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TMI Blog2018 (9) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... those investments which have not yielded any exempt income during impugned AY or which were not, at all, capable of yielding any exempt income subject to a further condition that overall disallowance, in no case, shall exceed exempt income of ₹ 131.46 Lacs earned by the assessee during the impugned AY. This ground stand partly allowed in terms of our above order. Unexplained entries appearing in Annual Information Return [AIR] - Held that:- Assessee was unable to reconcile certain entries as appearing in Annual Information Return [AIR] and therefore, the same were added to the income of the assessee. The same, upon confirmation by Ld. first appellate authority, is under appeal before us. The Ld. Sr. Counsel submitted that keeping i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowances Remarks 1. Depreciation on UPS Batteries Restricted to 15% as against 80% claimed by the assessee 2. Mark to Market Loss of ₹ 7 Crores Disallowed by Ld. AO treating the same a notional loss 3. Employees Stock Option Plan [ESOP] expenses of ₹ 2.64 Crores Disallowed by Ld. AO treating the same as not a real expenditure The assessee being resident corporate entity engaged in the business of share broking, depositors, mobilization of deposits and marketing of public issues has been assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod of remunerating them. However, not convinced, Ld. AO disallowed the same and added the same to the income of the assessee. 2.4 Aggrieved, the assessee contested all the three additions / adjustments with success before Ld. CIT(A) vide impugned order dated 29/09/2016 wherein the depreciation at higher rate as claimed by the assessee was allowed by following the decision of this Tribunal rendered in assessee s own case for AYs 2006-07, 2008-09 2009-10. Similarly the addition on account of Mark to Market Losses has been deleted by following the decision of this Tribunal rendered for AY 2008-09 2009- 10. The addition of ESOP expenditure has been deleted by following the decision of this Tribunal rendered for AY 2010-11. The det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h quantum of administrative expenditure as per Rule 8D(2)(iii). The assessee defended its computation vide reply dated 18/02/2015, the relevant portion of which has already been extracted in the quantum assessment order. As per the submissions, the investments made by the assessee were strategic in nature and made for long term purpose and therefore, no day-to-day expenses were required to be incurred to manage the same. It was further pointed out that the investments held as stock-intrade were not required to be considered for the purpose of computation of the disallowance. As an alternative submission, the assessee pleaded to restrict the disallowance to ₹ 23.45 Lacs, being 10% of cost of the investment division / share trading div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet Investment (P.) Ltd. [82 Taxmann.com 415]. Per Contra, Ld. CIT-DR submitted that the computations were to be made only as per the formula prescribed under the law. 4.4 We have carefully heard the rival contentions and perused relevant material on record including judicial pronouncements as cited before us. So far as the legal issue as raised by Ld. Sr. Counsel is concerned, we find that the issue in hand involves only quantum of administrative expenditure as per Rule 8D(2)(iii). Interestingly, both assessee as well as Ld. AO has made computations @0.5% as per Rule 8D(2)(iii) only and therefore, the applicability of the same is not under dispute. The difference in computation arises out of the fact that the assessee has excluded s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee during the impugned AY. Further, those investments which were not capable of yielding any exempt income were also to be excluded while arriving at the disallowance. 4.7 Keeping the above principles in mind, we have perused the nature of investments held by the assessee which are extracted at Page-14 of the impugned order. We find that the investments have been classified by the assessee as Strategic investments, Stock in-trade investment in other Shares / Venture Capital Fund. The assessee has already offered suo-moto disallowance @0.5% against investment in other Shares / Venture Capital Fund and therefore, there is no dispute against this category of investment. Therefore, the disallowance under dispute is against Stra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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