Income Tax Appellate Tribunal - Mumbai
Tilaknagar Industries Ltd, Mumbai vs Dcit Cc 1(1), Mumbai on 15 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "E", MUMBAI
Before Shri Mahavir Singh(JUDICIAL MEMBER)
AND
Shri G Manjunatha (ACCOUNTANT MEMBER)
ITA No. 5818 & 5819/Mum/2016
(Assessment years : 2010-11 & 2011-12)
Tilaknagar Industries Ltd vs Dy.C IT, CC- 1(1), Mumbai
C/o M/s S A R A & Associates
202, May Building, 297/ 299/
301, Princess Street, Near
Marine Lines Flyover,
Mumbai-400 002
PAN : AAACT6047R
APPELLANT RESPONDEDNT
ITA No. 6321/Mum/2016
(Assessment year : 2011-12)
Dy.C IT, CC- 1(1), Mumbai vs Tilaknagar Industries Ltd
C/o M/s S A R A & Associates
202, May Building, 297/ 299/ 301,
Princess Street, Near Marine Lines
Flyover, Mumbai-400 002
PAN : AAACT6047R
APPELLANT RESPONDEDNT
Assessee by Shri K Shivram
Revenue by Shri Rahul Hakani / Ryan Saldanha
Date of hearing 17-12-2018
Date of pronouncement 15-02-2019
Page 1 of 34
ORDER
This appeal filed by the assessee in ITA No.5818/Mum/2016 is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals) - 47, Mumbai {hereinafter called as CIT(A)} dated 08.08.2016, for the assessment years 2010-11 & 2011-12. Similarly, the assessee as well as the Revenue have filed cross appeals for Asst Year 2011-12 against the order passed by the Ld. Commissioner of Income Tax (Appeals) - 47, Mumbai dated 08.08.2016. Since, appeal for Asst Year 2010-11 & cross appeals for 2011-12 are having common issues, all the appeals are heard together and are disposed off under this common order.
2. In this case, assessee has raised the following grounds of appeal in its appeal for the Asst Year 2010-11:-
The Ld. CIT(A) erred in upholding the action of the Id Assessing Officer in making additions on the basis of statements of various persons recorded during the course of survey under Section 133A of the Act on 13.03.2013 without appreciating the fact that such recorded statement does not have any legal sanctity and cannot be relied upon.
The Ld. CIT(A) erred in upholding the reopening of the assessment despite the fact that all the details were before the Id Assessing Officer during the original scrutiny assessment proceedings for which order u/s 143(3) of the Act was passed on 31.01.2013. The Ld. CIT(A) erred in upholding the disallowance of depreciation on astrological fees (Architectural Fees) amounting to Rs. 1,04,67,3177- despite the fact that:
• The payments were made for the services provided; • The recipient had offered the same to tax; • The work was evidenced by various e-mails / maps; • The Hon'ble Settlement Commission in the appellant's own case had vide order dated 30.09.2015 held the same to be allowable;Page 2 of 34
• TDS @ 10% have been deducted;
• Service tax was paid;
• There is no evidence that services were not provided.
4.The Ld. CIT(A) erred in upholding the disallowance of rental charges amounting to Rs.26,96,640/- on the alleged ground that the expenses were not for purpose of business. The Id CIT(A) failed to appreciate that such sums were incurred for genuine business expediencies."
5. The Ld. CIT(A) erred in upholding the disallowance of housekeeping charges amounting to Rs.26,96,640/- on the alleged ground that the expenses were not for purpose of business. The Id CIT(A) failed to appreciate that such sums were incurred for genuine business expediencies."
3. Ground No 1 is not pressed and hence the same is dismissed.
4. Ground No 2 is also not pressed, hence, dismissed.
5. Ground No 3 challenges the disallowance of depreciation on astrology fees of Rs 1,04,67,317/-. During the year, the assessee has made payment of architectural and management consultancy fees to Mr. Anand Nair of Rs 9,96,50,798/-. Such payments were capitalized in the books of the assessee under "Fixed Assets". The assessee claimed depreciation of Rs. 1,04,67,317/- on such capitalization.
5.2 The ld Assessing Officer asked the assessee to explain the nature of such payment. The assessee submitted that the fees were architectural management and consultancy fees. The AO observed that the stand taken by the assessee was patently wrong since Mr Nair had disclosed the fees as Astrological Fees in his return of income. Mr. Anand Nair raised invoice / debit note as "Astrology Fees". The ld Assessing Officer was of the view that there is no record of services rendered by Shri Anand Nair to justify such a high fees Page 3 of 34 not only in current year, but also, in subsequent years. Accordingly, the AO disallowed the entire payment made during the year of Rs 9,96,50,798/-.
5.3 Subsequently on being pointed out that out of total payment of Rs. 9,96,50,798/-; deduction has been claimed only of Rs. 1,04,67,317/- being depreciation on Rs. 9,96,50,798/-; the ld Assessing Officer passed a rectification order u/s 154 of the Act on 10.09.2015 restricting the disallowance of Astrology Fees to the amount claimed in the P&L account amounting to Rs 1,04,67,317/-. Thus, the amount of dispute before us is the disallowance of Rs. 1,04,67,317/-.
5.4 The assessee challenged the Assessment Order before the ld. CIT(A). Before CIT(A), the assessee submitted that Mr Anand Nair was a qualified architect who had been entrusted with the assignment of successfully implementing various Projects of the company. Shri Anand P Nair was the President of the applicant company during 2006-07. The assessee gave details of services done by Mr Nair, sample emails, maps and drawings done by him. The assessee submitted all payments were by cheque after deducting TDS. Mr Nair had offered the same to tax. The assessee submitted confirmation. The assessee submitted that in its own case, the Hon'ble Settlement Commission had held the payments to Shri Anand Nair were genuine. The assessee submitted that Mr Nair had paid service tax in Amnesty Scheme under category "Management Service".
5.5 The ld. CIT(A) did not accept the submission of the assessee. The CIT(A) observed that the assessee had capitalized the fees paid to Mr Nair as part of the 100 klpd block of assets which was part of Plant & Machinery. However, the assessee could not establish which part of the 100 klpd plant the payment Page 4 of 34 related to. Further, an MOU was entered into by Mr Nair and Mr Amit Dahanukar and his wife Mrs. Shivani Dahanukar is in connection with Astrological Fees. The MOU proved that Mr Nair was providing the Dahanukar family with Astrological guidance. Further, it is not clear why Mr Nair would have a sudden change of heart and pay service tax on the same. In these circumstances, the CIT(A) upheld the disallowance of depreciation on astrological fees paid to Shri Anand Nair of Rs 1,04,67,317/-.
5.6 The ld. Senior Counsel of the assessee Mr. K. Shivaram submitted that Shri Anand Nair is a qualified architect and drew the attention of Bench towards the diploma certificate part of Paper Book. The ld Senior Counsel also pointed out the various emails sent by the Assessee and Contractor Triochem entrusted to carry out the factory work asking for guidance of Mr Nair. The ld AR produced the maps drawn by Shri Anand Nair. He explained that Mr Anand Nair's role was to build the 100 klpd grain refinery. This was a one-time project and once the refinery was built, it was the flagship refinery of the assessee company producing grain based alcohol. The ld. AR further submitted that at page 90 of the Paper Book for AY 10-11, Triochem has dispatched a CD containing drawings for Mr Nair's approval through his secretary Mr Ekesh Desai. At page 93-94 of the AY 10-11 Paper Book, the Triochem persons send an email containing notes for points to discuss with Mr Nair. At page 95 of the Paper Book, Mr Anand Nair suggests the interchanging of the lawn and one structure. Mr Ekesh Desai, who is the secretary of Nair, instructs Triochem to get Mr Nair's confirmation. At page 96 of the Paper book, Mr Nair gives suggestions relating to the building of water reservoir. At page 97 of the Paper book, Mr Nair advises the direction of the fans. At page 98 of the Paper book, Mr Nair advises the new bottling hall layout. At page 100 of the Paper book, Page 5 of 34 Mr Nair advises the control panel tower layout. At page 102 of the Paper Book, Mr Nair advises about the roofing sheets. At page 104 of the Paper Book, Mr Nair advises on a host of issues pertaining to the turbine, boiler, electrical fixtures, cable trays, light fixtures, cable routing plan, sensors etc. At page 106 of the paper book, Mr Nair's approval regarding MCC room design was awaited.
5.7. The ld AR submitted that the Hon'ble Settlement Commission in the assessee's case for Assessment Year 2012-13 and Assessment Year 2013-14 has considered the issue and held the payments made to Mr. Anand Nair to be genuine. It was held that Mr Nair is a qualified architect / management consultant and the fees have been booked as Income in the books of Mr Nair and applicable Income Tax was paid. The ld AR submitted that Mr Anand Nair has offered the entire amount received to tax in his income tax returns. The payments were made by account payee cheque and TDS u/s 194J at the rate of 10% was deducted. Confirmation of Mr Anand Nair was submitted. The Settlement Commission in the case of Shri Anand Nair have at internal page 14-15 have held that the income received from Appellant has been properly taxed in hands of Anand Nair. The Ld. AR further pointed out that the order of Settlement Commission is neither challenged by the assessee nor by the department, therefore, the same has become final. The ld. Senior Counsel argued that since payment to Mr. Anand Nair was accepted Genuine by Income Tax Department in Asst Year 2012-13 & 2013-14 by the department, with-out any change in the facts and circumstances in this year, the same cannot be considered non-genuine. The issue has already reached finality. Thus, the issue is a covered issue already decided in favor of the assessee.
Page 6 of 345.8. With regard to, nature of payment as "Astrology Fees", it was submitted that this nomenclature was used to save service tax. However, subsequently, Shri Anand Nair has paid service tax on the fees received under the category "Management Consultancy Services" through a Voluntary Amnesty Scheme. The Sr. Counsel drew our attention towards relevant pages of paper book whereby evidences in respect of service tax payments are placed. The ld AR submitted that the MOU dated 16.01.2012 which was so heavily relied upon by the ld. CIT(A) does not concern the assessee company as it is between Mr Anand Nair and Amit Dahanukar and pertains to subsequent period, hence not at all related to the assessment year subject matter of appeal. Thus, Assessee has discharged its onus to prove that payments made to Mr Anand P Nair were for business purposes and were genuine payments. Despite, filing of confirmation by Mr Anand Nair who is a third party and not a related party, the Ld. AO has chosen not to further examine him. The ld. A.O. has not brought on record any evidence to show that cash was received back by the Assessee against such payment. The ld. Senior Counsel further argued that whether the expenditure is justified; whether reasonable or not has to be seen from the businessman point of view; the AO cannot step in the shoes of Assessee.
5.9. The Ld. Senior Counsel further argued that the payment made by the assessee to Mr. Anand Nair has been offered for tax in his return of Income. He drew our attention towards order of Settlement Commission whereby total Income after settlement commission order was of Rs. 80 Crores appx across seven years. Mr. Anand Nair has paid tax and applicable interest on this amount. The AR argued that the quantum of income and tax thereon suggest that the payment made to Mr. Nair is genuine and bonafide. It was further argued that the payment made by the assessee has already been taxed in the Page 7 of 34 hands of Anand Nair, if taxed, in the hands of the assessee by way of disallowance, it amounts to double taxation; not permitted under Income Tax. To support this proposition, the ld. AR relied upon the following judicial precedents • CIT v. Edward Keventer (P.) Ltd. [1972] 86 ITR 370.(Cal)(HC). • Sigma Corporation India Ltd v DCIT [2017] 79 taxmann.com 412 (Delhi)
6. On the other hand, the ld Departmental Representative (DR) relied upon the order of the CIT(A) and the AO. The Departmental Representative contended that the payments were on the higher side and did not commensurate with the services provided. No formal agreement was there. The nomenclature of the payment of "Astrological Fees" showed that it was of personal nature. The subsequent agreement between director and the assessee clearly established fact that it is purely personal in nature and it was further supported by the conduct of assessee. The AO as well as the ld CIT(A) brought out enough materials to prove that expenditure is nothing to do with business activity of the assessee. The assessee failed to prove nexus between payment and services rendered by Mr. Nair. The AO never questioned genuineness of payment, but questioned nexus between such huge payment and services rendered, therefore, there is no reason to deviate from the findings of the lower authorities and their orders should be upheld.
7. We have heard both the parties, perused materials available on record and gone through the orders of the lower authorities. The dispute in this case is the deductibility of payment to Mr Anand Nair. It is observed that Mr Nair was President of the assessee company in 2006. The assessee Page 8 of 34 has submitted copy of profile of Mr Nair from Bloomberg Website. Mr Nair's name, photograph and profile are appearing in the Annual Report of the assessee of Financial Year 2005-06, 2006-07, 2007-08 and 2008-09 during which period Mr Nair continued to advise the assessee company. This means that there was a past history / relationship of the assessee company with Mr Nair. Subsequently, Mr Nair left the organization and started practicing on his own. The assessee company once again utilized the services of Mr Nair as an architect and Project Consultant in the current year. Although there was no formal agreement, the assessee has enclosed the debit notes which are proof that Mr Nair rendered the services. It is also on record that all the payments were made by account payee cheques and applicable TDS@10% has been deducted. The issue of payment of Astrological Fees was considered by the Hon'ble Settlement Commission. The appellant had approached the Hon'ble Settlement Commission for Assessment Year 12-13 and Assessment Year 13-14. The Hon'ble Settlement Commission vide order dt. 30.9.2015 at internal page 24, para 9.7 has considered the issue and held the payments to be genuine. They have held that Mr Nair is a qualified architect / management consultant and the fees have been booked as Income in the books of Mr Nair. The issue was considered after objections relating to same were filed in Rule 9 Report. Further, at para 8.6 on page 13 of the Settlement Commission order, the issue of payment to Shri Anand Nair was discussed. The relevant findings of Hon'ble Settlement Commission are as under:
"On disallowance of astrological fees paid to Shri Anand Nair u/s 37 by the CIT, the AR submitted that the applicant companies had paid Shri Anand Nair for the following services:Page 9 of 34
• Shri Anand Nair is a architect and management consultant who was assigned the job of implementing the projects of the company at various locations.
• Shri Nair and his team provided master plan for various projects and planned its land use;
• Shri Nair prepared detailed architectural & structural plans for new projects;
• Prepared plans for fire fighting, plumbing, electrical and mechanical works.
• He was actively involved in tender opening, bench marking process, negotiations with contractors and recommendation of vendors based on their qualification and experience.
• He co-ordinated with various agencies for implementation of the project by deputing his employees at sites for quality checking and bill verification."
At para 9.7 on page 24 of the Settlement Commission order, the Hon'ble Settlement Commission has given a finding as under:
"Another issue raised by the Department is regarding the Astrology fees paid by the applicant company to Mr Nair. Mr Nair is a qualified architect and is also a management consultant as averred by the AR. The fees paid by the applicant company has been booked in the books of Shri Nair, hence we are of the considered opinion that no interference is called for."
8. We further noticed that total management consultancy fees paid across a period of four years is not exceeding 9% of the total project cost. During the Assessment Year 2010-11 and Assessment Year 2011-12, the following payments were made to Shri Anand Nair:
Date of Amount (Rs) Depreciatio Projec Projec Project Total Page 10 of 34 capitalizatio n claimed t t Start End date cost n (Rs) name Date of projec t 23.11.2009 5,79,79,977/ 1,01,46,496 50 April Novemb Rs.
- /- klpd 2008 er 2009 62.51
Crore
s
15.03.2011 11,00,00,000 1,92,50,000 100 May Novemb Rs.
/- /- klpd 2010 er 2011 170
Crore
s
From the return of income of Mr Anand Nair, it is observed that apart from rendering services to M/s Tilaknagar Industries Ltd, Mr Nair has also rendered services to other companies. This shows that Mr Nair was a professional architect who undertook various architectural works for different clients. Mr Anand Nair's confirmation is at page 120 of the Paper Book where he confirmed to have rendering services in various technical, commercial and operational aspects of Shrirampur Mega Projects for the subject period. The maps / drawings of Mr Anand Nair have the seal of Anand Nair & Associates at the bottom right hand corner which shows that they are genuine. The e-mails show conversations between the staff of the assessee company, Mr Ekesh Desai (Secretary of Mr Nair) and Mr Nair himself. All aspects of the layout of the 100 klpd plant were looked into by Shri Anand Nair. We further notice that Mr. Nair has provided various services including master development plan for various projects & planned its land use. He had prepared detailed architectural plans based on concept level plans for these new projects. He had also actively participated in various tender openings, Bench marking processes, sustained negotiations with various contractors and Recommendation of vendors based on their qualifications and work experience. Shri. Anand Nair has had Page 11 of 34 coordinated with various agencies for ensuring successful implementation of project by way of deployment of their employees at site for quality checking at each & every stage of the project as well as assisting in bill verifications. Shri. Anand Nair has helped the applicant company with various advisory works before, during and after project. Shri. Anand Nair has ability to bring under one roof, various contractors, consultants and stakeholders of the business, all of whom were capable of handling mega projects and successfully executing them.
9. The main reason why the ld CIT(A) doubted the genuineness of payments to Mr Anand Nair due to the MOU. We are of the considered view that the MOU cannot be relied upon due to the reasons that said MOU is signed at a later date ie 16.01.2012 and is not relevant to Assessment Year 2010-11 and Assessment Year 2011-12. Although the nomenclature of the MOU is Astrological services, it is really an Investment Banking services. The MOU is how to sell the Dahanukar family's stake in M/s Tilaknagar Industries Ltd at a significantly high price. At Question 27 of the statement of Mr Amit Dahanukar dated 15.03.2013, Mr Dahanukar was asked about the MOU unearthed during the survey. Mr Dahanukar states that these pages are a written agreement between himself, his wife and Anand Nair wherein Mr Anand Nair was retained by him & his wife for astrological, design, strategic thinking and marketing insights, and networking consultancy services for their benefit. Thus, it was clear that the MOU was not for Tilaknagar Industries Ltd but was for the Dahanukar family's benefit. The assessee company was not a party to the MOU. Further, Shri Anand Nair has paid service tax on the fees received from the assessee under the head "management consultancy fees". Thus, if it was really Astrology Fees, what was the need for Mr Nair to pay service tax on the same, Page 12 of 34 that too under an Amnesty Scheme; i.e. without any enforcement such as search and survey. Shri Anand Nair is an unrelated party, therefore, the payment cannot be disallowed u/s 40A(2)(b) of the Act. The ld. AO has not examined Mr Anand Nair at all either by issue of summon under Section 131 or by issue of notice under Section 133(6) of the Act. The AO could not bring any evidence to prove that payment to Mr. Anand Nair is not genuine or without any corresponding services provided. The A.O. has not brought on record any evidence to show that cash was received back by the Assessee. Even otherwise, the ld Assessing Officer is not allowed to step in to the shoes of businessman. It is settled position of law that the AO cannot disallow expenses u/s 37 of the Act merely since he is of the view that they are unreasonable. The Hon'ble Calcutta High court in case of CIT v. Edward Keventer (P.) Ltd. [1972] 86 ITR
370.(Cal)(HC)., later SLP dismissed in CIT v. Edward Keventer (P.) Ltd. [1978] 115 ITR 149 (SC ) in para 13 held that;
"13.......... It is not for the Assessing Officer to dictate what the business needs of the company should be and he is only to judge the legitimacy of the business needs of the company from the point of view of a prudent businessman. The benefit derived or accruing to the company must also be considered from the angle of a prudent businessman. The term "benefit" to a company in relation to its business, it must be remembered, has a very wide connotation and may not necessarily be capable of being accurately measured in terms of pound, shillings and pence in all cases. Both these aspects have to be considered judiciously, dispassionately without any bias of any kind from the view-point of a reasonable and honest person in business."
Similarly, the Hon'ble Delhi High Court in case of Sigma Corporation India Ltd v DCIT [2017] 79 taxmann.com 412 (Delhi) (HC) held as under;
"10. Having regard to the above position, this Court is of the opinion that the ITAT in the present case overlooked the materials that were to be Page 13 of 34 taken into account, i.e. reasonableness of the expenditure having regard to the prudent business practice from a fair and reasonable point of view."
10. It is important note one more aspect of the case that the total income returned by the assessee was Rs 50.36 crores for all seven years. However, the total income finally assessed by the Settlement Commission was Rs 79.97 Crores for all seven years. Additional income of Rs 30 Crores appx was taxed/ offered for tax before the Hon'ble Settlement Commission. Mr. Anand nair has paid applicable income tax and interest thereon on such income of Rs. 80 crors appx. This shows that the assessed income was significantly high. Further Shri Anand Nair is an individual and not a corporate. Normally in case of non-genuine payments, the party who issues bill, never make any tax payment. Thus, the transaction lacks the basic characteristics of a hawala transaction. However, in this case, Mr Nair is offering income for tax @ 30%. Without any evidence to prove otherwise, the payment to Mr. Nair can-not be considered non-genuine. There is no dispute that Shri Anand Nair has offered the Architect / Professional fees to tax in his personal return of income. Hence, disallowance of the fees in the hands of the assesseet would lead to double disallowance. The Hon'ble Supreme Court in Laxmipat Singhania vs. CIT [72 ITR 291, 294] observed that "it is the fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice." The same income cannot be taxed twice; once in the hands of one person and again in the hands of another person; or for that matter, in the hands of the same person in two different assessment years. In other words, same income cannot be doubly taxed. The view was further held in Joti Prasad Agarwal vs. ITO [37 ITR 107,111][All] that the charge is to be levied on an income only once; the same income cannot be charged repeatedly in the hands of different persons or in Page 14 of 34 the hands of the same person has been impliedly approved by the Supreme Court in ITO vs. Bahcu Lal Kapoor [60 ITR 74, 80], wherein it was observed that "the Act does not envisage taxation of the same income twice over." In CIT vs. Murlidhar Jhawar [60 ITR 95], the Supreme Court held that "..the ITO cannot however seek to assess the one income twice. The principles that emerge from these judicial pronouncements is that once the income has been assessed in the hands of one entity, then the same income cannot be assessed in the hands of the other entity. Further, the Hon'ble Bombay High Court in the case of CIT v Noshira D Mody (50 taxmann.com 193) held that where the recipient of commission has offered the same to tax, it cannot be disallowed u/s 37(1) of the Act in the hands of the payer. Therefore, we are of the considered view that when Shri Anand Nair has offered the professional fees to tax, it cannot be disallowed in the hands of the payer. Shri Anand Nair has already paid tax to Government in respect of the fees received by him from the assessee company.
11 In view of the above, we are of the view that the payment of fees to Mr Anand Nair cannot be considered as non-genuine, when all evidences conclusively proved that said payment is genuine and it was incurred wholly and exclusively for business purpose. The assessee has rightly capitalized the same under the head Plant and Machinery. Hence, the AO is directed to allow depreciation claimed of Rs.1,04,67,317/- on architect fees paid to Shri. Anand Nair and capitalized in books under fixed assets.
12. Ground No 4 challenges the disallowance of rent paid to Mr Anand Nair of Rs 26,96,640/-. The rent was paid with respect to two flats at Vakola, Mumbai [total area 1,212 sq feet] pursuant to a Leave and License agreement Page 15 of 34 entered into on 1/4/2008 for a period of three years. The flats were to be used for accommodating the guests and employees of the assessee company who come from outstation.
12.2 During the assessment proceedings, the assessee was asked to give reasons for taking flats owned by Shri Nair on huge rent. The assessee stated that it had taken the flats on rent for use of guest house for outstation employees who came to Mumbai. The AO was of the view that it was a sham transaction. The flats were taken on rent for Rs 2 lakhs a month ie Rs 1 lakh per flat. Subsequently, the flats were sold for Rs 38 lakhs each in 2011-12 to one Mrs Anita Mohan, sister of Mr Anand Nair. He, therefore disallowed entire rent payment of Rs. 26,96,640/-. The assessee challenged the above disallowance before CIT(A). Before the CIT(A) it was submitted that the rent agreement was for 3 years. The payment was by account payee cheque and TDS was deducted. The assessee gave list of employees staying there and contended that the guest house was cheaper than a hotel. The contention of the assessee could not find favor from CIT(A). The ld. CIT(A) upheld the disallowance of rent as she observed that the guest list was not for financial year 2009-10. The CIT(A) further held that this is another generous payments to Shri Anand Nair.
12.3. The ld. Senior Counsel argued that, Shri Anand Nair is not a related party. The payments were made to Shri Anand Nair by account payee cheque. TDS was duly deducted u/s 194I of the Act. The rent was offered to tax in the hands of Shri Anand Nair. [ computation of total income of Shri Anand Nair for AY 2010-11 (page 147) wherein gross rent of Rs 24,00,000/- was disclosed and after deducting 30% standard deduction, net rent of Rs 16,80,000/- was Page 16 of 34 offered to tax.] The sample guest list demonstrates that the guest house was constantly used by employees and their families for personal / official purpose or for holding interviews. The payment is reasonable from the point of view of the Assessee Company as it would have to incur huge expenses if it were to accommodate outstation guests and employees in Hotels. Also assessee is able to block premises for a period of 3 years and have the premises whenever it desires.
12.4 On the other hand, the D.R. relied upon the order of the Lower Authorities.
13. We have heard both the parties and have gone through the orders of the lower authorities. In this case, the assessee has paid rent of Rs 1 lakh per flat to Mr Anand Nair for 2 flats. The rent was paid by cheque and TDS was deducted. The flats were used for housing outstation employees and clients. Before us, the assessee has produced the Rent Agreement. The Rent Agreement is for 3 years and is duly signed by the parties. We are of the opinion that guest house could be a better and cheaper option than the hotel in terms of comfort, privacy and familiar surroundings. With regard to sale in subsequent years at a low price, it is noted that the same is a transaction between a brother to his sister; therefore, not a correct benchmark to determine the rent is excessive. Further, Shri Anand Nair is not a related party. The payments were made to Shri Anand Nair by account payee cheque. TDS was duly deducted u/s 194I of the Act. Applicable service tax has been charged. The rent was offered to tax in the hands of Shri Anand Nair. The sample guest list demonstrates that the guest house was constantly used by employees and their families for Page 17 of 34 personal / official purpose or for holding interviews. The payment is reasonable from the point of view of the Assessee Company as it would have to incur huge expenses if it were to accommodate outstation guests and employees in Hotels. Also assessee is able to block premises for a period of 3 years and have the premises whenever it desires. Therefore, only for the reason that rent is high genuineness of payment cannot be questioned and disallowance be made. But, considering the size of flat and the locality, we are of the view that rent payment of Rs. 1,00,000/- per month for two flats appears to unreasonable and excessive. Further, the AO did not brought on record any comparable cases of similar nature or find out market rate prevailing at that time. Therefore, we are of the considered view that this issue needs to be reexamined by the AO in light of our aforementioned observations and hence, we set aside this issue to the file of AO and direct him to consider afresh after affording an opportunity of hearing to the assessee.
14. Ground No 5 challenges the disallowance of housekeeping charges paid to J S Trading of Rs 26,96,640/-. The house keeping charges was paid with respect to two flats at Vakola, Mumbai [total area 1,212 sq feet] pursuant to a Housekeeping agreement entered into on 1/4/2008 for a period of three years. Pursuant to the agreement, upfront payment of Rs 72 lakhs was paid. The AO disallowed amount on the ground that it was a sham transaction. The housekeeping charges of Rs 2 lakhs per month was too high an amount. No ordinary person would pay upfront fees of Rs 72 lakhs. Subsequently, the flats were sold for Rs 38 lakhs each in 2011-12 to one Mrs Anita Mohan, sister of Mr Anand Nair.
Page 18 of 3414.2 The assessee filed appeal before Hon'ble CIT(A). Before the CIT(A) it was submitted that JS Trading was doing house-keeping work for many years. The payment was by account payee cheque and TDS was deducted. The services include cleaning, maintenance of sanitary works, removal of garbage, polishing, pest control etc. The ld. CIT(A) upheld the disallowance of house- keeping charges as she was of the opinion that the agreement did not reflect such specialized services meriting payment of such high amount. The agreement was signed by Amit Dahanukar and Anand Nair. Thus, JS Trading was nothing but a partnership firm owned by Mr Nair. This was not the first time that the assessee has been making generous payments to Shri Anand Nair.
14.3. The ld. Senior Advocate argued that the flats were used as Guest House. Housekeeping was an essential service requirement. JS Trading is not a related party. The said housekeeping charges were offered to tax in the hands of M/s JS Trading. Under the house keeping agreement, JS Trading will provide housekeeping services mentioned at Schedule 1 on page 170 of the Paper Book which includes cleaning, maintenance of sanitary works, removal of garbage, polishing, pest control etc. Hence, observation of Ld CIT(A) are incorrect.
14.4. On the other hand, the D.R. relied upon the order of the Lower Authorities.
15. We have heard both the parties, perused materials available on record and have gone through the orders of the lower authorities. In this case, the assessee has paid housekeeping charges of Rs 1 lakh per flat to J S Trading for 2 flats. The house keeping charges was paid by cheque and Page 19 of 34 TDS was deducted. Applicable service tax has been charged and paid. Before us, the assessee has produced the Housekeeping Agreement. The Rent Agreement is for 3 years and upfront payment of Rs 72 lakhs was made. Although, payment is high, but for that reason alone genuineness of payment cannot be doubted, because, as per the housekeeping agreement, the service provider has provided housekeeping services by a team of personal every day, supervisor to attend round the clock, desired level of cleanliness, Toileteries / cleaning material in sufficient quantity such as soap, detergents, brushes, vacuum cleaners, mosquito repellents, etc. In addition, service provider has done daily removal of garbage, dusting, acid cleaning, mopping, washing carpets etc, weekly services of washing / scrubbing floor area, removal of dust, windows, polishing, shampooing, pest control etc. further, since the flats were used in the guest house, housekeeping was essential service. JS Trading is not a related party. The said housekeeping charges were offered to tax in the hands of M/s JS Trading. Applicable TDS has been deducted. Applicable service tax haven been paid. Under the house keeping agreement, JS Trading will provide housekeeping services mentioned at Schedule 1 on page 170 of the Paper Book which includes cleaning, maintenance of sanitary works, removal of garbage, polishing, pest control etc. Whether the expenditure is justified/reasonable or not has to be seen from the businessman point of view and AO cannot step in the shoes of Assessee as held by the Hon'ble Supreme Court in Hero Cycles (P) Ltd. vs. CIT (2015) 379 ITR 347 (SC). Therefore, we are of the view that the lower authorities were erred in treating housekeeping charges as non genuine payments. But, considering the size of flat, we are of the view that housekeeping payment of Rs. 1,00,000/- per month for two flats appears to unreasonable and excessive. Further, the AO did not brought on record Page 20 of 34 any comparable cases of similar nature or find out market rate prevailing at that time. Moreover, this issue is linked with disallowance of rent payment to flats. Since, we have already set aside disallowance of rent issue to the file of AO, we feel that this issue also needs to be reexamined by the AO in light of our aforementioned observations and hence, we set aside this issue to the file of AO and direct him to consider afresh after affording an opportunity of hearing to the assessee.
16. In the result, appeal filed by the assessee for Asst Year 2010-11 is Partly Allowed for statistical purpose.
ITA No.5819/MUM/2016 (Asst Year 2011-12)17. This appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) - 47, Mumbai {hereinafter called as CIT(A)} dated 08.08.2016, for the assessment year 2011-12 whereby the Ld. CIT(A) has Partly Allowed the appeals filed by the assessees arising out of the order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961.
18. In this case, assessee has raised the following grounds of appeal:-
"1. The Ld. CIT(A) erred in upholding the action of the Assessing Officer in making additions on the basis of statements of various persons recorded during the course of survey under Section 133A of the Act on 13.03.2013 without appreciating the fact that such recorded statement does not have any legal sanctity and cannot be relied upon.
2. The Ld. CIT(A) erred in upholding the disallowance of depreciation on astrological fees (Architectural Fees) amounting to Rs. 1,92,50,0007- despite the fact that:
• The payments were made for the services provided; • The recipient had offered the same to tax;Page 21 of 34
• The work was evidenced by various e-mails / maps; • The Hon'ble Settlement Commission in the appellant's own case had vide order dated 30.09.2015 held the same to be allowable; • TDS @ 10% have been deducted;
• Service tax was paid;
• There is no evidence that services were not provided."
19. Ground No 1 is not pressed and hence the same is dismissed.
20. Ground No 2 challenges the disallowance of depreciation on astrology fees amounting to Rs 1,92,50,000/- (on total payment of Rs. 7,00,00,000/-; capitalized in the books). During the year, the assessee has claimed depreciation on architectural and management consultancy fees paid to Mr Anand Nair to the tune of Rs 1,92,50,000/-.
20.1 This ground of appeal is same as Ground No 3 of the Assessee's appeal for Assessment Year 2010-11 in ITA 5818/Mum/2016, but for figures. Since, we have already decided the issue of depreciation on Astrology fees paid to Mr. Nair in favour of assessee in ITA. No. 5818/Mum/2016, for similar reasons we decide ground No. 2 of this appeal in fvaour of assessee and accordingly, direct the AO to allow depreciation as claimed by the assessee. In view of the above, we are of the view that the payment of fees to Mr Anand Nair was genuine. The assessee has rightly capitalized the same under the head Plant and Machinery. Hence, Ground No 3 of the Assessee's appeal is allowed. The assessee is entitled to relief of depreciation claimed of Rs.1,92,50,000/-.
21. Ground No. 3 is general, not pressed, hence, dismissed.
22. In the result, assessee appeal is partly allowed.
Page 22 of 34ITA 6321/Mum/2016-AY.2011-12
23. This appeal was filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals) - 47, Mumbai {hereinafter called as CIT(A)} dated 08.08.2016, for the assessment year 2011-12 whereby the Ld. CIT(A) has Partly Allowed the appeals filed by the assessees arising out of the order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961.
24. In this case, Department has raised the following grounds of appeal:-
"(/). "On the facts and circumstances of the case and in /aw, the Ld.CIT(A) erred in granting relief on the disallowance of depreciation made by assessing officer in respect of the capital expenditure made by the assessee company in the form of bogus inflation of expenditure of Rs. 26,25,14,887/- paid to M/s. Triochem Sucrotech Engineering & Projects P. Limited."
(ii) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not specially adjudicating the issue of depreciation on the inflated cost of Rs. 26,25,14,887f- of the plant and machinery as revealed during the course of survey at the premises of Triochem sucrotech Engineering & Projects P. Ltd and consequently survey at premises of the assessee ?"
(iii) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) in not appreciating the fact that the issue of inflated cost of Rs. 26.25 Cr. Of the project was not adjudicated by the ITSC which left the issue to the file of Ld. Commissioner of Income Tax (Appeal) erred in not adjudicating the same which resulted in allowing depreciating on inflated cost of the project ?"
(iv) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs.54,61,338/- made u/s 14A of the IT Act 1961 on the ground that investment had been made by the assessee in subsidiaries companies and the same does not qualify for disallowance u/s 114A of the IT Act 1961?"
Page 23 of 3425. Ground No. 1 (Sub Grounds (i), (ii) & (iii) of the Department appeal challenge the relief given by the CIT(A) on the depreciation attributable to Plant & Machinery purchased from M/s Triochem Sucrotech Engineering & Projects P Ltd.
25.2 The background of the case is that there was a survey action on the assessee on 13.03.2013. During the course of the survey, certain discrepancies were found related to various capital expenditure and revenue expenditure. The assessee was alleged to have received cash back from the parties and claimed depreciation on bogus capitalization. Among the various parties, one of the parties was M/s Triochem Sucrotech Engineering & Projects Pvt Ltd. From 2010 onwards, M/s Triochem Sucrotech Engineering & Projects Pvt Ltd was constructing a grain based refinery for the assessee at Shrirampur, Nasik. The assessee had capitalized the cost of the refinery in its books of accounts for the first time during Assessment Year 2011-12.
25.3 The ld Assessing Officer held that the assessee has booked bogus capitalization in respect of purchases from M/s Triochem Sucrotech Engineering & Projects P Ltd. to the extent of Rs.26,25,14,887/- and received back cash to the extent of Rs. 24.24 crores. Accordingly, the AO had made addition on account of cash back received of Rs. 22.43 Crores in Asst Year 2010-11 & of Rs. 1.81 crores in Asst Year 2011-12. The AO further held that depreciation on such inflated capitalization of Rs. 26,25,14,887/- can-not be allowed. Holding so, the ld. AO computed the average rate of depreciation claimed to be 9.65%. Accordingly, he disallowed depreciation of Rs 2,53,32,686/- (i.e. 9.65% of Rs. 26,25,14,887/-) in respect of capitalization related to M/s Triochem Sucrotech Engineering & Page 24 of 34 Projects P Ltd. The ld Assessing Officer also disallowed depreciation of other assets which were alleged to be bogus during the survey amounting to Rs. 6,90,11,884/-. The total disallowance made on account of depreciation on Assets held to be bogus at Rs. 9,43,44,570/- (i.e. 6,90,11,884/- related to other than Triochem plus Rs. 2,53,32,686/- related to Triochem Sucrotech Engineering & Projects Pvt Ltd. There is no dispute in respect of disallowance of Rs. 6,90,11,884/- before us as part of such addition is confirmed and part relief has been granted by CIT(A) and both the assessee and the department has accepted the same. The Department has only contested the depreciation attributable to M/s Triochem Sucrotech Engineering & Projects P Ltd amounting to Rs 2,53,32,686/-. Thus, there are two additions in respect of transaction with M/s Triochem Sucrotech Engineering & Projects P Ltd.; one addition on account of cash back received during the year of Rs. 1.81 crores which was not challenged by the department and another depreciation of Rs. 2,53,32,686/- claimed on alleged bogus capitalization of Rs. 26,25,14,887/- challenged before us.
25.4 The main grievances of the Department is that this issue related to depreciation has not been adjudicated by the CIT(A) at all in its order, therefore, the matter ought to be set aside to the CIT(A) to give a proper finding.
25.5. On the other hand, the ld. Senior Counsel has relied upon the order of CIT (A) and pointed out that under grounds no. 6 & 7; before CIT(A), the assessee has challenged the issue related to depreciation and cash back received respectively. The Ld. CIT (A) has given categorical findings in both the issues under para 5.4 (sub paras 5.4.1 to 5.4.4) and under para 5.5 (sub-paras 5.5.1 to 5.5.2 respectively). Therefore, there is no merits in the arguments of ld. DR for restoring matter back to the file of ld. CIT(A).
Page 25 of 3426. We have heard both the parties and have gone through the orders of the lower authorities. We find that while dealing with the issue related to cash back received from M/s Triochem Sucrotech Engineering & Projects P Ltd, the ld CIT (A) has given the following finding.
"5.5.2 -------
From a perusal of the assessment order passed in the case of M/s. Triochem A.Y. 2010-11 the AO noted that information on parties issuing bogus bills was received from the Sales Tax Department by the Income Tax Department and resulted in survey u/s 133A on M/s. Triochem. In the statement recorded from Shri. Nitin Deshpande during the survey, he admitted to the debiting of bogus expenses to the tune of Rs. 24.24 crores. The AO dismissed the argument of Shri. Nitin Deshpande that this amount was passed on to M/s. Tilaknagar Industries. In the assessment order of M/s. Triochem the AO rejected their argument that the supplementary contract was without substance and was put in place only to enable siphoning off funds for being passed on to M/s. Tilaknagar Industries, pointing out the various clauses of the supplementary agreement which enumerated the additional modifications and enhanced specification of the instrumentation originally proposed. In the course of assessment of M/s. Triochem the AO noted that there was no evidence that it was coerced into agreeing into signing an inflated contract. He also rejected the assertion that the bogus purchases were done at the behest of M/s. Tilaknagar Industries. The statements of Shri. S. K. Jain and Shri. Suresh Parikh were also analyzed by the AO in the assessment order of M/s. Triochem and he concluded that these statements have been only given to accommodate M/s. Triochem as the concerned parties cannot remember critical details and are unable to provide information regarding persons in M/s. Tilaknagar Industries who were allegedly given this money. In this background the amount of bogus expenses has been added back in the hands of M/s. Triochem. Perusal of the submissions made by the appellant, bear out the observations made by the AO of M/s. Triochem as it is seen that the existence of the plant in question is found attested to by the Sales Tax authorities and the independent chartered Engineer. M/s. Triochem has not been shown to be related to the appellant company. Generation of cash through bogus billing is generally done Page 26 of 34 through most cost effective means available with minimum payout for the party wishing to generate the cash. In the present case, the appellant has shown that payments to M/s. Triochem bore additional taxes including CENVAT @3% and VAT @ 12.5%. Further, the fact that receipts from Triochem are shown parallel to expenditure including handing over of amounts to Amit Tandon is apparent from the worksheets. As noted before, it is an accepted principle that the same income cannot be subjected to tax twice. Thus considering all facts, I find that the addition of Rs. 1,81,00,000/- cannot be sustained in the hands of the appellant concern and the same is deleted. Accordingly, Ground No. 7 raised by the appellant is allowed."
27. We, find that the CIT(A) has recorded categorical finding that in the Assessment Order of M/s Triochem, the AO rejected their argument that the supplementary contract with the present appellant was without substance. The AO added the amount of Rs 24 Crores in the hands of M/s Triochem. Thus, the very foundation of addition made in the hands of the assessee (being statement of the Mr. Nitin Deshpande) was rejected by the Income Tax department itself in the case of Triochem. The assessee has paid huge CENVAT and VAT which can-not be found in bogus transaction. The plant is in existence as attested by the Sales Tax authorities and the independent chartered Engineer. M/s. Triochem has not been shown to be related to the appellant company. Generation of cash through bogus billing is generally done through most cost effective means available with minimum payout for the party wishing to generate the cash which is not there in the present case. We further note that the Income Tax department has neither challenged the above addition on account of cash back received of Rs. 1.81 crores nor challenged the above findings of CIT(A) with reference to transaction with Triochem. Thus, the above findings of CIT(A) has remained un-challenged and final.
Page 27 of 3428. We find that the Ld. CIT(A) has dealt with the issue related to depreciation disallowance in ground number 6 of Grounds of appeal (para 5.4, Sub paras 5.4.1 to 5.4.4). The relevant portions of the orders are reproduced below:
"5.4 In Ground No. 6, the appellant has challenged the disallowance of depreciation amounting to Rs. 9,43,44,570/-. During the course of assessment proceedings, the AO noted that the increase in gross block of P&M during the year included fictitious assets acquired during the year as also the inflated cost of the project executed by M/s Triochem. The AO also observed that the inflation of the cost of the project executed by M/s Triochem was worked out to Rs. 26,25,14,887/- which included purchase of computers of Rs. 3,64,86,410/- on which depreciation @50.45% worked out to Rs. 1,84,07,393/-. Further the AO noted that in the preceding years, the computers/peripherals has been treated as Plant and machinery and hence were liable for depreciation @15%. The AO then worked out disallowance as under:
PLANT & MACHINERY Particulars Amount (Rs) Total fictitious capital assets 40,43,28,369 purchases during the year Less Computers included in the 3,64,86,410 above amount for which disallowance is made separately Net amount of Plant and 36,78,41,959 Machinery (fictitious purchases during the year other than computers) Add Inflated project cost of 26,25,14,887 Triochem Total P&M for disallowance 63,03,56,846 of depreciation Against total block of Rs Accordingly, the 239,39,96,953 the depreciation depreciation of Rs attributable to non 23,12,26,946 has been genuine P&M Page 28 of 34 claimed. Accordingly the @9.65% amounts to average rate of depreciation Rs 6,08,29,435/-. is worked out at 9.65% average.
Remarks Amount of
depreciation
disallowed (Rs)
Fictitious / non-existent 1,84,07,393/-
depreciation
Existing computers 1,51,07,742/-
(depreciation restricted
to 15%)
P&M (other than 6,08,29,435/-
computers)
Total depreciation 9,43,44,570/-
allowed
"
29. The ld. CIT (A) then reproduced the submissions of the assessee at para 5.4.1, page 17-20. Thereafter, CIT (A) has analyzed the assessment order, submission of the assessee, order of the Settlement Commissions, findings in earlier years and subsequent years. After detailed analysis of each party, the ld. CIT (A) has restricted the disallowance of depreciation to Rs. 3,03,06,714/-.
That means, the CIT(A) has made further disallowance of Rs. 92,81,009/- in revenue expenditure as the payment made to one party was not capitalized, but, charged to P&L a/c. The relevant ruling of ld CIT(A) read as under (para 5.4.4 on page 25):
"5.4.4 .............
The AO is therefore directed to limit the disallowance under this head to Rs. 3,03,06,714/- and make further disallowance of revenue expenses of Rs. 92,81,009/-. Accordingly, the ground raised by the appellant is partly allowed."Page 29 of 34
30. A reference to the above would show that while deciding Ground No. 7, the ld. CIT(A) has given a categorical finding that payment to M/s Triochem in respect of purchase of P&M is genuine and does not call for any interference. This finding was not at all challenged by the department. While dealing with Ground No. 6 of the assessee appeal before CIT(A), specific reference was given under para 5.4 for disallowance of depreciation in respect of transaction with Triochem. The Ld.CIT (A) has analysed each and every party alleged to be bogus and her analysis was so minute that she has even identified a payment of Rs. 92,81,009/- in respect of one party whereby such payment was debited in P&L account and directed to be disallowed over and above the addition made by AO. The Ld. DR could not pint out any other infirmity in the order of CIT(A), but, simply argued that no express finding was given in respect of transaction with Tricohem, therefore, matter may be set aside to CIT(A). In view of our findings hereinabove, we are of the considered opinion that the ld. CIT (A) has adequately dealt with this issue and we do not find any infirmity whatsoever in the order of CIT(A). Accordingly, Ground No. 1, sub grounds (i, ii & iii) of departmental appeal are dismissed.
31. Ground No 1(iv) of the Department Appeal challenges the deletion of the disallowance u/s 14A of the Act by the ld. CIT(A) of Rs 54,61,338/-. During the year, the assessee disallowed an amount of Rs 3,43,305/- under Section 14A of the Act. The Assessing Officer was of the view that Rule 8D was applicable. The AO quantified the disallowance at Rs 49.97 lakhs under Rule 8D(ii) and Rs 8.09 lakhs under Rule 8D(iii). The AO disallowed the excess over the sumoto disallowance amounting to Rs 54,61,338/-. The assessee filed appeal before the Hon'ble CIT(A). The CIT(A) deleted the disallowance on the ground that there was no exempt income earned during the year, the net worth was Page 30 of 34 sufficient, the investments were strategic in nature. Aggrieved, the Department has filed appeal before us.
32. The D.R. argued that the assessee had invested in shares of subsidiary companies. As per recent ruling of Hon'ble Supreme Court in the case of Maxopp Investment Ltd v/s CIT 402 ITR 640 (SC), the Court held that strategic investment in companies were to be included for purpose of Rule 8D computation.
33 The A.R. argued that the interest cannot be disallowed since, not a single rupee of dividend income was earned. Hence, following the recent Delhi Special Bench Decision of ACIT v Vireet Investment (P.) Ltd [2017] 82 taxmann.com 415 (Delhi - Trib.) (SB) no disallowance can be made. Further, the investments of Rs 25.81 Crores were entirely made out of the owned funds which were Rs 401.92 Crores. Hence, no 14A disallowance can be made following the Bombay High Court decision in CIT v HDFC Bank (2014) 366 ITR 505 (Bom). The AR further submitted that For Assessment Year 2010-11, the ld. CIT(A) deleted the identical addition. The Department appeal to ITAT was dismissed due to low tax effect. In the reopening, the AO once again made addition u/s 14A which was deleted by CIT(A) and has remained unchallenged by the Department. For Assessment Year 2009-10, Assessment Year 2012-13 onwards, there was no 14A disallowance.
34. We have heard both the parties and have gone through the orders of the lower authorities. In this case, the assessee has made investments in shares of subsidiary companies of Rs 26 Crores. The AO invoked Section 14A of the Act and disallowed an amount of Rs 54,61,338/- as per Rule 8D.
Page 31 of 34The CIT(A) deleted the disallowance on the ground that no dividend was earned. Having considered arguments of both sides, we are unable to accept the submissions of the Departmental Representative. There is no doubt that investment in subsidiaries ought to be included for 14A disallowance. However, other factors have also to be looked into like net worth, investment amount, receipt of dividend etc. We note that as against net worth of the assessee as on 31.03.2011 of Rs. 401.92 crores, investment stood at Rs. 25.85 crores. Thus, the assessee has adequate own funds. Hence, following the Hon'ble Bombay High Court decision of CIT v HDFC Bank (2014) 366 ITR 505 (Bom), no interest could be disallowed. It is also on record that the assessee has neither received any dividend income nor claimed any income to be exempt. Since there is no exempt income earned, there is no question of invoking Section 14A of the Act as held Hon'ble Special Bench in the case of ACIT v Vireet Investment (P.) Ltd [2017] 82 taxmann.com 415 (Delhi - Trib.) (SB). Thus, even on this count, no disallowance u/s 14A could be made. In view of the above, we are of the considered view that there is no error in findings of ld. CIT(A) and hence, we are inclined uphold CIT(A) findings and reject ground taken by the revenue.
35. Ground No 2 & 3 of grounds of appeal are general, not pressed, hence, dismissed.
36. In the result, Revenue appeal is dismissed.
37. As a result, appeals filed by the assessee for AY 2010-11 and 2011-12 are partly allowed for statistical purpose and the appeal of the Revenue for AY 2011- 12 is dismissed.
Page 32 of 34Order pronounced in the open court on 15-02-2019.
Sd/- sd/-
(Mahavir Singh) (G Manjunatha)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dt : 15th February, 2019
Pk/-
Copy to :
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
/True copy/ By order
Asstt. Registrar, ITAT, Mumbai
Page 33 of 34