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TMI Blog2024 (9) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 14A should be sustained. Accordingly, Ground Nos.1 and 1.1 raised by the assessee are allowed. Disallowance of expenses u/s 14A r.w. Rule 8D of the Rules while computing the book profits under section 115JB - Special Bench of Delhi Tribunal in the case of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] had categorically held that computation mechanism provided in Rule 8D(2) of the Rules cannot be imputed in the book profit computation under clause (f) of Explanation 1 to section 115JB(2) - direct expenses identified by the assessee in the sum as explained attributable to the earning of exempt income requires to be disallowed. Hence, we direct the learned AO to disallow addition u/s 14A while computing book profits under section 115JB. Nature of expenditure - disallowance of painting expenditure - revenue or capital expenditure - HELD THAT:- As relying in assessee s own case for A.Y. 2008-09 [ 2024 (8) TMI 802 - ITAT DELHI ] we hold that cost of paintings is to be considered as Revenue expenditure and accordingly ground no. 3 is allowed. - Sh. Challa Nagendra Prasad, Judicial Member And Sh. M Balaganesh, Accountant Member For the Assessee : Shri Rohit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee made suo moto disallowance of Rs. 36,54,208/- by considering the salary of Key Managerial Personnel (KMP), salary of Accountant, Communication Cost, Travelling and Conveyance Exps. Printing and Stationary. Since the total dividend income contributed 16.86% of the total Revenue of the Company, the assessee took 16.86% of the aforesaid expenses as attributable to earning of dividend income and disallowed a sum of Rs. 36,54,208/- under section 14A of the Act. The working of the same is enclosed at page 94 of the paper book. The learned AO completely ignored the suo moto disallowance made by the assessee and proceeded on the premise that no suo moto disallowance was made by the assessee. This is evident from observation made by the learned AO in para 3.4 of the assessment order. The learned AO thereafter, directly proceeded to apply the computation mechanism provided in Rule 8D(2) of the Rules. However, while computing this disallowance, he took cognizance of the suo moto disallowance made by the assessee in sum of Rs. 36,54,208/- and treated the same as an amount to be disallowable under Rule 8D(2)(i) of the Rules. The learned AO further made disallowance under Rule 8D( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit computation under clause (f) of Explanation 1 to section 115JB(2) of the Act. However, the direct expenses identified by the assessee in the sum of Rs. 36,54,208/- as explained attributable to the earning of exempt income requires to be disallowed. Hence, we direct the learned AO to disallow Rs. 36,54,208/- while computing book profits under section 115JB of the Act. Accordingly, ground nos. 2, 2.1 and 2.2 raised by the assessee are partly allowed. 9. Ground Nos. 3 3.1 raised by the assessee are challenging the disallowance of painting expenditure of Rs. 1,38,53,944/- by treating it as capital expenditure and on without prejudice basis, not granting depreciation thereon. 10. We have heard the rival submissions and perused the material available on record. At the outset, both the parties agreed that this issue has already been decided by this Tribunal in assessee s own case for A.Y. 2008-09 in ITA No. 1629/Del/2012 dated 31.01.2024. The only difference being in earlier years, the assessee had raised an additional ground claiming the cost of painting as a Revenue expenditure before the Tribunal. Whereas for the year under consideration, the same was raised as an additional grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are regularly replaced after few years with other contemporary paintings, shuffles the location of the paintings, puts them in new locations in the common areas etc, in order to provide world class interiors to its clients, both existing and prospective, with a view to obtain more prestigious clients and consequently increase revenues through new clients. The paintings acquired have short life in so far as the assessee is concerned and the same perform as a functional role in the business of the assessee. It was submitted that the paintings also include a few specific to the business operations of the assessee, depicting the history of The Hindustan Times which is specific to the business of the assessee having no re-saleable value. Owing to the nature of business, the assessee keeps on refurbishing the common areas frequently to attract the foreign visitors, employees of the multinational companies, which, in turn, attracts more clients and also gets higher return from the maintenance income as compared to the other buildings located in the same area. We are completely convinced with the aforesaid submissions of the assessee and hold that the cost of paintings are meant for aes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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