TMI Blog2015 (4) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... us the reassessment proceedings are bad in law. We, therefore, cancel the notice u/s 148 dated 02.03.2011 and as a consequence, all consequential proceeding are annulled. - Decided in favour of assessee Additions made on account of expenditure incurred by way of interest under section 14A - Held that:- In the case of the assessee in preceding year, we are of the opinion, that a consistent view taken by the revenue authorities on the submissions made by the assessee involving the factual aspects. We, therefore, set aside the order of the CIT(A) and restore the issue to the AO to ascertain the fact, as to when the investments were made and whether any investments, giving tax free income in assessment year 2008-09 and with a direction to verify and examine the necessary facts. - Decided in favour of assessee for statistical purposes. - ITA No. 6795/Mum/2012, ITA No. 6796/Mum/2012, ITA No. 6797/Mum/2012 - - - Dated:- 13-2-2015 - R. C. Sharma, AM And Vivek Varma,JM,JJ. For the Appellant : Shri Nitesh Joshi For the Respondent : Shri Pavan Kumar Beerla ORDER Per Vivek Varma,JM. The appeals have been filed against the orders of CIT(A)-4, Mumbai, dated 18.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 was scrutinized u/s.N3(3) of the T. T Act and on perusal of the record, it is seen that assessee has wrongly worked out the Income taxable under Rule 6EB which is actually pertaining to Period of six months. Thus apparently, the income of such Non-Performing Assets for further one and halt years has not been considered by the assessee in its details filed under Rule 6EB. Therefore, the income escaped is in excess of ₹ 1.00 lac for relevant assessment year. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment for AY. 2004-05 by reason of the failure on part of the assessee to disclose fully and truly all material facts necessary for assessment and also by the reason of understatement of income. Hence, necessary permission to issue notice u/s 148 per provision of Section 151(2) is sought to issue notice u/s 148 of the I.T. Act, for AY 2004-05 in the above mentioned case. X DCIT 2 (1), MUMBAI 5. The assessee informed the AO that the issue was called for by the AO in the questionnaire dated 31.07.2006, vide pt. no. 7, which read, 7. Detailed note on accounting policies clearly indicating the methods of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were able to generate something, which was not described by the assessee either in its return or explanation. This fact has not been broken by the revenue authorities. Hon ble Bombay High Court in the case of Sitara Dramond Pvt Ltd vs ITO, reported in 358 ITR 429, held that the department has to bring out something to prove that any particular of income was concealed. 18. In fact, we find that even in the accounts, as submitted along with the ROI, all details had been disclosed. 19. In such a circumstance, we are of the opinion that the reassessment proceedings are bad in law. We, therefore, cancel the notice u/s 148 dated 02.03.2011 and as a consequence, all consequential proceeding are annulled. 20. Ground no. 1 1.1 are allowed. 21. Ground no. 1.2 becomes academic. 22. As a result, the appeal for assessment year 2004-05 is allowed. ITA No. 6796/Mum/2012 : Asst Year 2005-06 : 23. The following grounds have been raised: 1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax - Appeals-4 Mumbai erred in confirming the action of the Assessing Officer in the re-opening of the assessment though no fresh material has been broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. The assessee approached the CIT(A) before whom the submissions were reiterated and it was further submitted that, As already mentioned, the main activity of the Appellant is to carry on the business of providing long term housing finance. Investment activity is an ancillary activity which is undertaken by the Appellant as ancillary to the main business in terms of which the surplus funds arising from the principal business activity are invested. The investments stated above were not made during the previous year ended 31.03.2009 nor were any borrowed funds of the previous year relevant to the Assessment Year under appeal were utilized for the purpose of making the investments. The Appellant also submits that no specific expenditure has been incurred which can be directly or indirectly attributable for earning such income. (A) Expenses attributable to exempt income aggregating to ₹ 1,13,18,2011-: To justify that section 14A of the Act should not be enforced in the Appellants case, we would like to draw your attention to Sub section (1) of section 14/1 oft ho Act for your reference. For the purpose of computing the total income under this Chapter, no ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income. It is proposed to insert a new section 14A so as to clarify the intention of the Legislature since the inception of the Income tax Act, 1961 that no deduction shall be made in respect of any expenditure incurred by the assessee in relation to income, which does not form part of the total income under the Income tax Act. The proposed amendment will take effect retrospectively from 1st April 1962 and will accordingly, apply in relation to the assessment year 1962-63 and subsequent assessment years . Proviso to section 14A of the Act states, Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. (Inserted by the Finance Act, 200 w.r.e.f. 11.5.2001). The Appellant submits that the pro visions of section 14A read with Rule 8D of the Income Tax Rules, 1962 ('the Rules) have to be applied in accordance with the facts and circumstances of the case and not in a straight jacketed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions contained in Rule 8D of the Rules 1962. In view of the facts, stated above the Appellant requests you to delete the additions made on account of interest considered by the Assessing Officer, while computing the expenditures incurred in relation to the exempt income. The Appellant requests you to consider the above facts, before you frame the appellate order. 32. The CIT(A), after considering the above facts, held, 6. I have considered the facts of the case and submissions of the assessee. Hon'ble Bombay High Court has held in the case of Godrej Boyce Mfg. Co. Ltd. vs. CIT 328 ITR 81 that Rule 8D is applicable from A.Y. 08-09 and, therefore, A.O. has correctly applied Rule 8D because certain portion of expenses relates to the exempt income which needs to be apportioned. Assessee has claimed that it has surplus funds which have been invested and no borrowed funds have been used for investment from which exempt income is received. It is also claimed that the investments are very old and at that time also there was surplus funds available with the assessee and therefore, no interest is disallowable under Rule 8D. The assessee has not shown any di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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