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TMI Blog2017 (2) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... ed also short- term and / or non-deduction of TDS on payment made to group entities be not disallowed by invoking the provision of section 40a (ia) of the Act. - Decided in favour of assessee Reduce the value of investment reflected in the balance sheet of the assessee to the extent of brokerage expenses - Held that:- We remand this issue back to the file of the AO with direction to verify whether this amount of ₹ 66.90 loss being brokerage on which TDS is not effected has been capitalized or not. In case these amounts are capitalized and not claimed in the P & L account, the disallowance cannot be made by invoking the provisions of Section 40a(ia) of the Act. In case these are claimed then the assessee is liable to deduct TDS and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above, the DI has obtained and verified the revised statement of working of section 14A read with Rule SD after reducing from investments, the own funds and interest free funds available in respect of each applicant. As computed the revised working gives rise to the additional income of ₹ 10,02,03092/-, After considering the facts of the case and judicial pronouncements on the issue we are of the considered view that total disallowance u/s 14A would be fairly taken at ₹ 10,02,03,092/-, which is hereby added to the total income of the respective applicants in the respective assessment years. Applicant wise and assessment year wise addition is as under: - Sl No Name of the Entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 12 8. Lodha Finstock P Ltd 0 0 0 1928830 0 1928830 Total 36637491 42776189 9531253 2632186 8625973 100203092 4. In view of the above, the learned counsel for the assessee stated that the issue is now decide and AO be directed to restrict to this addition only. When this was confronted to the learned CIT DR, he objected to the same. 5. After hearing the rival contentions and gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants. The Director of Income Tax (Investigation) has submitted a common verification report of such issues vide a forwarding letter dated 05.11.2014 In the above report of the DL there are 10 issues which were dealt with. 27.2 Based on the findings in the report, no infirmity was observed with regard to the following issues: - Non-deduction of TDS on income capitalised. Short deduction and / or non-deduction of TDS on payment made to group entities disallowable u/s.40(a)(ia). Deemed Dividend uls.2(22)(e)Payments to entities covered u/s.40A(2)(b). Interest disallowances of advances made to group entities. Depreciation on sample flats. We have considered the submissions made and the Report of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n principle, the amount of disallowance of interest u/s 40(a)(ia) should be excluded from the interest considered under Rule 8D while computing the disallowance u/s 14A. The ground is merited and is allowed as directed above. 29. The fifth ground of appeal pertains to the disallowance of brokerage expenses of ₹ 66,90,000/-. It is stated in the assessment order that as per column 27 of the Tax Audit Report, the tax was not deducted at source on brokerage paid to Geeta Cinema amounting to ₹ 66,90,000/-. Therefore, AO disallowed the same u/s 40(a)(ia) of the Act. During the appeal proceedings, the Ld. AR of the appellant has submitted that the appellant company has purchased of Odeon Theater Pvt. Ltd. for ₹ 31,26,65,954/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected has been capitalized or not. In case these amounts are capitalized and not claimed in the P L account, the disallowance cannot be made by invoking the provisions of Section 40a(ia) of the Act. In case these are claimed then the assessee is liable to deduct TDS and amount is to be disallowed in the absence of TDS. In term of the above, the issue is remanded back to the file of the AO for verification of the AO. 12. Coming to Revenue s appeal in ITA no. 1747/Mum/2015, which is only supportive of the order of CIT(A) and now, we have only adjudicating the issue raised while adjudicating assessee s appeal. Hence, the same has become infructuous and dismissed. 13. In the result, the appeal of assessee is partly allowed and the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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