2012 (2) TMI 713 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of loss u/s 94(7) of the Income Tax Act, 1961.
2. Disallowance u/s 14A of the Income Tax Act, 1961.
3. Interest payable u/s 234B/234C on short payment of advance tax.
4. Disallowance of interest on investment.
5. Disallowance on account of commission.

Summary:

1. Disallowance of loss u/s 94(7) of the Income Tax Act, 1961:
The Assessee contested the disallowance of Rs. 18,47,960/- u/s 94(7), arguing that the A.O. failed to consider the acquisition and sale dates of units/securities. The CIT(A) partially agreed, allowing the disallowance of Rs. 53,56,924/- but upheld the disallowance of Rs. 18,47,960/-. The Tribunal found no legal infirmity in the CIT(A)'s order, dismissing both the Assessee's and the Department's appeals on this issue.

2. Disallowance u/s 14A of the Income Tax Act, 1961:
The A.O. disallowed Rs. 25,55,412/- u/s 14A, which the CIT(A) reduced to 10% of the dividend income. The Assessee argued that the CIT(A) should have followed the Mumbai High Court's judgment in Godrej & Boyce Mfg. Co. Ltd. The Tribunal set aside the assessment order and remanded the issue back to the A.O. for fresh consideration in light of the Jurisdictional High Court's principles in Maxopp Investments Ltd.

3. Interest payable u/s 234B/234C on short payment of advance tax:
No arguments were advanced by the Assessee on this issue, leading to its rejection as "not pressed."

4. Disallowance of interest on investment:
The A.O. added Rs. 48,937/- as interest income not offered for taxation. The CIT(A) held that the amount was dividend from Franklin Templeton India Ltd., which is tax-exempt u/s 10(35). The Tribunal remanded the issue back to the A.O. for verification of the exemption claim.

5. Disallowance on account of commission:
The A.O. disallowed Rs. 7,09,754/- due to unserved notices and lack of confirmations. The CIT(A) admitted additional evidence and deleted the disallowance, accepting the Assessee's explanation and proof of identity of commission agents. The Tribunal upheld the CIT(A)'s decision, finding no fault in the evidences considered.

Conclusion:
The appeals of the Assessee and the Revenue were partly allowed for statistical purposes. The Tribunal directed the A.O. to reconsider certain issues based on the principles laid down by higher courts and after giving the Assessee a reasonable opportunity of being heard.