Income Tax Appellate Tribunal - Mumbai
Addl.C.I.T.3(1), Mumbai vs Ambit Corporate Finance Pvt. Ltd., ... on 16 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " A" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM
ITA No. 5991/Mum/2012
(A.Y. 2008-09)
The Asst. Commissioner of Ambit Corporate Finance
Income Tax, Circle 3(1), Pvt. Ltd.
Room No. 607, 6 t h Floor, Vs. Ambit House, 1 s t Floor, 449,
Aayakar Bhavan, Senapati Bapat Marg, Lower
Mumbai-400 020 Parel, Mumbai -400 013
Appellant .. Respondent
PAN No.AAACA8834B
ITA No. 6249/Mum/2012
(A.Y. 2008 -09)
ITA No. 6250/Mum/2012
(A.Y. 2009 -10)
ITA No. 1794/Mum/2014
(A.Y. 2010 -11)
ITA No. 1096/Mum/2015
(A.Y. 2011 -12)
Ambit Corporate Finance The Deputy Commissioner
Pvt. Ltd. of Income Tax, Circle 3(1),
Ambit House, 1 s t Floor, 449, Vs. Room No. 607, 6 t h Floor,
Senapati Bapat Marg, Lower Aayakar Bhavan,
Parel, Mumbai -400 013 Mumbai-400 020
Appellant .. Respondent
PAN No.AAACA8834B
Revenue by : Rajesh Kumar Yadav, DR
Assessee by : Nitesh Joshi, AR
Date of hearing: 06-11-2017 Date of pronouncement : 16-11-2017
2
I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 ,
I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 ,
I T A N o . 1 0 9 6 / Mu m / 2 0 1 5
Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12
ORDER
PER BENCH:
These five appeals one by the Revenue and four by the assessee are arising out of the order of Commissioner of Income Tax (Appeals)-5, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-5/Addl. CIT & DCIT 3(1)/IT-ROT 237 & 258/2011-12, IT-206&907/12-13&13-14/88&217/13- 14&14-15 dated 13-07-2012, 12.12.2013 & 14.11.2014. The Assessments were framed by the Addl. CIT Range 3(1) & DCIT, Circle 3(1), Mumbai (in short ACIT) for the assessment year 2008-09, 2009-10, 2010-11, 2011-12 vide order dated 10-03-2010, 22-11-2011, 31-01-2014, 27-12-2012 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act').
2. The first issue in this appeal of Revenue, in ITA No. 5991/Mum/2012 for AY 2008-09, is against the order of CIT(A) deleting the disallowance of expenditure incurred by assessee towards advertisement in media/ magazine amounting to ₹ 40,65,668/- for the reason that the benefit to the assessee is enduring nature over all long for long period of time. For this Revenue has raised following ground No.1-
"1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of ₹ 40,65,558/- being 2/3 r d of the expenditure of ₹ 60,98,501/ - incurred by the assessee towards advertisement in media/magazine which would result in benefit to the assessee of an enduring nature over a long period of time."3
I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12
3. Briefly stated facts are that the assessee has debited a sum of ₹ 68,23,934/- in its P&L Account on account of advertisement expenses. The AO during the course of assessment proceedings require the assessee to give details and also explain the reasons for increase in advertisement expenses from earlier yeas. The AO on perusal of the details noted that a sum of ₹ 41,72,013/- was payment towards NDTV Ltd. and further a sum of ₹ 19,26,488/- is towards payment to Mudra Communication Ltd. for advertisement in India Today. The assessee claimed before the AO that these expenses amounting to ₹ 60,98,501/- were mainly due to brand promotion incurred during the year including advertising in media/magazine. The AO has not doubted the genuineness of expenditure but only stated that this is not Revenue in nature and the expenses is towards promoting brand value which would result in benefit to the assessee of enduring nature over a long period i.e. beyond the previous year under consideration and hence, he allowed 1/3rd of such expenses amounting to ₹ 20,32,833/- during the year under consideration and balance amount of ₹ 40,65,668/- was disallowed. Aggrieved, assessee preferred the appeal before CIT(A), who deleted the disallowance by observing in Para 7.2 as under: -
"7.2 I have carefully gone through the facts of the case. The appellant has also provided with the details of expenses towards sponsorships/ advertisements incurred by the Appellant over last few assessment years. Considering the fact that the Appellant has been incurring such nature of expenses every year and there is no enduring benefit out of these expenses, these expenses cannot be treated as capital nature. The appellant has filed copy of assessment orders for the earlier AY i.e. AY 2007-08 4 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd. AYs: 08-09, 09-10, 10-11 & 11-12 wherein no disallowance has been made by the AO on the issue in hand. Further, it is also seen that in the subsequent year i.e. AY 2009-10 no disallowance has been made on this account. Following rule of consistency, the Assessing Officer is directed to delete the disallowance. This ground is accordingly allowed.
4. Aggrieved, now Revenue is in second appeal before Tribunal. Before us, the learned Senior Departmental Representative heavily relied on the assessment order and stated that this expenditure for brand promotion is in the nature of enduring benefit and hence, AO has rightly allowed 1/3rd of the expenditure in this year.
5. On the other hand, the learned Counsel for the assessee stated that the assessee is a category I merchant Banker approved by SEBI. The activities of it mainly include acting as advisors in the entire range of corporate finance activities including mergers, acquisitions, de-mergers, disinvestments, capital raising, asset sale etc. During the assessment year 2008-09, the assessee has incurred advertisement expenses of ₹ 60,98,501/- which mainly consists of reimbursement of expenses to Ambit Holdings Private Limited. Firstly, payment made to NDTV Ltd. towards sponsorship expense for program series "In the Ambit of Business" on Union Budget 2008, and secondly, Payment made to Mudra Communications Ltd. for advertisement in Media. The expenses incurred in connection with the Programme "In the Ambit of Business" is related to series of episodes covering topics like expectations from Union Budget 2008, debate on the impact of Budget 2008 on various sectors and economy at large, challenges and opportunities from Budget 2008 etc. The employees of the assessee participate in these programmes and provide their views. The assessee has been incurring such expenses 5 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 every year. It is also evident from the nature of topics covered in this program on Union Budget which itself is subject to change every year and has limited time value. The expenses incurred on these are of recurring nature. The discussions, views, debates conducted during these series pertain to then prevailing environment which itself is subject to constant change and hence, it does not entail any permanent benefit. Accordingly, the assessee incurs these expenses every year in its ordinary course of business depending on the need of business and subject to financial considerations. Sample copies of the bills of advertisement expenditure are already enclosed to the paper book of the assessee. As the assessee in the business of financial services, by participating in such programmes the assessee can demonstrate its professional expertise in these areas. The advertisement expenses paid to Mudra Communications Ltd. is for advertisement in magazines like India Today and Times of India in the normal course of business as part of its marketing exercise as an investment banker. A sample copy of the cut outs of the advertisement published in Economic Times- Mumbai on 17th October, 2007 is already enclosed to the paper book. Further, these expenses have been rightly allowed as admissible revenue expenses in AY 2006-07 and AY 2007-08. They are not of any exceptional nature or one time nature and hence, there is no question of any enduring benefit out of it. The Assessing Officer has allowed 1/3rd of expenditure in the AY 2008-09 on the consideration that these expenses are not of any enduring benefits. There is no provision in the Act to treat the expenditure as deferred revenue (in which expenses are to be allowed over a period of time except under section 35D). Expenditure can either be of revenue or capital in nature. Hence, once the expenditure is ascertained as not of any personal or capital nature, it has to be allowed as deductible expenditure as per the provisions of section 37 of the act. As per section 37 of the Act, an expenditure incurred will be allowed as deduction if it 6 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 fulfills the following conditions, namely; such expenditure incurred is not in the nature of expenditure described under section 30 to 36 of the Act. Such expenditure is not in the nature of capital expenditure. Such expenditure is not of personal in nature. Such expenditure is laid wholly and exclusively for the purpose of business or profession. The learned Counsel, therefore, finally argued that the expenditure incurred satisfies all the conditions laid down under section 37 and the same ought to be allowed as business expenditure.
6. The learned Counsel for the assessee also relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Asian Paints India Limited (2016) 243 Taxman 348/75 taxmann.com 152 (Bombay), wherein before the Hon'ble High Court question B, which is referred as under: -
"(B) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the disallowance made by the Assessing Officer on expenditure on 'Corporate Brand' building, treating such expenditure as revenue in nature?"
7. The learned Counsel for the assessee drew our attention to Para 5 of the judgement of Hon'ble Bombay High Court, wherein exactly identical expenditure as in the case of assessee was incurred and relevant Para 5 reads as under: --
"5. Re. Question No.(B) :
(a) The Respondent -Assessee incurred expenditure on advertisement on television aggregating to Rs.29.99 crores. This expen diture related to 7 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 advertisements published on television relating not only to individual products manufactured by it but also towards corporate advertisement to the extent of Rs.5.47 crores.
(b) The Assessing Officer disallowed the expenditure claimed t owards corporate advertisement amounting to Rs.5.47 crores on the ground that the same is on capital account as corporate advertisement helps in building the company's brand value. The benefit of such build up of brand value would endure over a period of y ears and therefore fall in the capital field. This view was taken by the Assessing Officer in his final order after his draft Assessment order taking an identical view was upheld by the D.R.P.
(c) On appeal to the Tribunal, the impugned order allowed th e Respondent Assessee's appeal by inter alia holding that the expenditure is revenue in nature, even if the same is incurred for promotion of a corporate brand, as it facilitates the business of the Assessee and results in increased sales and profitability. The impugned order further holds that the enduring benefit, if any, on account of brand building would not be in the capital field.
(d) Mr. Malhotra, learned Counsel for the Revenue, urges that an expenditure incurred to create/improve a brand would be on capital account. This is in view of the enduring benefit available to the Respondent-Assessee in relation to its brand. It is particularly submitted that amounts received on sale of brand is on capital account and not taxed as Revenue receipts. As als o, amount paid to purchase a brand is regarded on capital account. Therefore, the expenditure incurred on brand advertisement cannot be allowed as Revenue expenditure.
8I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12
(e) We find that an identical issue had arisen before this Court in case of CIT v. Jeoffrey Manners & Co.
Ltd. [2009] 315 ITR 134/180 Taxman 87 (Bom.), wherein the Court was considering a question whether the expenses incurred by the Respondent -
Assessee therein for making advertisement films is to be treated as a capital or revenue expenditure. This Court opined that the correct test to be applied in respect of expenditure incurred for making advertisement films was that when the same was incurred in respect of an ongoing business of the Assessee, it is Revenue. On the other hand, when the expenditure is incurred in respect of a brand which is to be used in a business which is yet to be commenced, it is capital expenditure. In this case also, the expendit ure on corporate advertisement films is in respect of ongoing business. The expenditure for advertisement of a brand or corporate name of an existing ongoing business is in the nature of maintaining the brand and/or corporate image and it is not for creation of a brand. Further, the test of enduring benefit urged by the Revenue was considered by the Apex Court in Empire Jute Co.
Ltd. v. CIT [1980] 124 ITR 1/3 Taxman 69 to hold that it is not a conclusive test in all cases so that such expenditure is always on capital account. The Court observed that what is to be examined is the nature of advantage obtained in the commercial sense by incurring the expenditure. If the expe nditure consists of merely facilitating the assessee to carry on business more profitably leaving the fixed capital untouched, it would be on revenue account. The entire expenditure, the Court observed, has to be looked at from a businessman's point of view. In the present facts, the expenditure on account of corporate advertisement is to essentially maintain the corporate image and not create a 9 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 corporate image. Further, the impugned order holds on facts that the corporate advertisement expenditure facilita tes the business having a direct impact on sales and profitability of the Respondent -
Assessee.
(f) In the above circumstances, the view taken by the impugned order that corporate advertisement enhances the business of the Assessee resulting in increased sales of its product in Revenue field, is a possible view, on the present facts. Consequently, the question as raised does not give rise to any substantial question of law. Thus, not entertained.
8. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that in the present case also the facts are not in dispute that the assessee has incurred this expenditure mainly on brand promotion during the year including advertising in Media/ Magazine. It is also not disputed by Revenue. Now before us, that this expenditure is not a corporate advertising films, is in respect of ongoing business. Once, this is for the business and expenditure incurred on brand advertisement, the same is to be allowed as Revenue in nature. Respectively, following Hon'ble Bombay High Court in the case of Asian Paints India Limited (supra), we confirm the order of CIT(A) allowing the claim of the assessee and dismiss this issue of Revenue's appeal. Revenue's appeal is dismissed.
9. Coming to assessee's appeals in ITA No. ITA Nos. 6249/Mum/2012, 6250/Mum/2012, 1794/Mum/2014, 1096/Mum/2015 for A.Y. 2008-09, 2009-10, 2010-11,2011-12. The only common issue in all these four years is as regards to the disallowance of expenses relatable to exempt income by the AO and confirmed by CIT(A) by invoking the provisions of section 14A of the Act read with rule 8D of the Income Tax Rules, 1962 (the rules). Briefly stated facts are that the AO noted, the 10 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 assessee has received dividend income of ₹ 43,26,298/- in AY 2008-09, ₹ 45,55,366/- in AY 2009-10, ₹ 47,70,620/- in AY 2010-11 and ₹ 1,47,57,441/- in AY 2011-12. The assessee claimed these dividend incomes has exempt under section 10(34) of the Act in all the years. The assessee suo moto disallowed a sum of ₹ 6,48,945/- (which was revised before CIT(A) vide computation at ₹ 3,81,528/-) for AY 2008-09, a sum of ₹ 3,29,296/- for AY 2009-10, a sum of ₹ 3,24,441/- for AY 2010-11, and a sum of ₹ 1,80,077/- for AY 2011-12.
10. The facts and circumstances are exactly identical in all the years and hence, we will take the facts from AY 2008-09 and will decide the issue. We find that in all the years, the AO has simply applied Rule 8D and made disallowance under Rule 8D (2)(iii) of the Rules except in AY 2010-11 Rule 8D (2)(ii) was also applied. The AO made disallowance of ₹ 14,07,045/- in AY 2008-09, a sum of ₹ 21,36,632/- in AY 2009-10, a sum of ₹ 69,53,073/- (including disallowance under Rule 8D(2)(ii) of interest amounting to ₹ 2,37,604/- for AY 2010-11 and a sum of ₹ 1,01,58,963/- for AY 2011-12. The CIT(A) also confirmed the disallowance made by AO for all the AYs.
11. Before us, the learned Counsel for the assessee stated that in any of the years, AO has not recorded any satisfaction as can be seen from the assessment order. The learned Counsel took us through the assessment order whereby the AO has relied on the decision of ITAT special Bench, Mumbai, in the case of ITO Vs. Daga Capital Management P. Ltd. 117 ITD 169 (SB) wherein it is held that Rule 8D is retrospective. The relevant Para 6.6 and 6.7 of the AO's order reads as under: -
"6,6 The insertion of section 14A with retrospective effect, from 1.4.1962, is a serious attempt on the part of the 11 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd. AYs: 08-09, 09-10, 10-11 & 11-12 Legislature not to allow deduction in respect of any expenditure incurred by the assessee in relation to income, which does not form part of the total Income under the Act, against the taxable income. The Legislature has further clarified its intention that the expenses incurred can be allowed only to the extent they arc relatable to the earning of the taxable income. The language has, therefore, made an attempt to curb the practice used to reduce the tax payable on the exempt Income by debiting the expenses incurred to earn the exempt income against the taxable income The language used by the legislature in the statute makes it amply clear that the legislature was well aware that the deduction of expenses in respect of exempt income were being claimed in full, against the taxable income was therefore clarified that expenses incurred can be allowed only to the extent they are relatable to earning of the taxable income. Nature of the expenses incurred may, therefore, be related partly to the exempt income, and partly to th e taxable income, but the intention of the legislature to allow the expenses only to the extent they are relatable to the earning of taxable income. It has been clarified unambiguously that in computing the total income, no deduction shall be allowed in respect of expenditure incurred by the assessee against the income which is 12 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd. AYs: 08-09, 09-10, 10-11 & 11-12 claimed as exempt from tax. Circular No.14 of 2001 dated 22.11.2001, and Circular No.8 of 2002 dated 27 .8.2002 have also explained the provisions wherein it has been clarified that n o expenses relatable to an income exempt from tax would be allowed as a deduction.
6.7 The explanation filed by the assessee is carefully perused and the same is not acceptable, in view of the above referred decisions, and decision of the i1on'ble ITA'F. Special Bench. Mumbai in the case of Daga Capital Management Pvt . Ltd. The assessee has incurred expenses for earning dividend income which is evident from the fact that the assessee itself has disallowed a sum of lts.6,48945/ on estimated basis. Since the expenses related to earning exempt income have been incurred, the same arc disallowed as per provisions of Section MA read with Rule 8D of the of the IT Rule. As per the provisions of See.14A, the disallowance u/s.14A has to be made in accordance with the Rule 81.) of the IT Rules 1962, which is computed as under:........."
12. The learned Counsel for the assessee stated that this decision of the special bench of ITAT in the case of ITO Vs. Daga Capital Management P. Ltd. (supra), is reversed by the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [2017] 394 ITR 449 (SC) and held the provisions of Rule 8D of the Rules 13 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12 as prospective and will apply for and from AY 2008-09 and thereafter the relevant assessment years falls wherein Rule 8D of the Rules will apply. The learned Counsel for the assessee drew our attention to Supreme Court decision in the case of Godrej & Boyce Mfg. Co. Ltd. (supra) and he referred to the relevant page 471, Para 37 & 38, wherein Hon'ble Supreme Court has clearly stated that it is mandatory for the AO with regard to subjective satisfaction on the issue. The relevant observations of the Hon'ble Supreme Court read as under: -
"37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub- sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of 14 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd. AYs: 08-09, 09-10, 10-11 & 11-12 the Rules or a best judgment determination, as earlier prevailing, would become applicable.
38. In the present case, we do not find any mention of the reasons which had prevailed upon the Assessing Officer, while dealing with the Assessment Year 2002-2003, to hold that the claims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the Assessing Officer, particularly, in the absence of any new fact or change of circumstances. Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available (Rs. 270.51 crores as on 1.4.2001 and Rs. 280.64 crores as on 31.3.2002) remains unproved by any material whatsoever. While it is true that the principle of res judicata would not apply to assessment proceedings under the Act, the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out which conspicuously is absent in the present case. In this regard we may remind ourselves of what has been observed by this 15 I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 , I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 , I T A N o . 1 0 9 6 / Mu m / 2 0 1 5 Ambit Corporate Finance Pvt. Ltd. AYs: 08-09, 09-10, 10-11 & 11-12 Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321/60 Taxman 248 (SC)."
13. From the facts of the present case, it is clear that the AO despite the fact that all the books of accounts were produced before him, he could not point out any nexus with the exempt income and that of the expenditure relatable to this exempt income. Even the Hon'ble Supreme Court in the case of Godrej & Boyce Mfg. Co. Ltd. (supra), has clearly laid down the principle that the satisfaction of the AO must be there for making disallowance under section 14A of the Act read with Rule 8D of the Rules. In the present case, the satisfaction is missing in all the years. Accordingly, we allow the appeals of the assessee on this issue except suo moto disallowance of a sum of ₹ 3,81,528/-in AY 2008-09 be enhanced to as sum of ₹ 6,48,945/- as it has revised the disallowance. The AO will recompute the income accordingly in all these years.
14. In the result, the appeal of Revenue is dismissed and that of the assessees' appeals are allowed except ITA No. 6249/Mum/2012 for AY 2008-09, which is partly allowed.
Order pronounced in the open court on 16-11-2017.
Sd/- Sd/-
(N.K. PRADHAN) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 16-11-2017
Sudip Sarkar /Sr.PS
16
I T A N o s . 5 9 9 1 , 6 2 4 9 , 6 2 5 0 / Mu m / 2 0 1 2 ,
I T A N o . 1 7 9 4 / Mu m / 2 0 1 4 ,
I T A N o . 1 0 9 6 / Mu m / 2 0 1 5
Ambit Corporate Finance Pvt. Ltd.
AYs: 08-09, 09-10, 10-11 & 11-12
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai BY ORDER,
6. Guard file.
//True Copy//
Assistant Registrar
ITAT, MUMBAI