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TMI Blog2019 (7) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... (A)' in short), dated 12.06.2017 emanating from the assessment order dated 30.03.2016 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2013-14. 2. The grievances raised being common, both the cases were heard together and disposed of by the common order. 3. We shall first take up assessee's appeal in ITA No. 1989/Ahd/2017 concerning AY 2013-14. ITA No. 1989/Ahd/2017-AY-2013-14 (Assessee's appeal) 4. The grounds of appeal raised by the assessee read as under:- "1. The order passed by the Learned Commissioner of Income-tax (Appeals) [hereinafter referred to as 'the Ld. CIT(A)'] is bad in law and on facts. 2. Re: Disallowance of discount offered to doctors - R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance u/s. 14A read with tule 8D of Rs. 7.24.182/- 3.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in disallowing administrative expenses u/s 14A by invoking Rule 8D without first recording satisfaction with regard to correctness of claim of the Appellant and as to how the disallowance carried out by the Appellant amounting to Rs. 50,000/- was not reasonable. 3.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have appreciated mat once it is undisputed that the Appellant had sufficient interest free funds to make the investments and that the Appellant had not incurred any expense to earn exempt income, disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its agents are not allowable expenditure. 11.10 We do not see any iota of merit in such plea. The discounts given to the customers/ultimate consumer has direct bearing on the potential turnover of the company. It is well settled that the test of the commercial expediency cannot be reduced to the shape of a ritualistic formula nor can it be put in a water tight compartment. It is trite that the Revenue authorities have to place themselves in the position of a business and find out whether expenses incurred can be said to have been laid out for the purposes of businessman. The commercial expediency and prudence are inseparable. If the expenditure is incurred to facilitate carrying on of business of the assessee and is supported by the comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds allowed." 6.2. In the light of the view taken in the earlier assessment years, the disallowance of discount offered to Doctors is uncalled for. 7. Ground No.2 of the assessee's appeal is allowed. 8. Ground No.3 of the assessee's appeal concerns disallowance of administrative expenditure amounting to Rs. 7,24,182/- calculated in terms of Rule 8D(2)(iii) r.w.s. 14A of the Act. 8.1 When the matter was called for hearing, the learned Senior Counsel for the assessee sought limited direction for computation of disallowance of administrative expenses only with reference to investments which have actually yielded exempt income in tune with ACIT vs. Vireet Investments Ltd. 165 ITD 27 (SB). 8.2 Identical issue has been dealt with by the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o these investments which have actually yielded exempt income instead of gross investments. 9. Ground No.3 of the assessee's appeal is partly allowed. 10. In the result, appeal filed by assessee is partly allowed. ITA No. 2026/Ahd/2017-AY-2013-14 (Revenue's appeal) 11. The grounds of appeal raised by the assessee read as under:- "1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in allowing the interest of Rs. 14,98,46,433/- by treating it as business expenditure ignoring the fact on record that the transaction between Aditya Medisales Ltd. & M/s. Sun Pharmaceutical Industries Ltd. is not a transaction between 2 unrelated parties as the controlling person in both the company is same i.e. Mr. Dilip Shanghvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands concluded in favour of the assessee by the jurisdictional High Court. The issue having been already examined in the earlier years, we do not see any reason to look afresh. Therefore, we decline to interfere with the order of the CIT(A) in this regard. Consequently, Ground No.1 of the Revenue's appeal is dismissed." 12.2 In parity with the view already taken in the identical circumstances, we find no error in decision rendered by the CIT(A). We therefore decline to interfere. 13. Ground No.1 of Revneue's appeal is dismissed. 14. Ground No.2 of the Revenue's appeal concerns partial reversal of disallowance under s.14A of the Act with reference to interest expenditure disallowed under Rule 8D amounting to Rs. 83,33,086/-. 15. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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