2016 (5) TMI 1311 - AT - Income Tax

Entitlement for deduction u/s. 80P - provisions on account of diminution of value of securities in earlier financial years - Held that - The deduction is allowed after giving effect to all the statutory deductions available to the assessee. Though the assessee has not claimed the statutory deduction on diminution of value of securities for the simple reason that its income was eligible for deduction u/s. 80P of the Act, be as it may. By claiming the diminution of value of securities during the year under consideration, the assessee is making itself entitled to a double benefit which has been declined by the A.O and has been confirmed by the First Appellate Authority as mentioned hereinabove. After giving a thoughtful consideration to the facts in issues qua the findings of the First Appellate Authority, we do not find any reason to interfere with the same. However, in all fairness, the assessee is very much entitled for the diminution in the value of securities for the financial year 2007-08 which is relevant for the assessment year under consideration. We, therefore, direct the A.O to allow the claim of F.Y. 2007-08 as per the provisions of the law. With the above directions, appeal filed by the Assessee is dismissed.

Summary

Issues:
Challenge to correctness of order regarding addition of ?45 lacs made by AO under section 143(3) of the Act for A.Y. 2008-09.

Analysis:
1. The appellant challenged the correctness of the order of the Ld. CIT(A) regarding the addition of ?45 lacs made by the AO under section 143(3) of the Act for the Assessment Year 2008-09.

2. The AO observed that the appellant had made provisions for diminution of value of securities in the financial years 2002-03 to 2005-06. The AO disallowed the claim of ?45,00,000, stating that the appellant had already claimed additional benefit equivalent to depreciation on securities in earlier years under section 80P of the Act. Consequently, the returned income of ?19,46,684 was assessed at ?64,46,684 after disallowing the claim.

3. The appellant contended that the diminution in value of securities was allowable as a deduction, but the AO rejected this argument. The CIT(A) upheld the AO's decision, emphasizing that the appellant had disallowed the provision for diminution in the value of securities during the relevant years.

4. The Tribunal noted that the appellant was entitled to a deduction under section 80P of the Act in the earlier years and did not claim the statutory deduction on diminution of value of securities. However, claiming the diminution during the current year would result in a double benefit, which was rightly disallowed by the authorities.

5. The Tribunal found no reason to interfere with the decision of the CIT(A) and dismissed the appeal. Nevertheless, the appellant was directed to allow the claim for diminution in the value of securities for the financial year 2007-08, which was relevant for the assessment year under consideration.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on the challenge to the correctness of the order regarding the addition of ?45 lacs made by the AO for the Assessment Year 2008-09.