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TMI Blog2020 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 1,320/-. Addition of sum paid to an associate concerns M/s Hero Global Design Ltd - AO held that since M/s Hero Global Design Ltd. is deriving income only from the assessee and does not have business expertise in providing engineering services, the expenditure claimed is disallowed - HELD THAT:- The copies of the invoices submitted by the HGD Ltd. have been examined. It is an undeniable fact that HGD Ltd. has provided services to the assessee, the design engineers of HGD Ltd. are regularly available within in the shop floor of the assessee company, they have been working for the last ten years with the assessee and getting paid regularly against their services. In view of this, we decline to interfere with the order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64/- to M/s Hero Global Design, without giving any finding in his appellate order whether the same expenses were incurred wholly and exclusively for the purpose of business. 3. Brief facts relevant to the case are that the assessee invested ₹ 79.19 crores in the equity shares and mutual funds and received dividend income of ₹ 1,320/- during the year under consideration. The Assessing Officer has disallowed an amount of ₹ 2.74 crores u/s 14A of the Income Tax Act, 1961. The ld. CIT (A) has directed the Assessing Officer to rework the disallowance u/s 14A excluding the investments made in the group concerns and in the debt oriented mutual funds. 4. Aggrieved the revenue fi led appeal before us. 5. The issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in turn referred to two earlier decisions of the same Court in CIT v. Hero Cycles Ltd. [2010] 323 ITR 518/189 Taxman 50 and CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204. The second was of the Gujarat High Court in CIT v. Corrtech Energy (P.) Ltd. [2014] 223 Taxman 130/45 taxmann.com 116 and the third of the Allahabad High Court in CIT v. Shivam Motors (P.) Ltd. [2015] 230 Taxman 63/55 taxmann.com 262. These three decisions reiterated the position that when an assessee had not earned any taxable income in the relevant AY in question corresponding expenditure could not be worked out for disallowance. 6. Hence, following the established judicial pronouncement, we hereby direct that the disallowance be restricted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreover, M/s Hero Global Design Ltd. also renders assistance in costing. 10. The ld. CIT (A) held that it is a fact that M/s Hero Global Design Ltd is located in the same premises as assessee and is a lessee of the assessee. It was doing the work of only the assessee and is running in losses mainly because of the interest and software cost/amortization/depreciation. The finance has also been provided by the assessee. There is no written agreement between the assessee and M/s Hero Global Design Ltd and the nature of services claimed are also of very basic nature as the basic designs are received from clients and the product is to be manufactured as per the said designs. The nature of services can at best be called a bridge with the ancill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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