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TMI Blog2019 (4) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee’s house property thereby rejecting the fair market rent - AO adopted the annual value of the property at ₹ 1.20 crores by following the stand taken in the earlier years and computed the income of the assessee under the head “income from house property” after allowing deduction under section 24(a) - HELD THAT:- This issue thus is squarely covered in favour of the assessee by the decision of this Tribunal rendered in assessee’s own case for the earlier years [2016 (1) TMI 169 - ITAT KOLKATA], which has been upheld by the Hon’ble Calcutta High Court and respectfully following the same, we uphold the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. Ground No. 2 is accordingly dismissed. Addition on account of excess expenditure allegedly claimed by the assessee - HELD THAT:- This working prepared and furnished by the assessee during the course of assessment proceedings was not properly understood and appreciated by the Assessing Officer and he made a huge disallowance without recording any adverse finding about the genuineness or the business expediency of the said expenditure. CIT(Appeals), on the other hand, appreciated the working f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The disallowance made by the Assessing Officer under section 14A read with Rule 8D(2)(iii) was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) deleted the same for the following reasons given in paragraph no. 2.3 of his impugned order:- 2.3. The submission of the appellant along with the supporting details/ evidences have been carefully considered and the facts of the case perused. The common issue involved these grounds of appeal is the application of Rule 8D of Income Tax Rules, 1962 ( Rules ) for disallowance u/s 14A of the Income Tax Act, 1961 ( the Act ). In the return of income, the appellant treated interest and DEMAT charges are the only expenses relatable to tax free dividend income and offered ₹ 10,90,01,363/- as expenditure disallowable u/s 14A of the Act. Further, during the appellate proceedings, the appellant submitted that interest income on bank deposit amounting to ₹ 15,49,776/- should be netted off from the interest already offered u/s 14A of the Act in computation. The AO did not consider this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 15 the appellant has challenged the applicability of Rule 8D for the purpose of computation of book profit under the MAT provisions. In this regard, the appellant relied on the judgment of Jurisdictional High Court in the case of CIT -vs.- Jayshree Tea Industries Ltd. [G.A. No. 1501 of 2014 dated 1911-2014] wherein it has been held that provision of Section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to Section 14A of the Act. Under the similar facts and discussions in the preceding paragraphs, I held that Rule 8D is not applicable for the purpose of computation of book profit . 5. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. had challenged the action of the ld. CIT(Appeals) in holding that Rule 8D is not applicable in the assessee s case, the ld. Counsel for the assessee has contended that total disallowance of ₹ 10,90,01,363/- was suo motu offered by the assessee under section 14A and the same being more than the exempt dividend income of ₹ 10,88,37,814/- received by the assessee during the year under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons given in paragraph no. 3.2 of his impugned order:- 3.2. I have carefully considered the submissions of the appellant along with the supporting evidences furnished and perused the facts of the case. It is seen that the appellant company owns a property at Bijwasan, Kapasera, a suburb of New Delhi. Vide an Agreement dated 28-06-2007 with an associated company, the appellant had let out the property on rent at an agreed consideration of ₹ 30,000/- p.m. However, following the earlier years, the A.O. while computing the income of the appellant, had considered the rent at ₹ 10 Lakh p.m. Accordingly, the A.O. rejected the annual rent received by the appellant as per the agreement, i.e. ₹ 3,60,000/- and substituted it by a sum of ₹ 1,20,00,000/-. I find that this issue is squarely covered in appellant's own case for earlier assessment years i.e. 2006-07, 2007-08 and 2008-89. In the earlier order in Appeal No. 246/CIT(A)-VIII/Kol/10-11 and 187/CIT(A)VIII/Kol/11-12 for Assessment Years 2008-09 and 2009-10 respectively, it has been held that the A.O. can not deviate from his position merely based on assumption, surmise and conjecture and that the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notional figure. Accordingly, the A.O. is directed to compute the income of the appellant by considering the rental income at ₹ 30,000/- p.m. i.e ₹ 3,60,000/- for the immediate previous year. Thus, this ground of appeal of the appellant is allowed in favour of the appellant . 9. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has relied on the order of the Assessing Officer in support of the revenue s case on this issue, it is observed that the addition on this issue was made by the Assessing Officer by following the stand taken in assessee s own case for the earlier years and the ld. CIT(Appeals) has deleted the said addition by relying on the decision of the Tribunal in assessee s own case on a similar issue for the earlier years, i.e. A.Ys. 2007-08, 2008-09 and 2009-10. The ld. CIT(Appeals) thus has followed the decision of the Tribunal on the similar issue rendered in assessee s own case for the earlier years and as submitted by the ld. Counsel for the assessee, the said decision of the Tribunal has been upheld by the Hon ble Calcutta High Court. This issue thus is squarely covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an excess expenditure of ₹ 6,85,96,174/- (Rs.7,35,74,997/- minus ₹ 49,78,823/-). He noted that the assessee-company on its own had disallowed an expenditure of ₹ 1,05,14,908/- in the computation of total income. He also noted that there was a difference of ₹ 14,71,501/- in the disallowance offered by the assessee in the computation of total income on account of pro-rata expenditure for Management fees from Mena House Oberoi, Egypt. After making adjustment of these two amounts against the alleged excess expenditure of ₹ 6,85,96,174/-, the Assessing Officer worked out the disallowance of expenditure to be made at ₹ 5,95,52,767/- and since he had already disallowed expenditure of ₹ 82,81,539/- under section 14A, the balance amount of ₹ 5,12,71,228/- was disallowed by him. 12. The disallowance of ₹ 512,71,228/- made by the Assessing Officer on account of the alleged excess expenditure was challenged by the assessee in the appeal filed before the ld. CIT (Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) deleted the same for the following reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Depreciation as per books of account 5,456,929 Loss in partnership firm 66,899 10,514,908 150,698,515 63,060,089 Less: Legal, Professional Consultancy Fees as per accounts 48,505,475 Share of common business expenses allocable against royalty (A) 14,554,614 Add: Legal expenses incurred for protecting royalty income (*being part of ₹ 48,505,475/_ (B) 4,978,823 Total expenses allocable against royalty income (A + B) 19,533,437 Total earnings from royalty 108,495,779 Percentage expenses to revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO for non considering of ₹ 1,45,54,614/- . From the details of allocation made by the appellant during assessment stage, it is crystal dear that the ratio of common expenses has been calculated for the purpose of royalty only as mentioned in the note to the calculation sheet submitted during assessment stage and re submitted before me. The appellant has already considered the disallowable expenses i.e. ₹ 1,05,14,908/- in the computation of total income which is also mentioned by the AO at para 4.5. Further disallowance made by the AO has been discussed separately in the respective grounds taken by the appellant. The AO calculated the residual amount at ₹ 5,12,71,228/-. The calculation is as follows: Total expenditure debited to PIL Account 213,758,604 Less: Specific Expenditure against other source other than royalty and Less membership fees 140,183,607 73,574,997 Less: Specific Expenditure against royalty income 4,978,823 68,596,174 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic expenses with respect to the corresponding source of income were considered and a separate working was furnished in respect of expenses claimed against royalty income. He has invited our attention to the said working furnished at page no. 9 of the paper book and explained that out of the total expenditure of ₹ 21,37,58,604/- incurred by the assessee, specific expenses against different heads of income other than royalty income as well as specific expenses incurred in respect of other income in the form of dividend income were to the tune of ₹ 14,01,83,607/- and out of remaining expenditure of ₹ 7,35,74,997/-, a sum of ₹ 4,85,05,475/- was incurred on account of common expenses which are required to be incurred by the Corporate entity like assessee at HO level such as financing, legal matters, audit fees, etc. He has submitted that such common expenses were not allocated by the assessee against different heads of income except royalty income for which a separate working was furnished. He has submitted the share of common business expenses allocable against royalty income as shown in the said working was ₹ 1,45,54,614/- leaving the balance amount of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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