9911796707
TMI Blog2023 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal:- "Your appellant being dissatisfied with the order passed by the Commissioner of Income Tax (Appeals)-2, Ahmedabad presents this appeal against the same on the following amongst other grounds. 1. The order passed by Commissioner of Income Tax (Appeals) is bad in law and on facts and hence, it is submitted that the same be cancelled and be suitably modified. a) The learned Commissioner of Income Tax (Appeals), has erred in law and on facts in confirming disallowance made by the AO for a sum of Rs. 5,60,888/ being 1/5 of the vehicle expenses by treating the same as personal expenses by wrongly considering that car has been used for personal purposes also in utter disregard to the fact that the car was wholly and exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14A does not apply to the Investment in the partnership firm, which investment was made out of the appellant's own funds. (c) The learned Commissioner of Income Tax (Appeals), has erred in law and on facts of the case in confirming the Impugned addition/disallowance in utter disregard to the fact that the appellant company had not incurred any expenditure directly or indirectly for earning the share of profit from the partnership firm and such income had been earned by the company solely by virtue of it being a partner in the Partnership Firm for which the company had not incurred any administrative expenditure. (d) It is therefore prayed that the impugned disallowance made by the AO may please be deleted. 4. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. 7. The learned AR before us submitted that the issue is covered in favor of the assessee by the judgment of Hon'ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. vs. CIT reported in 253 ITR 749. 8. On the other hand, the learned DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there were certain expenditures incurred towards the running & maintenance of motor vehicle/car held by the assessee company which was registered in the name of the director of the assessee company and same were claimed as business expenditure. However, the AO and the learned CIT(A) held that the possibility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of association of the company or in accordance with the resolution which may be passed by the company in the general meeting. This payment of remuneration is subjected to overall limits of managerial remuneration laid down in section 198 of the Companies Act. After going through section 198 of the Companies Act, it was clear that the expenditure incurred by the assessee-company on maintenance of vehicles which were available to the directors for their personal use would fall within the meaning of 'remuneration' as defined in the Explanation to section 198 of the Companies Act and once such remuneration was fixed as provided in section 309 of the Companies Act it was not possible to state that the assessee-company incurred an expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by him. Hence, the ground of appeal of the assessee is hereby allowed. 10. The last issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance made under section 14A of the Act for Rs. 10,85,354/- only. 11. The necessary facts are that the assessee has made investments in a partnership firm, namely M/s Iris Infrastructure, from where it received income amounting to Rs. 10,85,354/- and claimed the same as exempted income under section 10(2A) of the Act. However no corresponding disallowance of the expenses specified under section 14A of the Act was made by the assessee. Therefore, the AO by invoking the provision of section 14A(2) r.w.r. 8D of Income Tax Rule made disallowances of Rs. 4,71,458/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of law by virtue of the findings of several competent courts that if there are mixed funds, then the power of presumption would be that the investment has been made from interest free funds. In holding so, we draw support and guidance from the judgment of Hon'ble jurisdictional High court in the case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 wherein it was held as under: It was noted from records that the assessee was having share holding funds to the extent of 2607.18 crores and the investment made by it was to the extent of Rs. 195.10 crores. In other words, the assessee had sufficient funds for making the investments and it had not used the borrowed funds for such purpose. This aspect of huge surplus funds is not dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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