2013 (12) TMI 1567 - AT - Income Tax

Addition U/s 14A - Held that - The burden is on the assessee to submit the details of volume of transactions in relation to activity regarding dividend income and other activities from which the assessee has earned taxable income and then the Assessing Officer should work out the amount of disallowance in the ratio of such transactions undertaken by the assessee for earning dividend income and other transactions resulting into taxable income. The Assessing Officer should pass necessary order as per law as per above discussion after providing reasonable opportunity of being heard to the assessee. Ground No. 1 of Revenue s appeal stands partly allowed for statistical purposes. Addition on purchased/received the vehicle - Held that - If the assessee establishes this fact that the assessee received the delivery of the vehicle on 31/03/2007 and got it registered in his name on the first day of the next year then the assessee is eligible for depreciation even if the same was registered in the next year but since this fact is not verifiable from the record and no finding is available, we set aside the order of learned CIT(A) on this issue and restore the matter to the Assessing Officer for fresh decision. We would like to make it clear that the burden is on the assessee to furnish the proof of delivery of vehicle on 31/03/2007 and thereafter, the Assessing Officer should pass necessary order as per law. This ground of appeal is allowed for statistical purposes.

Summary

Issues Involved:
1. Deletion of addition made under Section 14A.
2. Deletion of addition related to commission payments.
3. Deletion of addition related to depreciation on vehicle.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Under Section 14A:
The Revenue challenged the deletion of additions made under Section 14A for both assessment years 2006-07 and 2007-08. The Assessing Officer had disallowed expenses by invoking Rule 8D, which the Tribunal found inapplicable for the assessment year 2006-07 based on the judgment in Godrej & Boyce Mfg. Co. Ltd. vs. Dy. CIT [2010] 234 CTR (Bom) 1. The Tribunal upheld the CIT(A)'s decision to delete the disallowance of interest expenditure but remanded the issue of administrative expenses back to the Assessing Officer for fresh determination based on transaction volume. For assessment year 2007-08, the Tribunal followed the same reasoning, confirming the deletion of interest expenditure disallowance and remanding the administrative expenses issue.

2. Deletion of Addition Related to Commission Payments:
For assessment year 2006-07, the Assessing Officer disallowed Rs. 1,93,389/- in commission payments due to lack of details and confirmations from nine individuals. The CIT(A) deleted the addition, citing that debit notes indicated sales mobilized by these individuals. However, the Tribunal found the CIT(A) failed to address the Assessing Officer's objections regarding the lack of service details and confirmations. Consequently, the Tribunal reversed the CIT(A)'s decision and restored the Assessing Officer's disallowance. A similar approach was taken for assessment year 2007-08, where the Tribunal upheld the disallowance of Rs. 1,20,327/- due to similar deficiencies in documentation.

3. Deletion of Addition Related to Depreciation on Vehicle:
For assessment year 2007-08, the Assessing Officer disallowed Rs. 1,10,475/- in depreciation on a vehicle, as the vehicle was delivered on the last day of the financial year and registered in the next financial year. The CIT(A) deleted the addition, but the Tribunal noted the need for proof of delivery on 31/03/2007. The Tribunal remanded the issue back to the Assessing Officer to verify the delivery date and decide afresh, emphasizing the burden on the assessee to provide proof of delivery.

Conclusion:
The Tribunal partly allowed the Revenue's appeals for both assessment years, confirming some deletions by the CIT(A) and remanding other issues back to the Assessing Officer for fresh consideration based on detailed guidelines provided.