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TMI Blog2024 (2) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Satyen Sethi , Adv. Sh. A T Panda, Adv. For the Respondent : Sh. V K Dubey, SR DR ORDER PER YOGESH KUMAR U.S., JM: This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax(Appeals)-44, New Delhi [ Ld. CIT , for short], dated 27/02/2019 for the Assessment Year 2014-15. 2. Grounds of the assessee are as under :- 1. That on the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals)-44, New Delhi ('the CIT(A)] has erred in upholding disallowance of Rs. 51,48,128/- u/s 14A of Income tax Act, 1961 (the Act'). 1.1 That on the facts and circumstances of the case and in law, the CIT(A) did not appreciate that in the absence of exempt income, no disallowance under section 14A was called for and that suo-moto disallowance made by the Appellant in the return was no impediment because there is no estoppel against law. 1.2 That on the facts and circumstances of the case and in law, the CIT(A) in exercise of appellate powers ought to have allowed the relief of Rs. 51,48,128/-, for the legal position is settled that Goetze (India) Ltd v. CIT [2006] 284 ITR 323 (SC) did not impi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under normal provisions of the Act (Rounded off) (A) 44,45,01.460 Add: Transfer pricing adjustment (B) 33,29,387 Add: Addition on account of delayed payment of employees' contribution to PF/ESI (Q 27,22,586 Assessed income under the normal provisions of the Act (Rounded Off) (A+B + Q 45,05,53,430 1.4. In addition to the above adjustments, the AO also made the following adjustments to the book profits of the Appellant under the MAT provisions of the Act: Particulars Amount (Rs.) Returned income under MAT provisions of the Act (A) 75,97,27,783 Add: Disallowance u/s 14A (B) 51,48,128 Add: Adjustment of rent equalization reserve ('RER ) (Q 36,06,899 Assessed income under MA T provisions of the Act (A+B + C) 76,84,82, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on the order of CIT(A) and submitted that the finding of the Ld. CIT(A) and conclusion are based on the order of the Co-ordinate Bench of the Tribunal in the case of Stryker Global Technology Vs. ACIT reported in 163 ITD 200 (Del), therefore, the Grounds of appeal No. 2 and its sub grounds sans merit, thus sought for dismissal of the above grounds. 11. We have heard both the parties and perused the material available on record. The assessee entered into lease agreement for office at Bangalore, Shimoga, Thane (Mumbai) and Manesar (Gurgaon) and the details of the agreement are as under:- Lease Premises Name of Lessor Lease deed dated Initial lease period Renewal Clause with escalation Bangalore(Page 108-131) SRJ Infrastructure Pvt. Ltd. 25.03.2007 28.06.2012 5 years-lock in period 3 years Page 112-131 Pg 105-107 Shimoga (Page 132-148) Xchanging Builders (India) Pvt. Ltd. 16.08.2013 4 years-lock in period 2 years Page 134 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the debit and credits in the profit and loss account would square off with each other. Therefore, the Revenue's contention that the amount is unknown to the Act - as held in the decision, is a mis-appreciation of what constitutes a lease equalization charge. Therefore, as long as the method of accounting follows some established principles, one of which. includes offering only Revenue income for tax, we cannot find fault with the assessee debiting lease equalization charges in the AYs in issue, in its profit and loss account. It represents a true and fair view of the accounts, which is a statutory requirement under Section 211(2) of the Companies Act. For these reasons, the first question is answered in favour of the assessee and against the Revenue. 14. Further in the case of CIT Vs. ICIC Venture Funds Management Company Ltd. (2015) 234 Taxman 569, the Hon'ble High Court of Karnataka held that lease equalization charges are not covered under any of the Clauses Explanation to Section 115JA (2) of the Act . 6. This appeal was admitted to consider the following substantial questions of law: Whether the Appellate Authorities were correct in reversing the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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