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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 ..... ssing Officer noticed that the assessee had incurred expenses of identical nature in the earlier years also and they were treated as capital expenses by the AO, as these expenses have been considered as incurred in connection with increasing the capital base of the company and not for carrying on day-to-day business activities. Accordingly, by following the orders passed in earlier years on the identical issue, the Assessing Officer disallowed the above said expenses by treating the same as capital expenditure The learned CIT(A) noticed that he had allowed the identical claim of the assessee made in the earlier years and accordingly reversed the order passed by the Assessing Officer on this issue. Aggrieved, the revenue is agitating the decision of Ld CIT(A) rendered on this issue. 4. We have heard the parties on this issue. We noticed that the Coordinate Bench of the Tribunal has considered an identical issue in ITA No. 1425/Mum/2011 dated 8.7.2016 relating to A.Y. 2007-08 and also in ITA No. 6711/Mum/2012 dated 24.8.2016 relating to A.Y. 2008-09. In both the years the Tribunal has confirmed the decision rendered by the learned CIT(A) and accordingly decided the issue in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since, we have already held that the expenses incurred in connection with the issue of FCCB is revenue in nature, we do not find it necessary to adjudicate the alternative contention of the Revenue. 9. Third ground urged by the Revenue relates to disallowance of Rs. 14.86 crores u/s. 40(a)(i) of the Act for non-deduction of tax at source from certain payments. 10. Learned AR submitted that the identical payments were also made in earlier years and the Tribunal has allowed the claim of the assessee by holding that the impugned payments do not attract deduction of tax at source u/s. 195 of the Act. He further submitted that the decision rendered by the Coordinate Bench in A.Y. 2007-08 was followed in A.Y. 2008-09 also. 11. We heard the rival submissions and perused the record. During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish details of expenses which were incurred in foreign exchange. The assessee furnished following details 12. When the Assessing Officer asked the assessee to furnish details of tax deducted at source in each of the case, the assessee furnished that the tax has been deducted u/s. 195 of the Act wherever it is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 91,51,701 The assessee submitted before Ld CIT(A) that the provisions of India UK DTAA and India-US DTAA are identical in nature. Accordingly the Ld CIT(A) held that these payments do not constitute income in the hands of payees as per the provisions of India-US DTAA and there was no requirement to deduct tax at source in section 195, consequently there was no requirement to make disallowance u/s 40(a)(i) of the Act. Accordingly he deleted the disallowance made by the Assessing Officer. The revenue is aggrieved by the decision of of Ld CIT(A) in granting relief to the assessee. Though the revenue has mentioned the figure of Rs. 14.86 crores in its ground, yet the fact remains that the Ld CIT(A) confirmed disallowance of Rs. 3,79,720/-; Rs. 93,060/- and Rs. 1,10,324/- out of the above figure, as discussed by us in pargraph 13 supra. Hence the revenue should be aggrieved only in respect of relief granted by Ld CIT(A), viz., (a) Payment made to M/s T.T. Forex - Rs.3,66,484/- (b) Payments made to U.K. Companies - Rs.13,85,96,004/- (c) Payments made to USA companies - Rs.91,51,701/- 17. The assessee has claimed that the payment made to M/s T.T Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disallowance to be made under clause (f) of Explanation-1 to section 115JB of the Act. 21. Clause (f) of Explanation-1 to section 115JB of the Act provides that the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause-38 thereof) or section-11 or section-12 is required to be added to the net profit shown in the profit and loss account in order to arrive at the "book profit" for the purpose of section 115JB of the Act. Section 14A of the Act also mandates that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income. Section 14A of the Act is required to be applied for the purpose of computing total income of the assessee, whereas clause (f) of Explanation-1 to section 115JB of the Act is required to be applied for the purpose of computing book profit u/s. 115JB of the Act. 22. The assessee had computed disallowance u/s. 14A of the Act read with Rule 8D of I.T. Rules at Rs. 32.70 crores. The Assessing Officer took the view that the very same amount so disallowed u/s 14A can be added under clause (f) of Explanation-1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dividend income. Considering the volume of dividend and quantum of addition of Rs. 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. 26. We shall now take the appeal filed by the assessee. The first issue relates to disallowance of Rs. 3,79,720/- made under section 40(a)(i) of the Act, being the amount paid to M/s P T Kilpady & Consultants, an Indonesian company. The Learned AR submitted that an identical addition was made in A.Y. 2007- 08 and 2008-09 and the Tribunal has restored the matter back to the file of the Assessing Officer for examining the same afresh. Accordingly, consistent with the view taken by the Coordinate Bench in the earlier years, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with similar directions. 27. Next issue relates to disallowance of professional fees of Rs. 93,060/- paid for listing of GDR. Learned AR fairly admitted that this issue has been decided against the assessee in A.Y. 2007-08 and 2008-09 by the Coordinate Benches. Accordingly, consistent with the view taken by the Coordinate ..... 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