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TMI Blog2023 (1) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have been considered for the purpose of disallowance under Rule 8D(2)(i) of the Rules and consequently even if it is required to be made, though not admitted, it has to be made keeping in mind the quantum of investment dealt in the preceding year and this year as well as income from current investment shown by the assessee. As far as disallowances required to be made under Rule 8D(2)(ii), it has to be restricted to 0.5% of the average investment yielding exempt income and not whole investment and that too. In the case of dividend from Dabur India Ltd., the assessee has not incurred any expenses at all because the assessee is one of the holding companies of Dabur India Ltd. and only a dividend warrant has been issued and deposited. Hence no expenses should be said to have been incurred by the assessee. The AO is directed to re-compute the disallowance taking into consideration the dividend yielding investments and to exclude PMS charges for computation of disallowance u/s 14A. The appeal of the assessee on this ground is allowed. Allowbale business expenses - Subscription expenses - HELD THAT;- The incumbent student was neither an employee nor associated with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barring ITR due on 31.10.2019. 3. Without prejudice to above, in the facts and circumstances of the case the CIT(A) erred in dismissing the appeal filed by the appellant thereby confirming the addition of Rs. 4,68,52,493/- made by the AO keeping in view the interest free advances given by the appellant company. 4. Without prejudice to above, in the facts and circumstances of the case the CIT (A) erred in dismissing the appeal filed by the appellant thereby confirming the addition of Rs. 77,09,852/- made by the AO u/s 14A. 5. Without prejudice to above, in the facts and circumstances of the case the CIT (A) erred in dismissing the appeal filed by the appellant thereby confirming the addition of Rs. 37,21,186/- made by the AO on account of Subscription fees incurred for the purposes of its business u/s 37. 6. Without prejudice to above, in the facts and circumstances of the case the CIT (A) erred in dismissing the appeal filed by the appellant thereby confirming the addition of Rs. 27,43,037/- made by the AO on account of Service charges incurred for the purposes of its business u/s 37. 7. In the facts and circumstances of the case, while the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest. 8. In Assessment Years 2010-11 to 2013-14, in assessee s own case in ITAs No. 2104/Del/2017 to 2107/Del/2017, the ITAT vide order dated 29th January 2020 had deleted the disallowance as made by the Assessing Officer on this issue. Hence the appeal of the assessee on this ground is allowed. Disallowance u/s 14A of IT Act: 9. The assessee has also raised additional grounds of appeal which are as under: The Assessing Officer ought not to have included the disallowances made u/s 14A of the Income Tax Act, 1961 made in normal computation of income, while computing the income u/s 115JB of the I.T. Act. 10. Admission of the additional ground has been opposed in principle by the ld. DR. Keeping in view, the judgment of the Hon ble Apex Court in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383, the additional ground filed by the assessee is accepted. The relevant portion of the judgment is as under: 5. Under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide e.g. C.I.T. v. Anand Prasad (Delhi), C.I.T. v. Karamchand Premchand P. Ltd. and C.I.T. v. Cellulose Products of India Ltd. . Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. The reframed question, therefore, is answered in the affirmative, i.e., the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits. 11. Respectfully following the above judgment of the Hon ble Apex Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund managers maintaining the portfolio and wherefrom the income from current investment was shown and offered to tax. 18. While considering the disallowance for PMS charges, the Assessing Officer at page 11 of the order observed as under: It is noticed that the PMS charge paid in the last year was approx. Rs.2 crores which has increased upto 14 Crores in this year. The assessee has responded that the increase in PMS Charges is owing to fact that additional investment of Rs. 150 Crores were in debt instrument treated as current investment or say stock-in-trade and the increase is attributed to such taxable instruments. I have considered the response of the assessee and find merit in the same. In line of the addition made on PMS charges last year of 2 crores, I have considered the investment to the tune of Rs.11,58,84,45,822/- (previous year Rs.242,76,12,297/-) made by the assessee which can earn exempt income. Hence, the proportionate disallowance on account of PMS Charges is worked out at Rs.52,40,372/- under rule 8D(i). 19. In this connection, it is stated that first of all the figures adopted by the Assessing Officer in the above paragraph for making proportionate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. Subscription expenses: 25. It was submitted by the ld. AR that the assessee is NBFC and engaged in the business of financing and investment which requires not only economic analysis about the financial sector but also requires a firsthand knowledge about various financial sectors for the purpose of investment. Having in mind such future requirement as well as the expansion, the assessee had sponsored a meritorious student Miss Vinne Vandal to study in California University under the Faculty of Economics. Miss Vinne Vandal is not a relative of any director of the company, but the sponsorship has been made on account of commercial expediency keeping in mind to have such type of person in its business. 26. Time and again the issue arose before the courts whether the foreign educational expenses of the children of the director or their relatives are allowable as an expenditure or not. In the following cases, the courts have held that if the expenses have been incurred on account of commercial expediency keeping in mind the nature of business carried out by the assessee, then such expenses deserve to be allowed: Kostub Investment 288 CTR 54 (Del) Krishna Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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