Income—Expenditure incurred in relation to income not includi
CHANDIGARH TRIBUNAL
Income—Expenditure incurred in relation to income not includible in total income—Assessee was running software development unit and showed investments—AO noted that Assessee incurred interest expenses and portfolio management expenses—Assessee further replied that no loan was taken during year under consideration and all investments were made out of owned funds—Assessee submitted that no disallowance u/s 14 A should be made—AO held that provision of section 14A were applicable in Assessee's case and accordingly computed disallowance under Rule 8D(2)(ii) and under Rule 8D(2) (iii)—CIT(A) preferred not to comment on issue of satisfaction to be recorded by AO, however, with regard to Rule 8D(2) (ii) he gave relief to Assessee, as only borrowed funds were with respect to car loan taken by Assessee and it was not case of mixed funds—AO was directed to verify facts and recomputed disallowance under Rule 8D(2)(iii) by taking value of investment pertaining to only those investments, income from which was not taxable—Held, assessee had disallowed PMS expenses incurred by it during year—It was also matter of record that Assessee vide its letter stated before AO that provision of section 14A were not applicable in its case as no loan had been taken during year under consideration and all investments had been made out of own sources—AO had to record satisfaction as to why he was not satisfied with disallowance made by Assessee—U/s 14A(2), AO was required to examine accounts of Assessee and only when he was not satisfied with correctness of claim of Assessee in respect of expenditure in relation to exempt income, he could determine amount of expenditure that should be disallowed in accordance with method prescribed—Rule 8D(1) also categorically stated same position—No satisfaction was recorded by AO, before he invoked Rule 8D(2) & made recomputation
SC sets aside HC orders, holds CBDT Instruction No. 3/2011 specifying minimum monetary tax effect of Rs 10 lacs for Revenue appeals before HC as not having retrospective effect; HC had dismissed Revenue's appeals considering the aforesaid CBDT instruction; SC observes that all the appeals in present case were preferred prior to 2011, further observes that the instruction clearly indicates that it shall govern only such cases which are filed after the issuance of the instruction; SC rules that the CBDT instruction does not apply to pending cases i.e cases filed before 2011; Thus, remits matter back to HC for re-adjudicating the appeals on merits : SC
Takeover Code contemplates independent disclosures from co. & promoters, Rejects 'double jeopardy' defense
SEBI, Adjudicating officer penalizes Tumus Electric Corporation Ltd. ('Noticee Co.') for continuous delay of 15 years in making disclosures under Reg. 8(3) of Takeover Code (relating to 'disclosure by listed company within prescribed time from end of FY and record date'); Rejects Noticee co.'s contention that disclosures under Reg. 8(3) were dependent on disclosures submission under Reg. 8 (1) & 8 (2), observes that such disclosures are independent as disclosures under Reg. 8(3) are on yearly basis irrespective of change in shareholding of person / promoters; Rejects Noticee co.'s submission that co. promoter have already been penalized under adjudication proceeding and any penalty on Noticee Co. would be double jeopardy, holds that "two separate requirement of disclosures viz. one from promoter and another from company, has been mandated under Takeover Code which are independent of each other"; Relies on SAT rulings in Hybrid Financial Services Ltd. wherein it was held that persons holding 15% and more shares are obligated to make disclosure even when there is no change in the shareholding:SEBI
The order is passed by Rachna Anand, SEBI Adjudicating Officer
LSI Note:
Regulation 8(1) of Takeover Regulations, 1997 states that every person who holds more than 15% shares or voting rights in any company, shall, within 21 days from the FY ending March 31, make yearly disclosures to the company, in respect of his holdings as on 31st March. Regulation 8(2) states that a promoter / every person having control over a company shall, within 21 days from FY ending March 31, as well as the record date of the company for the purpose of declaration of dividend, disclose the number and percentage of shares or voting rights held by him and by person acting in concert with him, in that company to that co. Regulation 8(3) states that every listed co. shall within 30 days from FY ending March 31, as well as record date of the co. for the purposes of declaration of dividend, make yearly disclosures to all the stock exchanges on which the shares of the co. are listed, the changes, if any, in respect of the holdings of the persons referred to under sub-regulation (1) and also holdings of promoters or person(s) having control over the co. as on 31st March.
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