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2016 (1) TMI 1398 - AT - Income TaxAddition u/s 14A - assessee has not made any claim for exemption - Held that - Admittedly the assessee has not claimed any exempt income in the instant case. Therefore the ratio laid down in the judgment relied upon by the Learned CIT(A) passed by the Hon ble Jurisdictional High Court in the case of Corrtech Energy Ltd. 2014 (3) TMI 856 - GUJARAT HIGH COURT where the assessee has not made any claim for exemption of any income payment of tax no disallowance could be made u/s 14A of the Act has rightly been applied by the Learned CIT(A). In the absence of any infirmity in the order passed by the Learned CIT(A) the same is confirmed by us. In the result revenue s ground of appeal is dismissed. Addition on account of disallowance of depreciation on Car - vehicle was not registered in the name of the assessee but in the name of the Directors - Held that - Judgment passed by the Apex court in the matter of Mysore Minerals-vs-CIT (1999 (9) TMI 1 - SUPREME COURT) also confirms that merely because the vehicles are not registered in the name of the company but in the name of the Directors the assessee cannot be denied of the claim of depreciation. It is not necessary that the vehicle ought to have been registered in the name of the assessee claiming depreciation. Further that it was also pointed out by the Learned CIT(A) that in the assessee s own case for A.Y. 2010-11 such addition made by the Learned Assessing Officer was deleted. - Decided in favour of assessee Addition u/s 145A on account of unutilized CENVAT Credit - Held that - Addition on unutilized CENVAT credit was made u/s 145A of the Act by the Learned AO in assessee s own case for A.Y. 2010-11 the same was deleted by the first appellate authority holding the said credit cannot be a subject matter of addition u/s 145A of the Act being tax neutral. We find no merit in the case made out by the Revenue neither any infirmity in the order impugned before us. - Decided in favour of assessee
Issues Involved:
1. Deletion of addition made under Section 14A of the Income Tax Act, 1961. 2. Deletion of addition made on account of disallowance of depreciation on car. 3. Deletion of addition made under Section 145A of the Income Tax Act, 1961 on account of unutilized CENVAT Credit. Detailed Analysis: 1. Deletion of Addition under Section 14A: The revenue challenged the deletion of Rs. 22,62,174/- made under Section 14A of the Income Tax Act. The assessee had earned dividend income and made investments in mutual funds and shares. The assessee contended that no expenditure was incurred for earning tax-free income and had suo moto disallowed Rs. 29,20,159/- under Section 14A read with Rule 8D. The Assessing Officer (AO) did not accept this and computed a disallowance of Rs. 51,82,333/-, adding Rs. 22,62,174/- to the assessee's total income. The CIT(A) deleted the addition, relying on the jurisdictional High Court's decision in Corrtech Energy Ltd., which held that no disallowance under Section 14A could be made if no exempt income was earned. The Tribunal confirmed the CIT(A)'s decision, noting that the assessee did not claim any exempt income, thus Section 14A was not applicable. 2. Deletion of Addition on Account of Disallowance of Depreciation on Car: The revenue contested the deletion of Rs. 18,34,715/- disallowed by the AO for depreciation on cars not registered in the assessee company's name but in the names of its directors. The assessee argued that the cars were purchased with company funds, used for business purposes, and shown as fixed assets in the company's accounts. The CIT(A) deleted the disallowance, citing the Delhi High Court's decision in CIT vs. Basti Sugar Mills Co. Ltd., which allowed depreciation claims even if the vehicles were not registered in the company's name. The Tribunal upheld the CIT(A)'s decision, emphasizing that the vehicles were used for business purposes and reflected in the company's books. 3. Deletion of Addition under Section 145A on Account of Unutilized CENVAT Credit: The revenue objected to the deletion of Rs. 50,13,577/- added by the AO under Section 145A for unutilized CENVAT Credit. The AO argued that the assessee followed the exclusive method of accounting instead of the inclusive method, leading to an understatement of profit. The assessee contended that the unutilized CENVAT Credit did not affect the profit and was utilized before the due date of filing the return, thus no addition was justified. The CIT(A) deleted the addition, relying on the jurisdictional Tribunal's decisions, which held that excise duty should not be included in the closing stock and that such adjustments were revenue-neutral. The Tribunal confirmed the CIT(A)'s decision, noting that the inclusive method of accounting would not have materially affected the profit. Conclusion: The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s decisions on all three issues. The deletion of additions under Section 14A, disallowance of depreciation on cars, and Section 145A on unutilized CENVAT Credit were upheld based on established legal precedents and the specific facts of the case. This judgment reinforces the principles that disallowances under Section 14A require actual exempt income, depreciation claims can be valid without vehicle registration in the company's name, and adjustments under Section 145A must consider the overall neutrality of tax impacts.
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