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TMI Blog2022 (5) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... r was not justified in making disallowance under section 14A - Decided in favour of assessee Disallowance of royalty payment - as assessee has claimed royalty paid to Shriram Ownership Trust for use of the logo by treating the expenditure as capital expenditure, the Assessing Officer allowed depreciation @25% - HELD THAT:- As decided in own case [ 2016 (7) TMI 1642 - ITAT CHENNAI] CIT(A) directed the Assessing Officer to allow the royalty payment by treating it as revenue expenditure. DR could not controvert the above decision of the Tribunal in assessee's own case. Just because the Revenue has filed an appeal against the order of the Tribunal before the Hon'ble Madras High Court, we cannot take a different view until and unless the decision of the Tribunal has been reverted or modified. The ld. CIT(A) has rightly followed the decision of the Tribunal and thus, we find no infirmity in the order passed by the ld. CIT(A). Accordingly, the ground raised by the Revenue stands dismissed. Interest income not offered to tax - AO has noted that the assessee has not offered the entire receipts on the ground that it is classified as NPA - Since the assessee has claimed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h it actually arises and to allow TDS thereof in the relevant assessment year in which interest income is offered in respect of those two parties. Consequently, the ld. CIT(A) has also directed the Assessing Officer not to allow credit for the TDS in respect of those two parties. Therefore, we are of the opinion that there is no merit in the ground raised by the assessee and accordingly, the ground raised by the assessee is dismissed. - I.T.A. Nos. 1199/Chny/2018 , 1307/Chny/2018 - - - Dated:- 13-4-2022 - Shri V. Durga Rao , Judicial Member And Shri G. Manjunatha , Accountant Member Department by : Shri P. Sajit Kumar , JCIT Assessee by : Shri R. Sivaraman , Advocate ORDER Per V. Durga Rao , Judicial Member Both the appeals filed by the Revenue as well as assessee are directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai dated 26.12.2017 relevant to the assessment year 2014-15. 2. Ground No. 1 in both the appeals of the Revenue as well as assessee is general in nature and requires no adjudication. 3. Ground Nos. 2 to 2.5 in the Revenue's appeal and ground Nos. 2 to 4 relates to disallowance made under section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same with reference to assessment record and to restrict to Rs. 24,24,160/- if the appellant's computation is in line with the decisions relied on as above. 4.3.2 In view of the above remarks, the appellant's ground on this issue is partly allowed. 3.3. Aggrieved, both the assessee and Revenue are in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the Assessing Officer has not recorded ay findings as to the correctness or otherwise of the claim of assessee company and prayed for deleting the disallowance under section 14A of the Act by relying upon the decision of the Tribunal in assessee's own case for the assessment year 2015-16 in I.T.A. No. 1767/Chny/2019 dated 16.12.2019, wherein, the judgement of the Hon'ble Supreme Court in the in the case of Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC). 3.4. On the other hand, the ld. DR has submitted that the ld. CIT(A) has no power conferred upon him to remit the matter back to the file of the Assessing Officer to verify the assessee's submission with reference to the assessment record and to delete the addition under section 14A of the Act. 3.5. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this principle by holding as under:- 41. Having regard to the language of section 14A(2) of the Act, read with rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the Assessing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the Assessing Officer''. Recently, the Co-ordinate Bench of the Tribunal to which one of us i.e. the Accountant Member is the author of the order, in the case of City Union Bank Ltd. vs. Assistant Commissioner of Income Tax, (2019) 74 ITR Trib (644) Chennai held as follows:- As regards to other limb of the argument of the assessee that in the absences of any finding by the Assessing Officer as to how the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany that only expenditure of Rs. 72,480/- was incurred to earn exempt income. Therefore, the Assessing Officer was not justified in resorting to provisions u/s. 14A of the Act. Accordingly, no disallowance can be made u/s. 14A of the Act. 3.7. Admittedly, in the present case also, against the voluntary disallowance made under section 14A of the Act by the assessee, the Assessing Officer has not recorded any satisfaction as to how the disallowance voluntarily made by the assessee is not correct and moreover, the Assessing Officer has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. Moreover, before the ld. CIT(A) also the assessee has revised the disallowance. The ld. DR could not controvert the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), which was followed by the Coordinate Benches of the Tribunal in the above cases to decide the issue in favour of the assessee. Thus, respectfully following the decision of the Coordinate Benches of the Tribunal in the case of Shriram Capital Limited v. DCIT (supra) as well as the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on either side and also perused the material available on record. During the year under consideration the assessee has paid Rs. 35,87,560/- to Shriram Ownership Trust for using their logo. The assessee claimed the same as revenue expenditure while computing the taxable income. The Assessing Officer disallowed the claim of the assessee on the ground that what was paid by the assessee is a royalty, therefore, it is in the capital filed and allowed depreciation u/s. 32 of the Act. The assessee claims that Shriram Ownership Trust is one of the group concern. If the assessee claims that Shriram Ownership Trust is one of the group concern, it is not known how a Trust can be a group concern. The assessee being a company engaged in the business, a Trust cannot be a group concern of the business concern. The Trust can be an independent entity for charitable activity or other activity as per the object of the Trust. This Tribunal is of the considered opinion that a Trust cannot be construed as a group concern of a business concern. The Trust has to be always treated independently and it is an independent statutory body. The assessee now claims that the logo belongs to Shriram Ownership Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions of the assessee and since the assessee should not have offered the above income in the current year, the Assessing Officer disallowed the interest income not offered to tax and added to the total income of the assessee. On appeal, after considering the submissions of the assessee, the ld. CIT(A) directed the Assessing Officer to allow credit for the TDS in respect of those two parts and allowed the ground raised by the assessee. 5.2. We have heard the rival contentions and perused the orders of authorities below. In this case, the Assessing Officer has assessed the notional interest income based on TDS reflected in Form 26AS by observing that interest from two parties corresponding to the TDS was not admitted. Before the CIT(A), it was the submissions of the assessee that the interest income was not actually received corresponding to the TDS reflected in Form 26AS and moreover, the cheques issued by the debtors bounced as they did not have adequate bank balance. It was further submitted that there was uncertainty in realizing interest income and therefore, the interest income was not recognized. After considering the submissions of the assessee, the ld. CIT(A) has obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law in holding that the indirect expenditure disallowed under Section 14A read with rule 8D(iii) of Rs. 24,64,632/- in computing the total income under normal provisions of the Act, is to be added to the net profit in computation of book profit for MAT purposes under Section 115JB and thereby importing the provision of Section 14A read with rule 8D into the MAT provisions on the facts and circumstances of the case? 6.2. After considering the arguments of the both sides, the Hon'ble Karnataka High Court has observed and held as under: 6. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of relevant extract of Section 115JB of the Act, which reads as under: 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall be deemed to be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that similar view, which has been taken by this court in Gokaldas Images (P) Ltd. supra was also taken by High Court of Bombay in 'THE COMMISSIONER OF INCOME TAX-8 VS. M/S BENGAL FINANCE INVESTMENTS PVT. LTD.', I.T.A. No. 337/2013. It is pertinent to note that in Rolta India Ltd., the Supreme Court was dealing with the issue of chargeability of interest under Section 234B and 234C of the ct on failure to pay advance tax in respect of tax payable under Section 115JA/115JB of the Act and therefore, the aforesaid decision has no impact on the issue involved in this appeal. Similarly, in MAXOPP Investment Ltd., supra the Supreme Court has dealt with Section 14A of the Act and has not dealt with Section 115JB of the Act. Therefore, the aforesaid decision also does not apply to the fact situation of the case. In view of preceding analysis, the substantial questions of law framed by a bench of this court are answered in favour of the assessee and against the revenue. In the result, the order passed by the tribunal dated 09.01.2015 insofar as it pertains to the findings recorded against the assessee is hereby quashed. 6.3. The ld. DR could not controvert the above deci ..... 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