2009 (9) TMI 963 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of depreciation on assets of sale and lease back transactions.
2. Credit for MAT before charging interest u/s 234B & 234C.
3. Disallowance of proportionate interest expenditure u/s 14A.
4. Disallowance of proportionate administrative expenses u/s 14A.
5. Disallowance of provision for diminution in the value of investments.
6. Charging of interest u/s 234B.
7. Confirmation of disallowance of administrative expenses u/s 14A.

Summary:

1. Disallowance of Depreciation on Assets of Sale and Lease Back Transactions:
The Tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 6,52,56,469/- out of depreciation on assets of sale and lease back transactions. The Tribunal noted that similar transactions in previous years had been accepted by the Revenue, and thus, following the principle of consistency, the present claim could not be disallowed.

2. Credit for MAT Before Charging Interest u/s 234B & 234C:
The Tribunal directed the Assessing Officer to allow credit for MAT from the total tax payable before charging interest u/s 234B & 234C, following the precedent set in Phillips India Ltd. v. ACIT (2005) 92 ITD 441 (Chd.).

3. Disallowance of Proportionate Interest Expenditure u/s 14A:
The Tribunal set aside the issue to the Assessing Officer to decide afresh, following the decision in the assessee's own case for the assessment year 2001-02, where it was held that the onus is on the assessee to prove that interest-bearing funds were not invested in tax-free securities.

4. Disallowance of Proportionate Administrative Expenses u/s 14A:
The Tribunal set aside the issue to the Assessing Officer to follow the decision taken in the assessee's own case for the assessment year 2001-02, where a 1% disallowance of administrative expenses was deemed reasonable.

5. Disallowance of Provision for Diminution in the Value of Investments:
The Tribunal rejected the assessee's claim for the provision made for diminution in the value of investments, following the decision in the assessee's own case and the precedent set in Gujarat Gas Services Ltd. v. ACIT 115 ITD 218 (Ahd).

6. Charging of Interest u/s 234B:
The Tribunal dismissed the assessee's contention against the charging of interest u/s 234B, following the decision in the assessee's own case, where it was held that interest under Section 234B is mandatory and consequential based on the assessed income.

7. Confirmation of Disallowance of Administrative Expenses u/s 14A:
The Tribunal dismissed the assessee's CO regarding the confirmation of disallowance of administrative expenses to the extent of Rs. 27,804, following the decision in the assessee's own case for the assessment year 2001-02.

Conclusion:
Both the Revenue's appeals were partly allowed for statistical purposes, and the assessee's Cross Objections were dismissed. The order was pronounced in Open Court on 11/09/2009.