9911796707
TMI Blog2018 (5) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,97,05,670/- claimed on account of write off of the-interest on OCDs." 3. "Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the loss on sale of shares held as Investment by the Assessee Company as Business Loss and allowing the Loss to be set off against Business Income." 4. "Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the Foreign Travel Expenses ignoring the decision of the Kamataka High Court in the case of M/s. Cananara Housing Development Company in ITA No, 38/2014 dated 25.07.2014." 5. "Whether in the facts and circumstances of the case an in law, the Ld. CIT(A) is justified in deleting the disallowance u/s. 14A of the Act while computing the book profits u/s. 115JB of the Act ignoring the decision of the Karnataka High Court in the case of M/s. Canara Housing Development Company in ITA No. 38/2014 dated 25.07.2014." The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary. 3. Riva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act in the proceedings u/s 153C rws 143(3) as the same does not arise out of seized material or findings of search. It is a fact that original assessment proceedings and reassessment proceedings u/s 147 for AY 2005-06 have been completed u/s 143(3) by making certain disallowances which have been subject matter of appeal before various appellate forums and decided accordingly. As on date of initiation of search, no assessment proceedings were pending before AO for this year which could be abated in terms of second proviso to section 153A of the Act In the assessment order passed u/s 153C rws 143(3) while the AO has retained certain additions made in earlier assessment orders, he has made fresh disallowances, which the appellant disputes as the same has not arisen out of findings of search action. I find that the issue has been covered by decision of Hon'ble Bombay High Court in the case of CIT Vs. Murli Agro Products Limited (ITA 36 of 2009) order dated 29.10.2010. The Hon'ble Court while examining the issue whether the revision order u/s 263 passed by CIT against order u/s 153A rws 143(3) passed by AO for not making certain adjustments which were not there in the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (it) undisclosed income or property discovered in the course of search. However, it may be stated that the Karnataka High Court in the case of M/s Canara Housing Development Company (ITA No.38/2014 dated 25.7.2014) recently held that the assessing authority shall determine the total income of the assessee taking into consideration the materials which were subject matter of earlier return and the undisclosed income unearthed during search and also any other income which comes to his notice. The Honourable ITAT Mumbai has not distinguished the higher forum decision in the case of M/s Canara Housing Development Company of Honourable Karnataka High Court The issue is not yet settled. Hence, respectfully following the decisions of Hon'ble Jurisdictional High Court and Special Bench decision of ITAT, Mumbai Bench, it is held that the AO was not right in enhancing disallowances or making fresh additions in absence of any incriminating material found during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of hearing before us as well as relied on by the lower authorities while passing their respective orders. With regard to the ground No.1 taken by the Department we found that additions were deleted by CIT(A) which were found to be without any incriminating document, hence not sustainable in the assessment proceedings u/s.153A of the Act for non- abated assessment years. While holding so, CIT(A) has relied on the decision of Mumbai Tribunal in the case of All Cargo Global Logistics Ltd., 137 ITD 287. Accordingly, CIT(A) was justified in deleting the additions made on issues other than those based on any incriminating material found during the course of search. 13. With regard to deleting disallowance of Rs. 10,97,05,670/-, we found that issue is squarely covered by the order of the Tribunal in assessee's own case in ITA No.4077/Mum/2014 vide order dated 24/06/2016 wherein the Tribunal observed and held as under:- 4. Next issue is with regards to disallowance of bad debts of Rs. 10,97,05,670/- made by Assessing Officer, which was confirmed by CIT(A). 4.1 In appeal, various contentions were raised on behalf of assessee and in response to same, remand report was called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on the ground that assessee had debited an amount of Rs. 7,30,31,599/- in P&L account towards „loss on sale of investments‟ which being long term capital gains should not be allowed as business loss. The loss is on account of sale of shares. Assessee has been showing the shares as investments in the balance sheet, however, for A.Y. 1992-93 and A.Y. 1993-94, Assessing Officer treated the sale of shares as business income/loss and completed the assessment u/s.143(3) of the Act. The said orders have also been confirmed by CIT(A) for both the years. Assessing Officer himself had assessed the income or loss on account of sale under the head „profit & gains from business‟ instead of „income of capital gains‟ shown by assessee, which has been followed by assessee consistently. Assessing Officer has not given any reason except stating that the assessee had shown the said shares as long term investments in the balance sheet. In this regard, CIT(A) observed that assessee has been showing said shares as investments in the balance sheet and since the department had altered the nature of income from capital gains to business income, assessee accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of ITAT(Special Bench) in the case of M/s. Vireet Investment Pvt. Ltd., order dated 22/06/2017. 21. In the result, appeal of the Revenue for A.Y.2005-06 is dismissed. 22. Similar issue for disallowance of 25% of the travelling expenses was taken by the Revenue in the A.Y.2006-07 in ITA No.523/Mum/2015. Disallowance on account of travelling expenses was restricted by the CIT(A) at 25% after observing as under:- During the year total travelling expenses of Rs. 52,53,129/- have been debited to P & L account which include Rs. 47,74,540/- on foreign travelling expenses of Mrs.Sangita Jindal, Managing Director of the company. As per AO, such expense is not justified as the investment business is restricted to India only and there is no specific detail to mention that entire expenditure has been incurred wholly and exclusively for the purposes of business. Per contra appellant claims that entire expense is on account of travel of Managing Director for business activities of the company in context of the NBPC business and exploring possible financial tie ups and business opportunities in consultancy business. I find that similar issue arose in A.Y.2005-06, wherein 25% of the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses. CIT(A) has given detailed finding for restricting disallowance at 25% after observing as under:- 8-2. The facts of case and submission have been considered. During the year total travelling expenses of Rs. 41/22,465/- have been debited to P&Z. account which include Rs. 38,84,674/- on foreign travelling expenses of Mrs Sangita Jindal, Managing Director of the company. As per AO, such expense is not justified as the investment business is restricted to India only and mere is specific detail to mention that entire expenditure has been incurred wholly and exclusively for the purposes of business. Per contra appellant claims that entire expense is on account of travel of Managing Director for business activities of the company in context of its NBFC business and exploring possible financial tie ups and business opportunities in consultancy business. I find that similar issue arose in AY 2005-05, wherein 25% of the total travelling expenses of the company were disallowed in the assessment order for want of verification and justification of foreign travelling expenses being incurred wholly and exclusively for the purposes of business which was also confirmed by QT(A). Respectful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance at 25% of total travelling expenses. The ground of appeal is disposed off accordingly as partly allowed 33. We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that after considering the entirety of facts and circumstances vis-à-vis nature of assessee's business, the CIT(A) has recorded a finding to the effect that disallowance of 25% of foreign travelling expenses will serve the purpose of justice. Finding given by CIT(A) are as per material on record which do not require any interference on our part. 34. In the appeals filed by the assessee in the A.Y.2006-07 ITA No.777/Mum/2015 , A.Y.2010-11 ITA No.778/Mum/2015 and A.Y.2011-12 ITA No.779/Mum/2015 , common grounds have been taken by the assessee with regard to addition of disallowance made u/s.14A while computing book profit u/s.115JB. The issue is squarely covered by the decision of ITAT Special Bench in case of M/s. Vireet Investment Pvt. Ltd., order dated 22/06/2017 wherein it was held that while computing book profit u/s.115JB, disallowance made by the AO u/s.14A r.w.rule 8D cannot be added in assessee's book profit. Respectfully foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
