9911796707
TMI Blog2010 (9) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed return of income on 29-11-2003, declaring a total income of ₹ 36,309/-. The AO, inter alia, disallowed the management fees and site expenses and has also denied claim of exemption u/s 80IA. Aggrieved, the assessee carried the matter in appeal. The first appellate authority granted part relief on both the counts of disallowance made u/s 40A(2)(b) of management charges paid to M/s King Prawns Ltd. and on the issue of computation of relief u/s 80IA. Aggrieved by the order of the CIT(Appeals), the Revenue has filed this appeal on the following grounds : 1. On the facts and in circumstances of the case and in law, the CIT(A) erred in restricting the disallowance u/s 40A(2)(b) regarding management charges paid to M/s King Praw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO has disallowed the management charges paid to King Prawns Ltd. as the assessee has not laid any evidence, justifying the claim. He submitted that the AO found that the business of M/s King Prawns Ltd. is trading and manufacturing of Prawns, Fish and Salt and they have no experience in generation in power and that King Prawns Ltd. has suffered heavy losses and has not rendered any services to the assessee. He submitted that the CIT(Appeals) has admitted fresh evidence and has not given an opportunity to the AO to examine these evidences. He prayed that the issue be restored to the file of the AO for fresh adjudication in accordance with law. 4. Coming to the issue of deduction u/s 80IA, the learned DR contended that the develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.65 lakhs, remuneration to Directors 1.32 lakhs etc. totaling to ₹ 12.97 lakhs. 6. The learned counsel further contended that M/s King Prawns Ltd. is a public company having a paid up share capital of ₹ 1,76,68,510/- with more than 790 share holders including IDBI and that Mr. Ajay Dhumal holds only 2.69% and the proviso to section 40A(2)(b) cannot be applied simply because Mr. Ajay Dhumal is a common Director of both the Boards of the Company. He relied on the order of the CIT(Appeals) and submitted that there is no fresh evidence whatsoever produced before the CIT(Appeals) and the question of Rule 46A coming into play does not arise. 7. Coming to the second issue for computation of relief u/s 80IA, Mr. Daniel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Fish and Salt it had no experience in Generation of Power . The AO has not brought on record any material to show that said King Prawns had never rendered such services. May it be true that apart from the services of the said King Prawns some other services might have been required, nevertheless it is not a case of the AO that the services actually rendered were only make belief. It may also be true that the said King Prawns was incurring losses but that itself would not be the ground for disallowance of such expenses in the hands of the appellant company. Further AO has not disputed the fact that the principal sanction was given to the said King Prawns for setting up of such project which also indicate that the said King Prawn was havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- would meet both the ends of justice. And accordingly the AO is directed to restrict the disallowance at ₹ 10 lakhs as against entire sum of ₹ 30 lakhs. This ground of appeal is partly allowed. 11. We agree with these findings. The AO has made disallowance u/s 40A(2)(b) and the CIT(Appeals) has restricted the disallowance to ₹ 10 lakhs. There is no additional evidence in this case before the first appellate authority. The finding of the AO that M/s King Prawns Ltd. is not in the business of power generation, is not factually incorrect. In fact M/s King Prawns Ltd. on 16th Oct., 2000, entered into MOU with German Firm to set up a Wind farm on its site at Palghar Dist. Thane and this wind farm has to be set up through a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
