2023 (2) TMI 1113 - ITAT DELHI

Disallowance u/s 14A r.w.r. 8D - suo moto disallowance made by the assessee - sufficiency of interest free funds - HELD THAT:- The aggregate of the Share Capital, the General Reserves and Surplus in Profit and Loss account, which can be termed as interest free funds available with the assessee as at 31st March 2009 is much in excess of the investments as on 31st March 2009.

In the case of Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that where an assessee had own funds as well as borrowed funds, a presumption can be made that the advances for non-business purposes have been made out of the own funds and that the borrowed funds have not been used for this purpose. We further find that identical issue arose before the co-ordinate Bench of Tribunal in assessee’s own case in A.Y. 2012-13 [2020 (2) TMI 1485 - ITAT DELHI] also. The Coordinate Bench of Tribunal while deciding the issue in that year has deleted the additional disallowance made by AO for the reasons noted therein. Before us, Revenue has not placed on record any contrary binding decision in its support nor has pointed to any distinguishing feature of the case in the year under consideration and that of earlier years.

Considering all we are of the view that no additional disallowance as made by AO in excess of the suo moto disallowance made by the assessee was warranted in the present case. We, therefore, direct the deletion of the additional disallowance made by AO. Thus the ground of assessee is allowed.

TP adjustment u/s 92CA(3) - interest on loan to assessee’s 100% subsidiary - HELD THAT:- We find that identical issue arose before the Tribunal in assessee’s own case in A.Y. 2014-15 [2021 (12) TMI 1428 - ITAT DELHI] and Co-ordinate Bench of Tribunal by following the order of Tribunal in assessee’s own case for A.Y. 2010-11 [2018 (2) TMI 2030 - ITAT DELHI] has decided the issue in favour of the assessee.

Nature of receipt - Receipts of of Carbon Emission Reduction (CERs) - According to assessee, the aforesaid amount was in the nature of capital receipt and should have been excluded while computing the taxable income but however it had recognized it as Revenue receipt in the return of income - HELD THAT:- We hold that the AO was not justified in considering the receipt from CERs to be revenue receipts. We, therefore, direct the AO to consider the receipts on transfer of CER to be capital receipt. Since the amount is held to be capital receipt, it cannot be considered for the purpose of computing book profit u/s 115JB of the Act. Thus the grounds of assessee are allowed.

Claim of depreciation on goodwill - claim of depreciation of goodwill was not made by assessee either in the return of income or during the assessment proceedings - HELD THAT:- No material has been placed by the Revenue to point out any judicial precedence to support his contention that when depreciation arising out of the same transaction has been allowed in other years, whether it can be denied in other years. Before us, Revenue has also not pointed to any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years. Revenue has also not placed any material on record to demonstrate that the order of Tribunal in assessee’s own case for A.Y. 2012-13 [2020 (2) TMI 1485 - ITAT DELHI] has been stayed/set aside/overruled by higher judicial forum. In view of the aforesaid facts, we are of the view that Assessee is eligible to claim depreciation on goodwill. We accordingly direct the AO to allow the claim of depreciation.

Calm first time made before CIT-A - Disallowance of donation paid to Schools of SRF Vidyalay and SRF Foundation - Claim for deduction was neither made by the assessee in the original return of income nor had the assessee filed revised return of income to claim such deduction - HELD THAT:- As decided in Mitesh Impex [2014 (4) TMI 484 - GUJARAT HIGH COURT] held that CIT(A) was not justified in not deciding the claim made by the assessee before him for the first time. We for the same reasons hold that CIT(A) has erred in not deciding the claim made before him for the first time and should have decided the claim of the assessee.

Revenue has also not placed any material on record to demonstrate that the order of Tribunal in assessee’s own case for A.Y. 2010-11 [2018 (2) TMI 2030 - ITAT DELHI] has been stayed/set aside/overruled by higher judicial forum. In view of the fact that there is no finding by the lower authorities on the allowability of the expenses, we, following the order of the coordinate bench of Tribunal in assessee’s own case and for similar reasons restore the issue back to the file of the AO and direct him to decide the claim of the assessee in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee.

Nature of receipt - additional depreciation, seeking of indexation benefit for long term capital gains and treating the TUF subsidy as revenue receipts - HELD THAT:- We for the reasons given while deciding the issue A.Y. 2014-15 [2021 (12) TMI 1428 - ITAT DELHI] and for similar reasons, restore the issue back to the file of AO and direct him to decide the issue afresh in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of this claim. Needless to state that the AO shall grant adequate opportunity of hearing to the assessee.

Indexation benefit for the calculation of Long Term Capital Gain - We find that though the issue was raised by the Assessee before CIT(A) but however CIT(A) did not admit the claim for the reasons noted in the order and therefore there is no finding of the lower authorities on the issue. Since there is no finding by the lower authorities on the issue, we restore the issue back to the file of AO and direct him to decide the claim of the assessee in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee.