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TMI Blog2017 (8) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified in adding the amount computed under section 14A of the Act to meet the requirement of clause (f) of Explanation-1 to section 115JB of the Act. We further noticed that the learned CIT(A) has computed the amount incurred for earning exempt income for the purpose of section 115JB at 10% of the dividend income. Considering the volume of dividend and quantum of addition of ₹ 9.22 crores, in our view the same appears to be reasonable. Accordingly, we uphold the order passed by the learned CIT(A) on this issue. - I.T.A. No. 6712/Mum/2012 And I.T.A. No. 6844/Mum/2012 - - - Dated:- 11-8-2017 - Shri B.R. Baskaran (AM) And Shri Ravish Sood (JM) For The Assessee : Shri Jintendra Sanghavi For The Department : Shri Darse S. ORDER Per B. R. Baskaran (AM) :- These cross appeals are directed against the order dated 6.8.2012 passed by the learned CIT(A)-13, Mumbai and it relate to A.Y. 2009-10. 2. The assessee is engaged in the business of providing fuel and facilitation services in various forms to power plants and isalso engaged in the joint venture operations for exploration and production of coal based Methane blocks. 3. We shall fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses incurred in connection with FCCB are revenue in nature. The Tribunal in the instant case, further noticed that FCCB holders never had any voting rights as the same were not converted into equity shares of the company during that year. In view of these facts, the Coordinate Bench held that the expenditure incurred by the assessee in connection with the issue of FCCB is Revenue in nature. 6. Learned AR submitted that there is no change in the facts with regard to the present claim of the assessee and also submitted that none of the FCCB has been converted into shares during this year also. On the contrary, the Ld D.R submitted that the assessee has collected huge funds by issuing FCCB and hence the assessing officer was right in treating the expenses as capital in nature. 7. Since the co-ordinate benches have already taken a view in this matter, consistent with the view taken by the Tribunal, we hold that the learned CIT(A) was justified in holding that the expenditure incurred in connection with the issue of FCCB is deductible as revenue expenditure. 8. In the second ground the Revenue is contending that the assessee had issued FCCB for the purpose of meeting its wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) confirmed the disallowance of ₹ 3,79,720/- paid to M/s P T Kilpady Consultants, as he held that the same is taxable as income of the payee in India and hence the assessee is required to deduct tax at source from that payment. The Ld CIT(A) confirmed the disallowance of ₹ 93060/-, being the expenses incurred in listing of GDR treating the same as capital in nature. The Ld CIT(A) also confirmed the disallowance of ₹ 1,10,324/-, being the amount paid to M/s Tasman Mining Pty Ltd towards technical review of cold mines, treating the same as capital expenditure. 14. The Ld CIT(A) noticed that the amount of ₹ 3,66,484/- paid to T.T.Forex was in the nature of reimbursement of expenses. Hence the Ld CIT(A) deleted the addition by following the decision rendered by Hon ble Bombay High Court in the case of M/s Siemens Aktongesellschaft (2008)(15 DTR 233). 15. The assessee has made payments made to following UK companies:- Barclays Bank - 10,58,188 Barclays Bank - 13,73,38,456 Deutsche Bank - 1,99, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment made to M/s T.T Forex was reimbursement of travelling expenses and hence the Ld CIT(A) has granted relief by following the decision rendered by Hon ble Bombay High Court in the case of Siemens Aktongesellschaft (supra). The Ld D.R did not dispute the facts as well as the decision of Bombay High Court followed by Ld CIT(A). Hence we uphold his order passed on this issue. 18. We notice that the assessee had made identical payments to UK companies and hence an identical issue came to the consideration of the Tribunal in A.Y. 2007-08, wherein the Tribunal followed the decision rendered in the case of Raymond Ltd. Vs. DCIT (2003) 86 ITD 791. In the case of Raymond Ltd., it was held that neither the management commission nor underwriting commission nor selling commission would amount to FTS within the meaning of the DTAA with UK and consequently there was no obligation on the part of the assessee to deduct tax under section 195 of the Act. Accordingly, the Coordinate Bench held that there is no requirement to make the disallowance u/s. 40(a)(i) of the Act. The decision rendered in A.Y. 2007-08 was followed in A.Y. 2008-09 also. Learned AR submitted that there is no change in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under clause (f) of Explanation-1 to section 115JB of the Act. Accordingly, he added amount of ₹ 72.70 crores for the purpose of computing book profit u/s. 115JB of the Act. 23. The learned CIT(A) took the view that disallowance computed u/s. 14A read with Rule 8D cannot imported into clause (f) of Explanation-1 to section 115JB of the Act. The learned CIT(A) further noticed that the assessee had disallowed 5.32% and 4.38% of exempt income in earlier two years for the purpose of computing book profit. The learned CIT(A) further noticed that section 80HHC has provided that 90% of the other income should be excluded, meaning thereby, expenditure incurred for earning other income is taken at 10% of other income. Accordingly, the learned CIT(A) took the view that it will be appropriate to estimate 10% of the dividend income received during the year as reasonable expenses relatable to exempt income. The assessee had received dividend income at ₹ 99.22 crores. Accordingly, the learned CIT(A) worked out 10% thereof amounting to ₹ 9.22 crores as amount required to be added under clause (f) of Explanation-1 to section 115JB of the Act. The Revenue is aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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