9911796707
TMI Blog2019 (11) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/S. CHETTINAD LOGISTICS PVT. LTD. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] have expressed a clear disagreement with CBDT Circular and held that where there is no exempt income in relevant year there cannot be a disallowance of expenditure under S. 14A of the Act. Similar proposition has been laid down in the case or Corrtech Energy (P.) Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] . Hence, in conformity with the judicial precedents, we find substantial merit in the conclusion drawn by the CIT(A) for limiting the disallowance to the extent of exempt income. Hence, we decline to interfere. Nature of expenditure - professional and legal fees - revenue or capital expenditure - HELD THAT:- The expenditure claimed by the assessee bears the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of professional and legal fees." 5. As per Ground No. 1, the Revenue has challenged the action of the CIT(A) for granting relief out of disallowance of expenses under S. 14A read with Rule 8D of the Income Tax Rules. 6. We have heard the rival submission on the issue. It was pointed out on behalf of the assessee that the assessee has earned exempt income only to the extent of ₹ 7,38,000/- during the year under review. It is the case of the assessee that disallowance under S. 14A of the Act has been thus rightly restricted to the extent of exempt income. We find merit in the aforesaid plea of the assessee. Various Courts have held that Section 14A of the Act disallowance cannot be kicked when there was no exempt income ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Revenue is dismissed. 8. As per Ground No. 2, the Revenue has challenged the action of the CIT(A) for considering the amount of ₹ 39,71,468/- revenue expenditure on account of professional and legal fees. 9. The CIT(A) has granted relief to the assessee by observing as under: "4.3. I have carefully considered the Assessment Order and submission filed by the Appellant. The Assessing Officer has contended that the Appellant has made payment for getting ROCP Report to note the market share of the Company in ROCP Product which can help Appellant to make future business strategy hence same is capital expenditure. On such basis, the Assessing Officer has treated such the expenditure as capital expenditure. On other hand the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market share of Company in ROCP Product and same will help Appellant to get update for existing market situation of existing products hence such expenditure does not give any enduring benefit hence same cannot be treated as capital expenditure. The Appellant has relied upon decision of Majestic Auto Limited (supra), KJS India Pvt. Limited (supra) and argued that such expenditure is revenue expenditure. In alternate argument, Appellant has stated that even though Assessing Officer has treated such expenditure as capital expenditure and observed that depreciation is allowable @25%, same was not allowed in computation of total income. On careful consideration of entire facts it is observed that professional fees paid by Appellant are for exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd appellant gets relief of ₹ 39,71,468/-. Thus this ground of appeal is allowed." 10. The CIT(A), in our view, has adjudicated the issue in right perspective. The expenditure claimed by the assessee bears the revenue character. We thus find no error in the order of the CIT(A). Hence, the Ground No. 2 of the Revenue is dismissed. 11. In the result, appeal filed by the Revenue is dismissed. CROSS OBJECTION No. 51/Ahd/2018 12. The grounds of appeal raised by the assessee read as under: "1. On the facts and in the circumstances of the case, the CIT(A) erred in confirming disallowance of expenditure of ₹ 1,33,528/- being employees' contribution to P.F. and ESIC u/s. 36(1)(va) of the I.T. Act on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
