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TMI Blog2022 (4) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of administrative expenses to the extent of 0.5% of average investment was correct or not? - HELD THAT:- It is not discernible from the order of the Ld. CIT(A) how he arrived at the figure of ₹ 42,00,867/- being the average investment. The disallowance under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, we are of the considered view that the computation of the disallowances under section 14A read with rule 8D(2)(iii), which is issue in the assessee's appeal, is to be restored in the file of the AO for re-computation for identifying average investments which actually yielded dividend income to the assessee and on that basis recompute disallowance u/s. 14A of the Act read with Rule 8D(2)(iii) of the IT Rule. Disallowance under section 14A is to be added to the income computed as per Section 115JB for MAT purpose - This issue is covered in favour of the assessee by the decision of Special Bench in the case of ACIT Vs. Vireet Inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the learned CIT(A) has grievously erred in confirming the disallowance of commission paid to non-resident of ₹ 18,84,793/- made by AO on account of non-deduction of tax at source u/s. 40(a)(ia) of the Act, by giving totally different reasons vide paras 2.4 and 2.5 of the order under appeal, without even giving any opportunity to the appellant. 2. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of ₹ 25,72,254/- on account of interest on loan given to 100% Foreign Subsidiary. 3. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance to the extent of ₹ 38,02,347/- made u/s. 14A r/w Rule 8D of the Act while computing the income under the normal provisions of the Act. 4. That on facts and in law, the learned CIT(A) has grievously erred in confirming the disallowance to the extent of ₹ 3,98,520/- made u/s. 14A r/w Rule 8D of the Act while computing the income under section 115JB of the Act. 5. That on facts and in law, the learned CIT(A) has grievously erred in confirming the addition of ₹ 3,18,140/- on account of mismatch of TDS as per for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, mainly on the ground that the assessee has not proved each sales commission paid with documentary evidences, more so when the list of the persons to whom commission was paid included the names of Indians, and whether their income was taxable in India or not. The Ld. CIT(A) has noticed names of the agents in his impugned at page No. 8, which for the sake of brevity, we reproduce below: SI. No. Name Amount (Rs.) 1 Sepco Sikaneta, NDOLA ₹ 1,08,860/- 2 Micheal Nyirendra ₹ 2,96,644/- 3 Romeo Zoppe ₹ 6,82,988/- 4 Binod Shah ₹ 72,100/- 5 Binod Shah ₹ 2,41,966/- 6 Binod'Shah ₹ 3,18,825/- 7 Sola Tech Ltd. ₹ 3,18,825/- 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore, the Ld. counsel for the assessee submitted that these documents may be entertained by the Tribunal invoking Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and further pleaded that the similar is being allowed in favour of the assessee by Co-ordinate Bench in the Asst. Year 2013-14. The Ld. DR for the Revenue has no serious objection for entertaining the above new documents on records and to be verified by the AO. 7. In light of the above facts fact that these new documents were filed before the Tribunal for the first time, the AO has no occasion to examine copies of these documents while finalizing the assessment, therefore in the interest of justice, we restore this issue to the file of the Assessing Officer for reconsideration of the commission payment. The assessee is directed to furnish all evidences to support its case before the Assessing Officer, and thereafter, the AO shall pass an order after providing reasonable opportunity to the assessee. Thus, this ground of appeal is allowed for statistical purpose. 8. Assessee has not pressed ground No. 2 for adjudication, therefore, this ground is dismissed for want of prosecution. 9. So far as grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, and out of that an amount of ₹ 201 crores has been transferred to portfolio management and investment through Kotak Bank Securities. Further, the assessee has earned interest income of ₹ 10.23 crores, and against which only ₹ 3.75 crores incurred as interest expenses and the net interest income was offered to tax. Assessee has also contended that no addition should be made under section 14A to book profit computed under section 115JB of the Act, and relied upon the decisions in the cases of ACIT Vs. Vireet Investment, ITA No. 502/Del/2012 (Del)(SB) and CIT Vs. JSW Energy Ltd., 60 taxmann.com 303 (Bom HC). The Ld. CIT(A) after examining the issue, accepted the claim of the assessee to delete disallowance of interest calculated by the AO under Rule 8D(2)(ii) of the Rule of ₹ 96,21,298/-, but confirmed administrative expenses by adopting method given under Rule 8D(2)(iii) being 0.5% of the average investment. Thus, the Ld. CIT(A) partly allowed disallowance to the extent of ₹ 38,02,347/- i.e. ₹ 42,00,867/- minus ₹ 3,98,520/-. Regarding addition to the book profit made under section 115JB for the MAT purpose, he restricted disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment, and therefore, no disallowance was to be computed is to be disregarded in view of Hon'ble Supreme Court judgment in the case of Maxopp Investment Ltd. Vs. CIT, 402 ITR 640 (SC). 12. We have given our thoughtful consideration to the facts of the case, and gone through the orders of the Revenue authorities. We find that issue before us has two folds, viz. (i) whether disallowance under Rule 8D(2)(iii) in respect of administrative expenses ₹ 38,02,347/- to the extent of 0.5% of average investment was correct or not, and (ii) whether computation provisions prescribed for computation of total income under normal provisions with reference to section 14A read with Rule 8D could be taken into consideration while computing book profits under MAT provisions? 13. So far as first fold of dispute is concerned, it is undisputed fact that the assessee has received an amount of ₹ 225 crores from sale of business out of which ₹ 201 has been transferred to Kotak Securities for investment. Further, it is also not in dispute that annual report of the assessee showed that assessee also got enough reserves and surplus of ₹ 276.83 cores. Therefore, assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT purpose or not, is covered in favour of the assessee by the decision of Special Bench in the case of ACIT Vs. Vireet Investment P. Ltd., 165 ITD 27 wherein Special Bench held that computation under MAT provisions was to be made without resorting to the computation as contemplated under section 14A read with Rule 8D. Respectfully following the same, we delete disallowance of ₹ 3,98,520/- for the purpose of calculation of book profits u/s. 115JB of the Act. 15. Now we take ground No. 5 in respect of confirmation of addition of ₹ 3,18,140/- on account of mismatch of TDS as per Form 26AS. 16. On verification of Form 26AS, it was noticed by the AO that the assessee had claimed TDS of ₹ 93,69,723/- against ₹ 94,015,537/- shown by Form 26AS. Thus, there was different in the TDS amounting to ₹ 31,814/-. It was explained by the assessee that this amount related to a party viz. TESCO Project P. Ltd., to whom the assessee has given loan. It was submitted assessee has not received any interest income from that party, because the party has defaulted and cheques issued to the assessee for repayment was returned by the bank as unpaid, and recovery suit was f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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