2009 (8) TMI 783 - HC - Income Tax

Interest on borrowed capital - The Assessing Officer submits that in the assessment order, no finding was recorded by the Assessing Officer with respect to the disallowance of part of the expenditure on the touchstone of section 14A of the Act - He did not record any adverse findings against the assessee - In his submission, had there been an adverse finding on this issue, the assessee would have challenged the same raising specific ground in that behalf - Appellant submits that in the absence of any adverse finding by the Assessing Officer, it has got to be presumed that the submissions made by the assessee were accepted by the Assessing Officer with regard to the non-applicability of section 14A of the Act - He, thus, submits that the very same issue which was considered in favour of the assessee ought to have been challenged by the Revenue - The Revenue has practically conceded to the submission made by the assessee - In view of the above, quash and set aside the order of the Tribunal to the extent it directs consideration of the applicability of section 14A of the Act.

Summary

The High Court of Bombay heard a case where the substantial question of law was whether the Tribunal overstepped its jurisdiction by suggesting the Assessing Officer consider the applicability of section 14A of the Income-tax Act. The appellant's counsel argued that the Assessing Officer did not pursue the matter of disallowing expenditure related to exempted dividend income under section 14A, and no findings were recorded in the assessment order. The Commissioner of Income-tax (Appeals) upheld the disallowance, but the Tribunal remanded the matter back to the Assessing Officer. The appellant challenged this part of the Tribunal's order, claiming that as the Assessing Officer did not make any adverse findings, it should be presumed that the submissions made by the appellant were accepted. The Tribunal's directive to reconsider the applicability of section 14A was deemed inappropriate by the High Court, which partially allowed the appeal and set aside the Tribunal's order on this issue. The rest of the order was left untouched. The appeal was disposed of with no order as to costs.