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TMI Blog2020 (2) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... rantee royalty claim pertaining to acquisition of music rights in the year of actual payment going by the music industry market trends. We conclude in this backdrop of facts that the Revenue s latter argument also carries no substance. This issue is accordingly decided in assessee s favour. Disallowance of advertisement and sales promotion, consultancy, ad hoc head(s) - recording expenditure disallowance(s) from 10% made by the Assessing Officer to 2% in the lower appellate proceedings - HELD THAT:- We find no substance in Revenue s instant argument seeking to revive the impugned ad hoc disallowance under four head(s). Apart from the fact that the earlier co-ordinate bench s order(s) have already upheld the CIT(A) s identical action, we note that the assessing authority itself is very fair in estimating the impugned disallowance @ 10% meaning thereby that assessee s claim(s) stand accepted in principle @ 90%. We therefore adopt judicial consistency to affirm CIT(A) s findings restricting all four disallowance(s) items from 10% to 2% only. The Revenue as well as assessee s corresponding grounds fail therefore as a necessary corollary. Nature of expenses - training and development ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obal Securities Ltd. [ 2018 (7) TMI 1425 - CALCUTTA HIGH COURT] holds that the impugned disallowance does not come into play in case of absence of exempt income. Coming to latter aspect of interest free loans to sister concern, we notice that assessee had no interest free funds in the nature of share capital, reserves and surplus of 60.26 crores as against interest free loans of 24.17 crores; respectively. The CIT(A) has followed hon ble s Bombay high court s decision in CIT vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] that the necessary presumption in such an instance is of utilization of interest free funds only. We accordingly affirm the CIT(A) s findings under challenge Addition u/s 14A - HELD THAT:- Rule 8D carries prospective effect only from assessment year 2008-09. We notice that the CIT(A) has restricted the impugned disallowance to 1% of the exempt income only; coming to 23,230/- in his lower appellate order under challenge. The assessee s share capital and reserves against the exempt investments read figures 84.13 crores and 59.99 cores; respectively. The CIT(A) has followed a catena of case law Income Tax Officer Ward-12(1) Kolkata vs. Nup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember And Dr. A.L. Saini, Accountant Member For the Assessee : Shri J.P. Khetan, Senior Advocate And Shri P. Jhunjhunwala, Advocate For the Revenue : Shri Ram Bilash Meena, CIT-DR And Shri Dhrubajyoti Roy, JCIT-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- The instant batch of seven cases pertains to a single assessee M/s Saregama India Ltd. First two assessment year(s) 2003-04 & 2004-05 involve assessee's and Revenue's cross appeal(s) ITA No.309 and 470/Kol/2017 and ITA Nos. 310 & 471/Kol/2017. Assessment year(s) 2005-06 and 2006-07 contain latter appeal(s) ITA No.s 472 & 473/Kol/2017 and assessment year 2010-11 includes taxpayer's appeal ITA No.312/Kol/2017, arising against the Commissioner of Income Tax (Appeals)-22 Kolkata's separate orders; dated 07.12.2016 (former two), 08.12.2016 (in 3rd and 4th) and 09.12.2016 (in last assessment year) passed in case No.s.155/CIT(A)-22/Kol/03-04/15-16, 157/CIT(A)-22/Kol/04-05/15-16, 156/CIT(A)-22/Kol/10-11/15-16, 160/CIT(A)- 22/Kol/01-02/15-16 & 163/CIT(A)-22/06-07/15-16,assessment year-wise; respectively relevant proceedings in all cases are u/s 143(3) of the Income Tax Act, 1961; in short 'the Act'. Learned Shri J.P.Khetan, Senior Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 34,50,15,567/- have been deducted to arrive at the loss as returned by the assessee. The assessee was asked to file details with respect to these items and In course of hearing the assessee submitted that "out of total deducted amount of ₹ 34,50,15,567/-, ₹ 19,62,00,00/- is minimum guaranteed royalty". The assessee was asked to submit copy of agreement along with names and addresses of the parties in respect of minimum guaranteed royalty and the same was submitted its examination reveal that the assessee has acquired the absolute right of production and sale of cassettes, compact disc etc. its nature appeared to be capital in nature because this payment is one time contractual expenditure Incurred for the purpose of acquiring the absolute/monopoly right. As the right with respect to production of music cassettes/CD is a capital asset hence the assessee was asked to explain as to why the same should not be disallowed. The assessee submitted reply on 17.02.2006 - "As your kind self is aware, that the company is engaged inter-alia in the business of manufacture and sale of audio cassettes, CDs etc. and also in production of films/TV serials etc. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984-85 [reported in 48 ITO 145, 156, 157 (Ca I)] wherein the Hon'ble ITAT has held that "Considering the nature of the assessee's business, music must be treated as its raw material. The royalty payment is therefore is directly related to the raw material. It is for the purpose of obtaining the raw material..... In the present case, applying the test laid down in the aforesaid decision, it is found that the assessee has to obtain music for the purpose of its business. The assessee's business itself consists of purchasing of music, reproducing the same in gramophone record and music cassette and selling them to the public. The Hon'ble Supreme Court itself in the aforesaid decision has laid down that the question of whether the particular expenditure is capital or revenue must be decided in large context of business necessity or expediency. Since, the assessee's business itself constitute of reproducing and selling recorded music, the royalty payment for the purchase of the original music, which forms the raw material, is an expenditure incurred out of business necessity such as a sugar manufacture require a sugarcane as its raw material. The payment is so re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no clause of such extinction of right. The Hon'ble Supreme Court in the case of Mewar Sugar Mills Ltd. Vs CIT reported in 87 ITR 400 held that payment for obtaining monopoly/absolute right is a capital expenditure. In the instant case, the ratio of' judgment is applicable because the persons from where/whom the right has been purchased cannot resale the right over it to other persons and for It M.G. Royalty for the production of fixed number of assets and royalty for subsequent number are payable/paid. The assessee in its explanation also took shelter to the judgment of the Hon'ble jurisdictional ITAT, Kolkata (ITA No.1528/Cal/89) and in assessee's own case for A. Y .1984-85 wherein it has been held that such expenditure on account of royalty is in the nature of revenue expenditure and accordingly it is allowable as deduction while computing the total income of the company under the provisions of the Act but this judgment is distinguished in as that it relates to royalty paid and not for M.G. Royalty paid for the acquisition of monopoly right. The Hon'ble Supreme Court in the case of J.K. Cotton Manufactures Ltd. VS. CIT 101 ITR 221 to determine the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Ltd. vs. CIT [-1983]143 ITR 822 (Guj.). The above argument of the assessee is not considered to be tenable with following observations: 1. The assessee has accepted that MG royalty is paid for acquiring absolute right for the reproduction of the music cassette/Cc on a particular film as per agreement with various parties. Hence, the benefit coming to the assessee out of Investment/expenditure is a capital asset. 2. The observation/decision of the Hon'ble ITAT in the assessee's case referred above is distinguished because in that case the Issue considered was royalty as a whole but In the Instant case, it is, with respect to minimum guaranteed royalty without which the assessee cannot proceed to produce music/cassettes/CD etc. and this right cannot be withdrawn. The general royalty is related to expenses made after the production of specified number as mentioned in the agreement. The general royalty may be considered of revenue nature because it is paid at a specified rate on sales which means that the amount of royalty is variable with quantum of sale but in this case it is fixed and contractual and the company is competent to produce music only after entering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to ₹ 19,62,00,000/- as revenue expenditure to be allowed under section 37(1) of the Act. In its return of Income for the year under appeal while arriving at Its income chargeable to tax under the provision of the Act other than section 115JB, the appellant added back the entire amount of ₹ 33,72,15,567/- debited in its profit & loss A/c. under the account-head 'royalty' and claimed deduction of an aggregate amount of ₹ 34,50,15,567/- which related to royalty accrued during the year. The said amount included MG royalty of ₹ 19,62,00,000/- accrued during the year under appeal. A copy of the computation annexed with the return (Pg. 115). On specific query raised by the Assessing Officer during the course of the assessment proceedings, the appellant duly furnished copies of agreements of MG Royalty and explained its contention towards allow ability of such MG royalty as revenue expenditure while computing its income chargeable to tax. The Assessing Officer however rejected the contention of the appellant by holding that the expenditure Incurred towards MG Royalty Is a capital expenditure as the same has been incurred to acquire the absolute right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has to obtain music for the purpose of its business. The assessee's business itself consists of purchasing of music, reproducing the same in gramophone records and music cassettes and selling them to the public. The Hon'ble Supreme Court itself in the aforesaid decision has laid down that the question whether a particular expenditure is capital or revenue must be decided in the larger context of business necessity or expediency. Since the assessee's business itself consists of reproducing and selling recorded music, the royalty payment for the purchase of the original music, which forms the raw material, is an expenditure incurred out of business necessity just as a sugar manufacturer would require sugarcane as its raw material. The payment is so related to the conduct of the assessee's business that it must be regarded as in Integral part of the profit earning process and not for acquisition of any asset or any right of a permanent character." The learned CIT (Appeals) attention is drawn to page 13 (Pg. 138) of the aforesaid Hon'ble Tribunal's order where the agreement based on which the royalty paid has been stated at Paragraph 11. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance in this regard is placed on the decisions of the Hon'ble Supreme Court in Berger Paints India Ltd. vs. CIT [266 ITR 99 (SC.)], CIT vs. Shivsagar Estate [257 ITR 59 (SC.)] and CIT vs. Narendra Doshi [254 ITR 606 (SC.)] wherein it has been held that if the Revenue has not challenged the correctness of the law and has accepted it, then it is not open to the Revenue to challenge its correctness without just cause. On perusal of the order of the Hon'ble Tribunal, it is clear that music is a raw material of the assessee company and purchasing of music (raw material) is made to reproduce the same In music cassettes and CDs for selling them to the public. The Hon'ble Tribunal has also compared the situation with a sugar manufacturer who would require sugarcane as its raw material. Since purchase of sugarcane for the purpose of manufacture of sugar (i.e. for the production) Is a revenue expenditure, purchase of music for the purpose of reproducing the same in the music cassettes and CDs would also be revenue expenditure. The learned CIT (Appeals) would appreciate that by whatever method the payment is made (i.e. in the form of MG Royalty till a specified sale and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee by way of written agreements. While deciding the issue, the Hon'ble Mumbai Tribunal had referred to the decision of the Hon'ble Supreme Court in R.B.Seth Mulchand Suganchand vs. CIT [86 ITR 647 (SC.)] where the case was that of n1iping leases where minerals are part of the land and have to be won, extracted and brought to the surface, expenditure for acquiring the right over or in the land to win the minerals would be of capital nature. It was also held that however, the mineral has already been gotten and is on the surface, expenditure incurred for obtaining the right to acquire the raw materials i.e. would be revenue expenditure. The Hon'ble Mumbai Tribunal held that in the case of production of audio cassettes the master cassette represents the original sound music is like the mineral which has already been gotten on the surface. The assessee had incurred expenditure for obtaining the right to acquire this music i.e. raw material and therefore applying the principle laid down by the Supreme Court the said expenditure was held to be revenue in nature. Reference in this regard is also made to the decision of the Hon'ble Delhi Tribunal In Super ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Hon'ble Supreme Court which laid down the principle apply on all fours to the facts of the case and following the said decisions the learned CIT(Appeals) is requested to delete the disallowance of ₹ 19,62,00,000/-, representing MG Royalty paid for the purpose of purchasing raw material i.e. music." 06. DECISION: 1. I have carefully examined the grounds 1(a) to 1(c) which arise on account of the action of the Ld AO in making a disallowance of ₹ 19,62,000/- claimed by the appellant-company as Minimum Guarantee Royalty (M G Royalty). The Ld AO has treated the claimed expenditure as partaking the nature of Capital Expenditure, interalia on account of the following reasons: a. The assessee-company has accepted that MG royalty is paid for acquiring absolute right for the reproduction of the music cassette/CD on a particular film as per agreement with various parties, and therefore the benefit coming to the assessee out of investment/expenditure is a capital asset. b. The observation/decision of the Hon'ble ITAT in the assessee's case for the A.Y 1984-85 [reported in 48 ITD 145, 156, 157 (Cal)] is distinguished because in that case the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducers is enclosed herewith (Pgs.1 - 114). c. For the purpose of its accounts, the appellant consistently treats the MG royalty paid during the year in terms of the said agreements as deferred revenue expenditure and amortizes the same over a few years. In computing its income under the provisions of the Income Tax Act, the appellant had claimed expenditure incurred on account of MG royalty amounting to ₹ 19,62,00,000/- as revenue expenditure to be allowed under section 37(1) of the Act. In its return of income for the year under appeal while arriving at its income chargeable to tax under the provision of the Act other than section 115JB, the appellant added back the entire amount of ₹ 33,72,15,567/- debited in its profit & loss A/c. under the account-head 'royalty' and claimed deduction of an aggregate amount of ₹ 34,50,15,567/- which related to royalty accrued during the year. The said amount included MG royalty of ₹ 19,62,00,000/- accrued during the year under appeal. A copy of the computation annexed with the return (Pg. 115). d. On specific query raised by the Assessing Officer during the course of the assessment proceedings, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's business, music must be treated as its raw-material. The royalty payment is therefore directly related to the raw-material. It Is for the purpose of obtaining the raw material. In the present case, applying the test laid down in the aforesaid decision, it is found that the assessee has to obtain music for the purpose of its business. The assessee's business itself consists of purchasing of music, reproducing the same in gramophone records and music cassettes and selling them to the public. The Hon'ble Supreme Court itself in the aforesaid decision has laid down that the question whether a particular expenditure is capital or revenue must be decided in the larger context of business necessity or expediency. Since the assessee's business itself consists of reproducing and selling recorded music, the royalty payment for the purchase of the original music, which forms the raw material, is an expenditure incurred out of business necessity just as a sugar manufacturer would require sugarcane as its raw material. The payment is so related to the conduct of the assessee's business that it must be regarded as in integral part of the profit earning process and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejection of its reference application under section 256(2) of the Act by the Hon'ble Calcutta High Court. It is submitted that as the Department has accepted the dedsion of the Hon'ble Tribunal, it is not open to the Department to agitate on the same issue again without just cause. Reliance in this regard is placed on the decisions of the Hon'ble Supreme Court in Berger Paints India Ltd. vs. CIT [266 ITR 99 (SC.)], CIT vs. Shivsagar Estate [257 ITR 59 (SC.)] and CIT vs. Narendra Doshi [254 ITR 606 (SC.)] wherein it has been held that if the Revenue has not challenged the correctness of the law and has accepted it, then it is not open to the Revenue to challenge its correctness without just cause. j. On perusal of the order of the Hon'ble Tribunal, it is clear that music is a raw material of the assessee company and purchasing of music (raw material) is made to reproduce the same in music cassettes and CDs for selling them to the public. The Hon'ble Tribunal has also compared the situation with a sugar manufacturer who would require sugarcane as its raw material. Since purchase of sugarcane for the purpose of manufacture of sugar (i.e. for the production) is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kindly noted that in the aforesaid case before the Hon'ble Mumbai Tribunal, the assessee was manufacturer of audio cassettes and CDs and acquired sound tracks commonly known as "audio rights" from producers and for consideration the copyrights owned by the film producers were assigned to the assessee by way of written agreements. While deciding the issue, the Hon'ble Mumbai Tribunal had referred to the decision of the Hon'ble Supreme Court in R.B.Seth Mulchand Suganchand vs. CIT [86 ITR 647 (SC.)] where the case was that of mining leases where minerals are part of the land and have to be won, extracted and brought to the surface, expenditure for acquiring the right over or in the land to win the minerals would be of capital nature. It was also held that however, the mineral has already been gotten and is on the surface, expenditure incurred for obtaining the right to acquire the raw materials i.e. would be revenue expenditure. The Hon'ble Mumbai Tribunal held that in the case of production of audio cassettes the master cassette represents the original sound music is like the mineral which has already been gotten on the surface. The assessee had incurred ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f lump sum down secures supply of the raw material for a period extending over several years. o. It is submitted that the aforesaid decisions of the Hon'ble Jurisdiction Tribunal in the appellant's own case, Hon'ble Mumbai & Delhi Tribunal which are directly on the issue and the decisions of the Hon'ble Supreme Court which laid down the principle apply on all fours to the facts of the case and following the said decisions the learned CIT(Appeals) is requested to delete the disallowance of ₹ 19,62,00,000/-, representing MG Royalty paid for the purpose of purchasing raw material i.e. music. 3. After carefully perusing the action of the Ld.AO and the submissions of the Ld. A.Rs, I find that the identical issue has travelled to the Hon'ble ITAT on different occasions. The matter has also been decided in favour of the appellant-company for the A.Y 2001-02 by the First Appellate Authority in Appeal No 902/CIT(A)- 1/C- 3/2014-15 dated 11th March, 2015. For the A.V 2002-03, the matter had travelled to the ITAT. The Hon'ble ITAT-"D"-Bench in their decision in ITA No.2236 (Kol) / 2005 for the A.Y 2002-03 dated 22.06.2007 have adjudicated the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f in the aforesaid decision has laid down that the question whether a particular expenditure is capital or revenue must be decided in the larger context of business necessity or expediency. Since the assessee's business itself consists of reproducing and selling recorded music, the royalty payment for the purchase of the original music, which forms the raw material, is an expenditure incurred out of business necessity just as a sugar manufacturer would require sugarcane as its raw material. The payment is so related to the conduct of the assessee's business that it must be regarded as in integral part of the profit earning process and not for acquisition of any asset or any right of a permanent character. "(emphasis ours) We are of the considered view that the aforesaid principle emerged from the said order of the Hon'ble tribunal in the assessee's own case would also hold good in the case of the assessee for M G Royalty paid for purchase of music, i.e. raw material In the year under consideration. In this respect we must point out that expenditure Incurred for purchase of raw material is always revenue expenditure irrespective of mode of payment viz. minim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the expenditure towards Minimum Guarantee. Royalty has been held to be revenue expenditure. Accordingly, respectfully following this judgment [also affirmed by the Hon'ble High Court for an Identical Issue for the A.Y 1984-85, as mentioned in the order of the Hon'ble ITAT], it is to be said that the action of the Ld AO In disallowing an amount of ₹ 19,62,000/- claimed by the appellant-company as Minimum Guarantee Royalty CM G Royalty, cannot be sustained, and is ordered to be deleted." 5. Learned CIT-DR vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in deleting the impugned minimum guarantee royalty relating to acquisition of music rights as revenue expenditure. Mr. Meena is very fair in not disputing the clinching fact that the instant issue is no more res integra since the assessee has succeeded qua the same up to hon'ble jurisdictional high court in earlier assessment years (supra). He seeks to pin-point an exception in assessee's impugned minimum guaranty royalty claim based on per cassette-wise payment. His case is that since it has undertaken to pay the impugned royalty based on cassette sales in addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sales promotion, consultancy, ad hoc head(s) and recording expenditure disallowance(s) from 10% made by the Assessing Officer to 2% in the lower appellate proceedings. We notice herein as well that all these issues are also no more res integra since this tribunal's coordinate bench's order (supra) in earlier assessment year(s) has affirmed 2% disallowance only. Learned CIT-DR vehemently contended herein as well that the Assessing Officer had rightly invoked the impugned disallowance @ 10% since the assessee had made cash payments thereof to "... other profits. His case therefore is that the Assessing Officer had rightly noted the above twin discrepancies in all these four heads to estimate 10% disallowance therein. We find no substance in Revenue's instant argument seeking to revive the impugned ad hoc disallowance under four head(s). Apart from the fact that the earlier co-ordinate bench's order(s) (supra) have already upheld the CIT(A)'s identical action, we note that the assessing authority itself is very fair in estimating the impugned disallowance @ 10% meaning thereby that assessee's claim(s) stand accepted in principle @ 90%. We therefore adopt judicial consistency to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant had given a property on rent to Sprint RPG for last few years. The appellant "had all along offered the said rental income to tax in respective years. During the course of assessment proceedings, on specific query raised by the assessing officer, the appellant had submitted that rent amounting to ₹ 7,50,000 was booked during the year on account of Sprint RPG. However, pursuant to the downward rate revision during the year in respect of the rent for earlier period, there was an adjustment/reversal of ₹ 12,50,000. Accordingly, a net amount of Rs.(-) 500,000/- (income for the year ₹ 7,50,000/- less ₹ 12,50,000/- adjustment/ reversal during the year) was considered while computing the total rent chargeable to tax for the year. Copy of the letters dated 13 November, 2006 and 12 September, 2006 filed during the course of assessment proceedings is marked as Annexure-3 & 7 (refer Pg 210-219 and Pg 245-248 of the WS), respectively. The Assessing Officer, without appreciating the facts of the case, has inflicted an addition of ₹ 990,000/- which has no basis whatsoever and is liable to be deleted summarily. By making the above adjustment, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven cognizance to the submission on grounds that the appellant was unable to produce a copy of the computation and treatment given to such rent paid by the sister concern. 2. On the other hand, during the appeal stage, the appellant-company has pleaded as under: a. The appellant had given a property on rent to Sprint RPG for last few years. The appellant had all along offered the said rental income to tax in respective years. b. During the course of assessment proceedings, on specific query raised by the assessing officer, the appellant had submitted that rent amounting to ₹ 7,50,000 was booked during the year on account of Sprint RPG. However, pursuant to the downward rate revision during the year in respect of the rent for earlier period, there was an adjustment/reversal of ₹ 12,50,000. Accordingly, a net amount of Rs.(-) 500,000/- (income for the year ₹ 7,50,000/- less ₹ 12,50,000/- adjustment/ reversal during the year) was considered while computing the total rent chargeable to tax for the year. Copy of the letters dated 13 November, 2006 and 12 September, 2006 filed during the course of assessment proceedings is marked as Annexure-3 & 7 (refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 7,50,000 was booked by the appellant-company during the year on account of M/s Sprint RPG, a sister-concern which was a tenant with the assessee. It has been submitted that pursuant to the downward rate revision during the year in respect of the rent for earlier period, there was an adjustment/reversal of ₹ 12,50,000, as is apparent from the rental agreements. Therefore, according to the appellant, a net amount of Rs. (-) 500,000/- (income for the year ₹ 7,50,000/- less ₹ 12,50,000/- adjustment/ reversal during the year) was considered by the appellant while computing the total rent chargeable to tax for the year. Be that the case, the deductions available for house property income have been specified in the Income Tax act under Sec 24, and the Ld AO has quite correctly, in my considered opinion allowed the necessary deductions and disallowed the balance amount of ₹ 9,90,000/-. In summary, the addition made by the Ld. AO stands confirmed, and the ground is decided against the appellant-assessee. The ground of appeal stands dismissed." 12. We have given our thoughtful consideration qua above stated sole issue of rent amount addition. Both the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure on share investments and interest free loans given to sister concern. It has come on record that the assessee has not derived any exempt income in the impugned assessment year. Hon'ble jurisdictional high court's decision in ITAT 100 of 2014 GA No. 2122 of 2014 Commissioner of Income Tax vs. M/s Ashika Global Securities Ltd. dated 1106.2018 holds that the impugned disallowance does not come into play in case of absence of exempt income. Coming to latter aspect of interest free loans to sister concern, we notice that assessee had no interest free funds in the nature of share capital, reserves and surplus of ₹60.26 crores as against interest free loans of ₹24.17 crores; respectively. The CIT(A) has followed hon'ble's Bombay high court's decision in CIT vs. Reliance Utilities and Power Ltd. in (2009) 313 ITR 340 (Bom) that the necessary presumption in such an instance is of utilization of interest free funds only. We accordingly affirm the CIT(A)'s findings under challenge. This Revenue's appeal ITA No. 472/Kol/2017 is dismissed. Assessment Year 2006-07:- 16. This fourth assessment year 2006-07 involves Revenue's appeal in ITA No.473/Kol/2017. Its fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal's co-ordinate bench's decision in REI Agro Ltd. vs. DCIT (2013) 144 ITD 141 (Kol) as upheld in hon'ble jurisdictional high court. Learned CIT-DR fails to rebuttal the crucial fact that lower authorities have taken into account the assessee's non exempt income yielding investment as well. The fact also remains that we are dealing with an indirect head of expenditure wherein some kind of proportional location on estimate basis is always involved. We therefore deem it appropriate that a lump sum disallowance of ₹8 lakh including suo motu figure of ₹ 7 lakh would be just and proper with a rider that same shall not be treated as a precedent in any other assessment year. The assessee gets part relief. Necessary computation to follow as per law. 20. Lastly comes assessee's latter substantive ground that the lower authorities have erred in law and on fact in disallowance its leave encashment provision of ₹13,52,190/- u/s 43B(f) for want of actual payment. Both parties inform us during the course of hearing that hon'ble jurisdictional high court's decision in Exide Industries Ltd. vs. Union of India (2007) 292 ITR 470 (Cal) quashing the statutory provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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