9911796707
TMI Blog2017 (12) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has incurred expenditure by way of interest, since, own funds of the assessee are sufficient to cover the investments, no disallowance under Rule 8D(2)(ii) is warranted. As regards disallowance under Rule 8D(2)(iii) i.e. an amount equal to 1/2% of the average value of investment is concerned, we find that as against closing balance of investment of ₹ 347 crores the Assessing Officer has taken into consideration ₹ 151 crores after excluding the investments on which the assessee has not earned any tax free income. The ld. AR contended that while computing the figure of ₹ 151 crores, the Assessing Officer has included some investment on which the assessee has not earned any tax free income. After considering the submissions of assessee we are of considered view that the issue can be remitted to Assessing Officer for limited purpose of verification whether any investment on which tax free income has not been received has been included while computing the closing balance of investment at ₹ 1,51,66,97,307/-. Disallowance of repairs and maintenance expenditure - Held that:- Expenditure incurred by assessee for renovation of building is capital in nature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N/2013 - - - Dated:- 15-12-2017 - SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Sharad Shah For The Revenue : Shri Rajiv Kumar Ajay Modi ORDER PER VIKAS AWASTHY, JM : These cross appeals by the assessee and the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-I, Pune dated 30-09-2013 for the assessment year 2008-09. 2. The brief facts of the case as emanating from records are: The assessee company is engaged in manufacturing and sale of Pumps, Valves, execution of Turnkey Projects for Water Supply, Water Resource Management, Power Oil Gas etc. The assessee filed its return of income for the impugned assessment year on 29-09-2008 declaring total income of ₹ 1,05,12,89,266/-. The assessee further declared total value of Fringe benefits as ₹ 4,30,69,310/-. During the course of scrutiny assessment the Assessing Officer inter alia made following additions/disallowances : i. Disallowance of deduction u/s. 80IA claimed in respect of infrastructure facility developed for Sardar Sarovar Project ₹ 21,98,82,046/-. ii. Disallowance u/s. 40(a)(ia) ₹ 63,70,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar disallowance was made by Assessing Officer in assessment years 2006-07 and 2007-08. The Tribunal in assessment year 2006-07 held that the infrastructure facility developed by assessee for Sardar Sarovar Narmada Nigam Limited qualifies to be an infrastructure facility and eligible for claiming deduction u/s. 80IA of the Act. The Tribunal in assessment year 2007-08 followed its own decision and allowed the claim of deduction u/s. 80IA of the Act. The ld. AR placed on record a copy of the order of Tribunal in assessee s own case for assessment year 2006-07 reported as 167 TTJ 102 and copy of order of Tribunal in ITA No. 2031/PN/2012 for assessment year 2007-08 decided on 10-10-2014. 5.1 In respect of ground No. 2 the ld. AR submitted that the Assessing Officer made disallowance of ₹ 2,40,31,932/- u/s. 14A r.w. Rule 8D without considering the fact that the assessee is having own interest free funds much more than the investment made. The ld. AR referred to Balance Sheet of assessee company as on 31-03-2008 at page 58 of the paper book. The ld. AR pointed that own funds of assessee including Share Capital and Reserves and Surplus are to the tune of ₹ 662 crores, as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the Assessing Officer and the Commissioner of Income Tax (Appeals) disbelieved the same. The ld. AR further referred to the order of Commissioner of Income Tax (Appeals) para 9.2 at pages 67 and 68 wherein the statement of Shri Sanjay B. Dandekar, Managing Director of M/s. Rex Poly Extrusion Limited has been reproduced. The ld. AR pointed that in reply to Q. No. 13, he has admitted the fact that the company has received commission from the assessee for rendering various services as per letter of appointment dated 01-05-2007. The ld. AR further contended that in the subsequent assessment year i.e. assessment year 2009-10, the Assessing Officer allowed the payment of commission to M/s. Rex Poly Extrusion Limited. The ld. AR asserted that the services rendered by the aforesaid company in the assessment year under appeal, as well as in the subsequent assessment year are of similar nature and there has been no change in the facts and circumstances. 5.5 In respect of last ground No. 6 relating to Fringe Benefit Tax on reimbursement of medical expenditure to employees, the ld. AR fairly admitted that this issue has been decided against the assessee by the Tribunal in assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival sides and have perused the orders of the authorities below. The ground No. 1 raised in appeal relates to claim of deduction u/s. 80IA of the Act. We find that in assessment years 2006-07 and 2007-08 similar disallowance was made by the Assessing Officer. The matter travelled up to the Tribunal. The Co-ordinate Bench of the Tribunal in assessment year 2006-07 granted relief to the assessee by holding that the assessee is eligible for claim of deduction u/s. 80IA in respect of profits derived from development of infrastructure facility for Sardar Sarovar Narmada Nigam Limited. In assessment year 2007-08 the Tribunal followed the order of Co-ordinate Bench and granted the benefit of deduction u/s. 80IA. Both sides in present appeal are unanimous in admitting that the facts in assessment year under appeal are identical. Therefore, we find no reason to take a different view. Following the order of Co-ordinate Bench in earlier assessment years, we allow assessee s claim of deduction amounting to ₹ 21,98,82,046/- u/s. 80IA of the Act. Accordingly, ground No. 1 raised in the appeal by assessee is allowed. 8. The next issue in appeal by the assessee is with respect to disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 46,21,003/-. The Commissioner of Income Tax (Appeals) in his order has tabulated the expenditure that has been treated as capital. For the sake of convenience the same is reproduced here-in-below : Sr. No. Nature of Work Amount (Rs.) i Changing of flooring painting etc. in tiffin park of area 48,255/- ii Changing of flooring painting etc. in tiffin park of area 1,64,979/- iii Changing of flooring painting etc. in tiffin park of area 17,51,77/- iv Demolishing of old damaged toilets in the accounts department replacement of WC urinals painting 3,40,285/- v Demolishing of old damaged toilets in the accounts department replacement of WC urinals painting 5,35,775/- vi Demolishing of old damaged toilets in business office replacement of WC urinals painting 1,79,585/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the tune of ₹ 46,21,000/- incurred by assessee for renovation of building is capital in nature, as it provides new advantage/benefit to the assessee for years to come. The ld. AR has not been able to controvert the findings of Commissioner of Income Tax (Appeals). The ld. AR has also failed to substantiate that the expenditure held to be capital is in fact revenue in nature. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, ground No. 3 raised in the appeal by assessee is rejected. 10. In ground No. 4 of the appeal the assessee has assailed disallowance of interest expenditure ₹ 97,110/- u/s. 36(1)(iii) of the Act. The assessee has advanced interest free temporary loan of ₹ 11,82,450/- to its one of the sister concern. The contention of the assessee is that the loan has been advanced from own funds and not from interest bearing borrowed funds. A perusal of Balance Sheet as on 31-03-2008 (at page 58 of the paper book) shows that the assessee has sufficient own funds to cover the loan advanced. The Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities Power Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounded by Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Gopal Purohit (336 ITR 287) cannot be ignored. If a particular expenditure has been disallowed in one assessment year and the same expenditure under same set of facts is allowed in another assessment year, it would result in absurdity. The assessee has given the details of services rendered by various parties including M/s. Rex Poly Extrusion Limited at pages 390 and 391 of the paper book. The assessee has also furnished confirmation from M/s. Rex Poly Extrusion Limited regarding the receipt of payments. The Commissioner of Income Tax (Appeals) has referred to the statement of Shri Sanjay B. Dandekar, Managing Director of M/s. Rex Poly Extrusion Limited recorded u/s. 131 during the course of survey action u/s. 133A on 09-01-2013 in the case of M/s. Rex Poly Extrusion Limited. In reply to Q. No. 13 Shri Sanjay B. Dandekar admitted that the company has received commission during the Financial Year 2007-08 (relevant to the assessment year under appeal), 2009-10 and 2011-12 for rendering various services to the assessee company. He has also referred to the terms and conditions of the letter of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled to the Hon ble Delhi High Court. The Hon ble High Court concurred with the findings of Tribunal and dismissed the appeal of assessee. We find that the facts of the aforesaid case are distinguishable from the facts in the case in hand. In the instant case not only that the assessee has placed copy of letter of appointment which is in the form of MOU for engaging the services of M/s. Rex Poly Extrusion Limited as Consultant but has also given the details of contracts secured through M/s. Rex Poly Extrusion Limited. The assessee has also filed confirmation from M/s. Rex Poly Extrusion Limited indicating that the commission has been received through banking channels after deduction of TDS. The Department has not disputed that the assessee has not received contracts of the companies/organizations which are purportedly secured through M/s. Rex Poly Extrusion Limited. It is also an undisputed fact that in the subsequent assessment year the Assessing Officer has allowed payment of commission to M/s. Rex Poly Extrusion Limited. Thus, in view of the distinguishable facts, we are of considered view that the decision rendered by Hon ble Delhi High Court in the case of Precision Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue raised by the Department in appeal has been considered by the Tribunal in assessee s own case in assessment year 2008-09. 17. We have considered the submissions made by representatives of both the sides. The Department in appeal has assailed the findings of Commissioner of Income Tax (Appeals) in deleting the disallowance u/s. 40(a)(ia) in respect of payment of commission ₹ 63,70,000/- to Non- Executive Directors without deduction of tax at source. We find that similar issue was raised before the Co-ordinate Bench in assessee s own case in assessment year 2007-08. The Tribunal by placing reliance on the decision of Bharat Forge Ltd. Vs. Addl. CIT in ITA Nos. 1326, 1327, 1357 1358/PN/2010 for the assessment years 2007-08 2008-09 decided on 31-01-2013 held as under : 8. The next issue is with regard to disallowance u/s.40(a)(ia) of the Act amounting to ₹ 80,00,000/-. The Assessing Officer has disallowed the said amount on the ground that the assessee has not deducted tax at source on payment of commission to the Non-executive Directors, which was confirmed by the CIT(A). The learned Authorized Representative has pointed out that this issue is covered ..... 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