9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (11) TMI 422 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - CIT(A) deleted the addition - Held that - In view of the factual position that own funds were many times more than the amount of investment and in view of the judgment of CIT Versus Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) wherein held that no disallowance u/s 14A when assessee had interest free funds of its own and also in view of the fact that Rule 8D is not applicable in the present year, no interference is called for in the order of CIT(A) on this issue - in favour of assessee. Reopening of assessment - valuation of closing stock, disallowance u/s 14A & escaping of FBT - Held that - As in the course of original assessment proceedings, the A.O. has made proper queries regarding valuation of closing stock as well as regarding disallowance to be made u/s 14A and on both the counts, reply were submitted by the assessee before the A.O. in course of original assessment proceedings and thereafter, the assessment was completed by the A.O. u/s 143(3) and therefore, it is abundantly clear that opinion was made by the A.O. in course of original assessment proceedings on the basis of queries and its reply and no new material has been indicated which has come to the notice of the A.O. for reopening. FBT which cannot be the ground for issuing notice u/s 148 because for issuing notice in respect of escaping of FBT, there is a separate section 115 WG in the I.T. Act and therefore, no notice can be issued u/s 148 of the I.T. Act - Hence, in the facts of the present case, the reopening is on the basis of mere change of opinion which is not permissible as per law - against revenue.
Issues Involved:
1. Deletion of disallowance under Section 14A for A.Y. 2007-08. 2. Validity of notice issued under Section 148 and quashing of assessment order under Section 143(3) read with Section 147 for A.Y. 2008-09. Issue 1: Deletion of Disallowance under Section 14A for A.Y. 2007-08 The Revenue challenged the deletion of disallowance of Rs. 35,84,595/- made under Section 14A by the CIT(A). The CIT(A) noted that the assessee had substantial own funds (Rs. 4890.03 lacs on 01.04.2006 and Rs. 4979.32 lacs on 31.03.2007) which were more than the investments made (Rs. 835.90 lacs). The CIT(A) relied on the judgment of the Bombay High Court in the case of Reliance Utilities and Power Ltd., which held that if own funds exceed the investments, it should be presumed that investments were made from own funds and no disallowance under Section 14A is warranted. The Tribunal upheld the CIT(A)'s decision, noting that the CIT(A) had correctly applied the principles from the Reliance Utilities and Power Ltd. case. Additionally, Rule 8D was not applicable for the relevant assessment year. The Tribunal also acknowledged that the CIT(A) had made a reasonable disallowance of Rs. 20,000/- for administrative expenses related to exempt income, which was deemed appropriate given the quantum of exempt income (Rs. 1,38,24,412/-). Issue 2: Validity of Notice Issued under Section 148 and Quashing of Assessment Order under Section 143(3) read with Section 147 for A.Y. 2008-09 The Revenue contended that the CIT(A) erred in holding the notice issued under Section 148 as invalid and in quashing the assessment order passed under Section 143(3) read with Section 147. The reasons for reopening the assessment included non-disallowance of expenses under Section 14A, unutilized CENVAT credit not included in closing stock, and non-charging of Fringe Benefit Tax (FBT) on certain expenses. The Tribunal noted that during the original assessment proceedings, the Assessing Officer (A.O.) had already raised queries regarding the valuation of closing stock and disallowance under Section 14A, and the assessee had provided satisfactory replies. The Tribunal emphasized that no new material had come to the A.O.'s notice to justify reopening the assessment, making it a case of mere change of opinion, which is not permissible under law as per the Supreme Court's ruling in CIT vs. Kelvinator of India Ltd. Regarding the FBT issue, the Tribunal observed that notice for FBT should be issued under Section 115 WG and not under Section 148, thus invalidating the third objection of the A.O. Consequently, the Tribunal upheld the CIT(A)'s decision to quash the reassessment order, holding that the reopening was not valid. Conclusion: The Tribunal dismissed both appeals by the Revenue, upholding the CIT(A)'s decisions on both issues. The disallowance under Section 14A was correctly deleted for A.Y. 2007-08, and the reopening of the assessment for A.Y. 2008-09 was invalid due to it being based on a mere change of opinion.
|
