assessee agreed for disallowance of 20% of the aforesaid expenses being ₹ 2,53,759/-, the AO disallowed the same and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were supported by only selfmade vouchers and were not amenable for verification for which the Assessing Officer made adhoc disallowances. We find similar disallowances were made in the preceding year and the assessee has not objected to the same. However, none of the parties has brought to our notice regarding the amount of disallowance. Considering the totality of the facts of the case, we are of the considered opinion that the disallowance at 10% on adhoc basis appears to be on the higher side. We therefore direct to restrict such disallowance to 5% of the expenses. We hold and direct accordingly. The ground raised by the assessee is accordingly partly allowed. 15. Following the same reasonings we direct the AO to restrict such disallowance to 5% of the expenses claimed as against 10% made by him and upheld by the CIT(A). This ground by the assessee is accordingly partly allowed. 19. Following the same reasoning we direct the AO to restrict such disallowance to 5% of the expenses claimed as against 10% disallowed by him and upheld by the CIT(A). This ground by the assessee is accordingly partly allowed. 20. Ground of appeal No.7 by the assessee reads as under : 7) On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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