9911796707
TMI Blog2025 (2) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... estments made in partnership firm and the profit earned thereof. Even on merits, we find no prejudice is caused to the Revenue and hence the order of the Ld. PCIT on this issue cannot be upheld. Compensation paid - PCIT held that assessee had neither disallowed such expense nor the Assessing Officer had verified the expense as it is not allowable within the provisions of section 28 to 44DA - Compensation expenses paid in year under consideration is on account of contractual payment and not on account of any violation of any law and hence, no disallowance in this regard is warranted under the provisions of the Act. Since no disallowance is warranted as enumerated above, the assessment order passed u/s 143(3) of the Act by Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already gone through issue regarding disallowance u/s 14A of the Act and after satisfying himself with respect to the details submitted by the appellant company, the Ld. Assessing officer has passed the order under section 143(3) of the Act. 3. In law and in the facts and circumstances of the Appellant's case, the PCIT-1, Ahmedabad has erred in invoking revision proceedings for compensation expenses incurred in the year under consideration without considering the fact that such expenditure was incurred as per contractual terms of Memorandum of Understanding and does not represent any penalty which attracts disallowance u/s 28 to 44DA of the Act. 4. In law and in the facts and circumstances of the Appellant's case, the PCIT-1, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the order of the Ld. PCIT, the assessee is now in appeal before the Tribunal. 5. Before us, Ld. AR submitted that assessment order passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of the revenue. 5.1 With regard to disallowance u/s 14A of the Act, the Ld. AR contended that:- * The Assessing Officer had proposed to make disallowance u/s 14A of the Act in the year under consideration following the order of Assessing Officer for A.Y. 2017-18. In this regard, the assessee submitted that the assessment order passed in AY 2017-18 was challenged by the assessee before the Ld. CIT(A), who passed the order dated 02.09.2020 wherein disallowance made by the Assessing Officer u/s 14A was deleted. * Fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered Rule 8D(2)(iii) and had overruled the Board's Circular No. 05/2014 dated 11.02.2014 therefore, the expenses which are relatable to earning of exempt income have to be considered for disallowance, irrespective of the fact whether any such income has been earned during the financial year or not. 7. Heard both the parties and perused the material available on record. 8. We find that, the Board's Circular No. 05/2014 dated 11.02.2014 has been dealt in a number of cases by various judicial authorities and held that no disallowance is warranted in the absence of any income claimed as exemption. Further, in this case, the Assessing Officer has made disallowance of Rs. 43,03,145/- which stands deleted by the Ld. CIT(A). Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration, the assessee has debited Rs. 60,00,000/- as compensation expenses in Profit and Loss Account separately in Annexure 27 being "other expenses of Audited annual accounts. During the course of revision proceedings, vide reply dated 01.02.2024 assessee has submitted it is engaged in the business of developing a residential project. The assessee-company has entered into a Memorandum of Understanding ('MoU) to purchase a property for a consideration of Rs. 60 crore from Madhu Rajiv Maheshwari for the purposes of its business and MOU contained terms & conditions for purchase of property along with forfeiture terms & conditions. The assessee company before Ld. PCIT has explained that said MoU was cancelled and as per terms & c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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