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TMI Blog2022 (4) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... peals sought to set aside the impugned orders dated 09.01.2012, 19.04.2012, 29.01.2018 for A.Y. 2008-09, 2009-10 & 2013-14 respectively passed by Commissioner of Income Tax (Appeals) [hereinafter referred to as the Ld. CIT(A)], on the grounds inter alia that: ITA No.2509/M/2012 (Revenue's appeal) for A.Y. 2008-09 "On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s.!4A r.w.r. 8D ignoring the fact that Rule 8D is applicable from A.Y. 2007-08. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in treating interest on margin money, interest on loans to employees, interest on day to day balance with bank in current account, interest on blocked amount and as business income without appreciating the fact that the same were not immediately linked to the business of the assessee. 3. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses u/s 14A of the Act without giving any reasons for not accepting disallowance offered by Appellant towards 14A. 3) The CIT (A) erred in confirming disallowance of Rs. 37,65,576/- (i.e. l/5th of Rs. 18,827,878/-) incurred in AY 2011-12 towards issue of CCPS on right basis claimed u/s 35D of the Act. 4) The CIT (A) erred in confirming disallowance of Rs. 99,39,752/- (i.e. l/5th of Rs. 4,96,98,760/-) incurred in AY 2012-13 towards issue of CCPS on right basis claimed u/s 35D of the Act. 5) The CIT (A) erred in confirming the interest income of Rs. 23,17,37,000/- being taxed under the head 'Income from other sources' and not as 'business income' as offered by the Appellant. 6) The CIT(A) erred in disallowing u/s 36(l)(ii) commission of Rs. 4,00,000/- paid to Mr. K.Suntook director of the company. The Appellant craves leave to add to, alter, amend, substitute and/or vary any of the above grounds of appeal before or during the course of hearing of the appeal." ITA No.2509/M/2012 for A.Y. 2008-09 4. Tribunal has passed the order dated 05.01.2022 in MA No.20/M/2021 (supra) and recalled the appeal for limited purpose to dispose of additional ground No.2 rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the interest disallowance on the loans given to subsidiaries, interest on Income-tax refund and interest on warrants conversion, application money, taxed under the income from other sources instead of business income. Ld. Counsel for the assessee submitted that this ground is not pressed as there is no impact on the assessed income and hence academic. In view of the submissions of the Ld. Counsel for the assessee this ground is treated as not pressed. Further, we keep the issue open and the decision taken for this assessment year shall not be treated as precedent for later years. This ground is dismissed as indicated above." 10. So in view of the matter, we are of the considered view that since the income under consideration is tax neutral and assessee has not pressed this ground being academic in nature, the same is dismissed. However, this issue is kept open and the decision taken for the year under consideration shall not be treated as precedent for the later years. ITA No.3423/M/2012 A.Y. 2009-10 11. Tribunal has passed the order dated 05.01.2022 in MA No.21/M/2021 (supra) and recalled the appeal for limited purpose to dispose of additional grounds No.1 & 2 raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire sitting fee paid to Investment Committee at 55,000/-, 5% of MD Remuneration at Rs..7.68 lacs, 5% commission paid to none executive directors Rs..1.53 Lacs, 5% of directors' fee at Rs..28,900/-, other administrative expense at T 3.25 lacs and interest expense at Rs.. 3.73 Lacs totaling Rs..35,90,326/-. As may be seen from Para 3.2 of the assessment order quoted above, the AO has not given any cogent reason for not being satisfied with the claim of the appellant. The AO had further erred in disallowing employees' cost and miscellaneous expense at Rs..1.86 Crores over and above the disallowance computed as per Rule 8D, specially on account of the fact that Rule 8D (iii) itself provides for disallowance of administrative expense in form of 0.5% of the average value of investment. As the appellant's computation of disallowance u/s.14A is satisfactory, the disallowance u/s,14A is restricted to Rs..35,90,326/- and the disallowance by the AO is deleted." 81. We also further noticed from the Assessment Order that, the assessee has made elaborate submissions and a detailed computation of the expenditure attributable for earning exempt income which is said to be consiste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. for the Revenue. Operative part of the findings returned by the Tribunal is as under: "58. Ld. Counsel for the assessee submits that the assessee has disallowed an amount of Rs..35,07,020/- as expenditure incurred towards earning exempt income while computing its book profit taxable under section 115JB of the Act. The expenses disallowed pertain to those incomes which are exempted/ excluded while computing book profit under section 115JB of the Act. The Assessing Officer has applied Rule 8D of I.T. Rules to compute the disallowance u/s. 14A of the Act at Rs..3,71,34,919/- and added back the same to the assessee's income taxable under normal provisions of the Act, as well as to the book profit under section 115JB of the Act. Ld. Counsel for the assessee further submits that disallowance computed u/s. 14A of the Act r.w. Rule 8D of I.T. Rules is not the actual expenditure incurred by the assessee for earning exempt income, but is a notional amount, which has not actually been debited to the assessee's profit and loss account. Hence, the same cannot be added back while computing book profit under section 115JB of the Act. Ld. Counsel for the assessee submits that the amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance under section 14A to Rs. 26,65,237/- while computing the book profit under section 115JB of the Act. Consequently, additional grounds No.1 & 2 raised by the assessee are decided in favour of the assessee. ITA No.1500/M/2018 A.Y. 2013-14 18. Tribunal has passed the order dated 05.01.2022 in MA No.22/M/2021 (supra) and recalled the appeal for limited purpose to dispose of additional ground No.5 raised by the Revenue, which is as under: "The CIT(A) erred in confirming the interest income of Rs. 23,17,37,000/- being taxed under the head 'Income from other sources' and not as 'business income' as offered by the Appellant." 19. The AO during the scrutiny proceedings noticed from the notes forming part of the profit & loss account (note 2.2) that the assessee has credited the same under the head "other income" as under: Sr. No. Sub-head Amount (Rs. in Crores) 1. Interest on loans & advances 23.72 2 Interest/discount on bank deposits with Banks 5.08 20. The assessee was called upon to explain as to why the interest income of Rs. 28.80 crore included by the assessee under the head "income from business" be treated as "income from other sources". Declining the conten ..... 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