2011 (4) TMI 1350 - AT - Income Tax

Summary

Issues Involved: Cross-appeals and Cross Objection (CO) arising out of ITA No.2763/Ahd/2007 by Revenue against the order of Commissioner of Income-tax(Appeals)-VIII, Ahmedabad in appeal No. CIT(A)-VIII/AC-4/237/06- 07 dated 05-04-2007 for the assessment year 2004-05.

Issue 1: Disallowance under section 14A of the Act

The assessee contested the disallowance under section 14A of the Act related to interest paid on borrowings made for investments in tax-free securities. The Commissioner of Income Tax (Appeals) confirmed the disallowance. However, both parties agreed that the issue was covered by a previous decision of the ITAT in the assessee's own case for assessment year 2001-02. The Tribunal had set aside the issue to the file of the Assessing Officer, emphasizing the need for judicial consistency between the revenue and taxpayers. Consequently, the issue was remanded to the Assessing Officer for further consideration based on the Tribunal's decision.

Issue 2: Disallowance of administrative expenses under section 14A

The Commissioner of Income Tax (Appeals) confirmed the disallowance of administrative expenses under section 14A of the Act. The Tribunal referred to a previous decision in the assessee's own case for assessment year 2001-02 and directed the issue to be reconsidered by the Assessing Officer in line with the Tribunal's decision, providing the assessee with a reasonable opportunity to be heard.

Issue 3: Disallowance of depreciation on assets of sale and leaseback transaction

The Revenue appealed the deletion of disallowance of depreciation on assets of a sale and leaseback transaction. Both parties acknowledged that the issue was previously decided in favor of the assessee by the Tribunal for the assessment year 2000-01. The Tribunal upheld the decision based on the principle of consistency and dismissed the Revenue's appeal on this ground.

Separate Judgement:

The Cross Objection (CO) filed by the assessee became infructuous due to the decision on the Revenue's appeal related to the disallowance of depreciation on sale and leaseback. Therefore, the CO was dismissed as infructuous. The appeal filed by both the assessee and Revenue was partly allowed for statistical purposes.