2014 (6) TMI 574 - HC - Income Tax

Expenses on replacement of meters Head Office Expenses - Held that - Company engaged in the business of providing energy/ electricity and finding that the expenses have been incurred for development and to take care of environmental issues - The Tribunal rightly noted the factual position and particularly that the very claim arose for the AY 1999-2000 to 2005-2006 - The particulars in that regard are referred in the order of the ITAT thus, no substantial question of law arises for consideration Decided against Revenue. Deduction u/s 80IA of the Act - Purchase price from Tata Power Company Held that - The Tribunal was of the view that till the AY 2005-2006, the Revenue considered the rate at which the power was purchased by the Assessee from Tata Power Company as market value - there is nothing brought on record as to how the rate determined by the MERC is the true market value - the reasons assigned by the ITAT and finding that the attempt is to seek re-appreciation and reappraisal of the factual data thus, no substantial question of law arises for consideration Decided against Revenue. Disallowance u/s 14A r.w Rule 8D of the Rules - Held that - Following Godrej & Boyce Manufacturing Company Limited v/s DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT - the disallowance u/s 14A of the Act, has to be made in accordance with the principles laid down in the decision - Rule 8D should not be applied retrospectively - Such findings of remand and based on the judgment of the Court obviously will not raise a substantial question of law Decided against Revenue.

Summary

Issues Involved:
1. Assessment of claims in the Assessment Year 2006-07.
2. Substantial question of law regarding expenses incurred for development and environmental issues.
3. Deduction claim on account of replacement of meters.
4. Head office expenses.
5. Claim relating to purchase price from Tata Power Company under Section 80IA.
6. Disallowance under Section 14A of the Income Tax Act, 1961 and Rule 8D.

Analysis:

1. The High Court reviewed the ITAT's order concerning claims in the Assessment Year 2006-07. The ITAT had directed the Assessing Officer to allow certain claims in the Assessee's case related to expenses for development and environmental issues. The Court found that the Tribunal's findings did not raise any substantial question of law as the expenses were related to the Assessee's business of providing energy/electricity.

2. The Court addressed the issue of the claim for deduction on account of replacement of meters, which had arisen in previous Assessment Years as well. It was noted that this deduction, along with the earlier claims, did not raise a substantial question of law based on the factual positions presented in the ITAT's order.

3. Regarding the Head Office Expenses claim, the Court referred to the ITAT's findings for prior Assessment Years and concluded that the factual findings did not raise any substantial question of law in relation to this claim.

4. The Court examined the claim related to the purchase price from Tata Power Company for deduction under Section 80IA. The ITAT's analysis of the claim in light of Section 80IA, MERC's order, and market value considerations led the Court to determine that the claim did not present a substantial question of law, as it seemed to seek reevaluation of factual data.

5. The judgment also discussed the disallowance under Section 14A of the Income Tax Act, 1961 and Rule 8D. Referring to a previous Division Bench decision, the Court held that the Assessing Officer should adopt a reasonable basis for disallowance in accordance with the principles laid down in the decision. The Court found that this issue did not raise a substantial question of law and directed the Assessing Officer to rework and recomputed the disallowance based on the given facts and circumstances.

6. In conclusion, the Court dismissed the Appeal, stating that no substantial question of law was raised in the issues discussed. The judgment highlighted the importance of factual findings and the need for claims to be in accordance with relevant legal provisions and past decisions.