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TMI Blog2019 (7) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in the case of CIT vs. Max India Ltd [ 2017 (3) TMI 1254 - PUNJAB AND HARYANA HIGH COURT] the presumption in favour of the assessee that the advances were only out of this surplus funds and such a presumption does not stand reverted, and consequently the issue is held in favour of the assessee. Addition u/s 14 A and Rule 8D - recording of satisfaction - HELD THAT:- AO failed to record his satisfaction recording the correctness of the claim made by the assessee in relation to expenditure incurred to earn exempt income and therefore, we find it difficult to sustain any disallowance whatsoever on this aspect. We, therefore, while accepting the contention of the assessee and respectfully following the decision of the Hon ble Delhi High Court in the case of Vedanta [ 2019 (1) TMI 476 - DELHI HIGH COURT] delete the addition made u/s 14 A and Rule 8D. Deduction u/s 24 - disallowance of prior period expenses - HELD THAT:- All these issues are covered by the order dated 12/02/2019 for the assessment year 2011-12 in assessee s own case [ 2019 (4) TMI 1373 - ITAT DELHI] Addition on account of late deposit of PF - HELD THAT:- Ld. CIT(A) deleted the same by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 in respect of the assessment year 2010-11, quashing the assessment and preliminary ground of jurisdictional aspect and while holding that the directions issued by the ACIT for special audit under section 142 (2A) of the Income tax Act, 1961 (in short the Act ) was illegal and thus the assessments were made was barred by limitation. They, therefore, submitted that a co-ordinate Bench of this Tribunal decided the appeal on similar facts for the assessment year 2011-12 by order dated 12/02/2019 and such an order is relevant for the purpose of disposing of these appeals. We, therefore, wherever necessary will take guidance from the order dated 12/02/2019 in assessee s own case for assessment year 2011-12. 4. Briefly stated relevant facts are that the assessee is deriving income from the business of construction and development of real estate projects; that the assessee has a diverse vide product mix comprising residential, commercial, IT parks, retails, amusement parks and hotels; that the core business of the assessee is real estate; that the assessee had many real estate projects all over India ranging from residential to commercial, retail, hospitality, entert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted business profit and not capital gain as the intention of the company was not to earning dividend but again profit by sale of shares of those companies. 8. Ld. CIT(A), on these facts, noticing his predecessors order dated 16/08/2013 for the assessment year 2009-10 in assessee s own case, felt that the said order for the assessment year 2009-10 is self explanatory, exhaustive on the basis of modus operandi adopted by the assessee, and to follow the rule of judicial consistency, he found it difficult to take a different view and, therefore, upheld the addition. 9. Ld. AR submitted that this issue is no longer res integra and vide paragraph No. 15 of the order dated 12/02/2019 in ITA No. 6585/Del/2015 for assessment year 2011-12, a co-ordinate Bench of this Tribunal held the issue in favour of the assessee. A copy of the order is produced before us and we have gone through the same. Vide paragraph No. 15, it was held that,- 15. Further the guide line issued by the CBDT, clearly lays down that, what has to be seen is, firstly, the objective of acquiring the shares, that is, whether it has been treated as investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. While following the assessment orders for the assessment years 2009-10 and 2010-11, learned Assessing Officer brought the proportionate interest to tax. 13. It is submitted that this issue also is no longer res integra and is covered by the order in ITA No. 6585/Del/2015 for the assessment year 2011-12. On a perusal of the order, we find that the Tribunal dealt with this issue vide paragraph numbers 16-21 of the order, and vide paragraph No. 21 held that,- 21. Further, if at all such disallowance is being made on notional and hypothetical basis treating share application money as advance or interest free loan, then AO also needs to take into consideration, whether assessee company has sufficient surplus fund or not; and if surplus fund exceeded the amount of advance, then again, no notional interest or disallowance can be made. Here it is undisputed fact that assessee company has more than ₹ 9281.87 crores of accumulated reserves and during the year itself its reserves have increased by ₹ 1379 crores and amount of share application money advance was only ₹ 245.34 crores. Thus, in such circumstances, presumption is always in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, Ld. CIT(A) also upheld the same. 16. It is brought to our notice that this issue is covered by the order dated 12/02/2019 for the assessment year 2011- 12, vide paragraph numbers 27-31 and vide paragraph numbers 30 and 31, a co-ordinate Bench of this Tribunal held as follows:- 27. In ground No. 6 to 7.2 assessee has challenged the disallowance of ₹ 1,32,17,15,364/- as interest imputed by AO on interest free loan/ advance to sister concerns. The facts in brief are that assessee company has given advances during the year to subsidiaries/joint venture/associates for sum of ₹ 233.01 crores. The outstanding balance as on 31.3.2001 aggregated to ₹ 986,67,87,694/-, the details of outstanding balances have been incorporated at page 11 of the assessment order. AO has held that this issue has been examined in detail during the assessment proceedings for the assessment year 2009-10 and 2011-12, wherein it has been held that interest paid by the assessee on this borrowed fund should be disallowed @ 14%. Following the same precedent AO has calculated the disallowance of interest on borrowed capital funds to ₹ 1,32, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., reported in 398 ITR 209 (P H). Accordingly, such a disallowance is deleted on this ground also. 17. Revenue does not dispute the applicability of these findings for the years under consideration also and in view of the above finding of the Tribunal, we hold that in the absence of any nexus proved by the learned Assessing Officer that only borrowed funds were advanced, a presumption has to be drawn that such advances were provided out of interest free funds, in view of the decision of the Hon ble Punjab and Haryana High Court in the case of CIT vs. Max India Ltd (supra). Hence, ground No. 3 of the appeals of the assessee for the assessment year 2007-08 and 2012-13 and ground No. 2 for the appeal for the assessment year 2013-14 are answered in favour of the assessee and the addition stands deleted. 18. Ld. AR reported that grounds No. 4 and 6 in ITA No. 1906/Del/2017 for assessment year 2012-13 are not pressed. He argued ground No. 5 relating to the disallowance of expenses to the tune of ₹ 4,17,05,381/- sustained by the Ld. CIT(A) under section 14 A r.w.Rule 8D of Income Tax Rules, 1962 ( the Rules ) out of the total disallowance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. Now coming to the appeals of the Revenue for the assessment years 2012-13 and 2013-14, we find that 3 issues are common for both the years and those related to the addition out of deduction under section 24 of the Act, disallowance of prior period expenses and disallowance of expenses under section 14A of the Act read with Rule 8D of the Rules and all these issues are covered by the order dated 12/02/2019 for the assessment year 2011-12 in assessee s own case in ITA No. 6585/Del/2015. In respect of the assessment year 2013-14, an additional issue is raised by the Revenue relating to the addition of ₹ 4,85,65,343/-on account of late payment of PF payable. We shall deal with these aspects hereunder. 24. In respect of the addition out of deduction under section 24 of the Act, the Tribunal dealt with this issue vide paragraph numbers 32-35, and vide paragraph No. 35 thereof it was held that,- 35. After hearing both the parties and on perusal of the impugned order it is seen that, nowhere it has been denied that the rental income by the assessee is from leasing of the premises and such rental income has been declared under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receding assessment year. He also drew our attention to the relevant bills given at page 4 of the additional paperbook -V to show that most of the bills related to consultancy charges and travelling expenses of the Directors which was submitted and received by the assessee during the year and therefore, based on these bills assessee has claimed expenditure. Accordingly, when bills have been received during the year then we do not find any reason as to why such expenditure is to be disallowed and hence same is deleted. 26. On the aspect of the addition under section 14A of the Act r.w.Rule 8D of the Rules, vide paragraph numbers 18 to 22 (supra), we have dealt with this issue and reached a conclusion that any addition under section 14A of the Act read with Rule 8D of the Rules cannot be sustained in the absence of the learned Assessing Officer recording satisfaction/dissatisfaction in relation to the amount that was voluntarily disallowed by the assessee. 27. In view of the observation taken by the Tribunal in assessee s own case for the assessment year 2011-12 which is applicable to the facts of the case for the assessment years 2012-13 and 2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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