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2021 (5) TMI 1041 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - expenditure incurred by the assessee in relation to the income which does not form part of the total income - HELD THAT - As respectfully following the decision of the coordinate Bench rendered in assessee s own case for the assessment year 2010-11 2019 (7) TMI 1601 - ITAT CHANDIGARH we send this issue back to the AO for ascertaining as to whether the working submitted by the assessee is in accordance with the direction given by the coordinate Bench in assessee s own case for the assessment year 2010-11 and in case it is found correct, to restrict the disallowance to the computation made by the assessee. Further we find merit in the alternative plea of the Ld. Counsel that the disallowance u/s 14A read with Rule 8D (2) cannot exceed the exempt income earned by the assessee. As relying on JOINT INVESTMENTS PVT LTD case 2015 (3) TMI 155 - DELHI HIGH COURT disallowance u/s 14A read with Rule 8D cannot exceed the exempt income. Hence, we further direct the AO to restrict the disallowance to the exempt income of the assessee in case the disallowance exceeds the exempt income while computing the same as per direction of the coordinate Bench given in assessee s case for the assessment year 2010-11 discussed above. We therefore do not find any merit in the first ground of appeal of the revenue. Claim filled during assessment proceedings - Additional depreciation during the assessment proceedings - As per DR since the assessee had not claimed carry forward of additional depreciation in its return of income, there is no provision under the Income Tax Act to make amendment in the return of income at the assessment stage without revising the return - HELD THAT - As in the case of Budhewal Cooperative Sugar Mills Ltd. 2009 (5) TMI 63 - PUNJAB AND HARYANA HIGH COURT following the ratio laid down by the Hon ble Jurisdictional High Court in the case of CIT vs Ramco International 2008 (12) TMI 413 - PUNJAB AND HARYANA HIGH COURT allowed the identical claim of the assessee made on the basis of a letter filed after the last date on which the revised return could have been filed u/s 139 (5) and not filing revised return. - Decided against revenue. Non application of Rule 8D for the purpose of computing income u/s 115JB - HELD THAT - The Special Bench of the ITAT Delhi has categorically held in the case of CIT Vs Vireet Investment Pvt Ltd. 2017 (6) TMI 1124 - ITAT DELHI that Rule 8D cannot be applied while computing book profit u/s 115JB - Since, the findings of the Ld. CIT(A) are in accordance with the decision there is no merit in this ground of appeal of the Revenue. Hence, in view of the decisions referred above, we uphold the findings of the Ld. CIT(A), we dismiss this ground of appeal of the Revenue. Nature of receipts - Carbon Credit Receipts - revenue or capital - HELD THAT - We notice that the Coordinate Bench has already decided the identical issue in favour of the assessee in assessee s own case for the AY 2010-11 2019 (7) TMI 1601 - ITAT CHANDIGARH by following the decision of the coordinate Bench in Kotla Hydro Power Pvt Ltd. 2015 (4) TMI 1346 - ITAT CHANDIGARH treating the Carbon Credit Receipts as capital in nature. - Decided against revenue.
Issues Involved:
1. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules. 2. Claim of additional depreciation. 3. Application of Rule 8D for computing book profit under Section 115JB. 4. Treatment of carbon credit receipts as capital in nature. Detailed Analysis: 1. Disallowance under Section 14A read with Rule 8D of the Income Tax Rules: The Revenue challenged the restriction of disallowance under Section 14A to the exempt income earned by the assessee, citing the Supreme Court's decision in Maxopp Investment Ltd. The assessee contended that the disallowance should be computed on a proportionate basis as in the previous assessment year (2010-11). The Tribunal noted that the Assessing Officer (AO) had not recorded dissatisfaction with the assessee's computation and directed the AO to verify the working submitted by the assessee. The Tribunal further directed that the disallowance under Section 14A read with Rule 8D should not exceed the exempt income earned by the assessee, following the decisions in Joint Investment (P) Ltd. and Maxopp Investment Ltd. Consequently, the Tribunal dismissed the Revenue's appeal on this issue and allowed the assessee's cross-appeal for statistical purposes. 2. Claim of Additional Depreciation: The Revenue argued that the assessee could not claim additional depreciation during the assessment proceedings without filing a revised return, relying on the Supreme Court's decision in Goetze (India) Ltd. The assessee countered that the issue was covered by the decisions of the Chandigarh Bench of the Tribunal and the Punjab & Haryana High Court in Ramco International. The Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) [CIT(A)], who had allowed the claim based on these precedents, and dismissed the Revenue's appeal on this issue. 3. Application of Rule 8D for Computing Book Profit under Section 115JB: The Revenue contested the CIT(A)'s direction to the AO not to apply Rule 8D while computing book profit under Section 115JB. The Tribunal noted that this issue was settled in favor of the assessee by the Special Bench of the ITAT Delhi in CIT vs. Vireet Investment Pvt. Ltd. and other coordinate Bench decisions. Consequently, the Tribunal upheld the CIT(A)'s findings and dismissed the Revenue's appeal on this issue. 4. Treatment of Carbon Credit Receipts as Capital in Nature: The Revenue challenged the CIT(A)'s decision to treat carbon credit receipts as capital in nature. The Tribunal observed that this issue had already been decided in favor of the assessee in its own case for the assessment year 2010-11 by the Chandigarh Bench, following the decision in DCIT vs. Kotla Hydro Power Pvt. Ltd. The Tribunal upheld the CIT(A)'s findings and dismissed the Revenue's appeal on this issue. Conclusion: The appeals filed by the Revenue and the assessee for the assessment years 2012-13 and 2013-14 were partly allowed for statistical purposes. The Tribunal's directions included verifying the assessee's computation for disallowance under Section 14A, upholding the claim of additional depreciation, and confirming the treatment of carbon credit receipts as capital in nature. The Tribunal's findings were consistent with precedents set by higher judicial authorities and coordinate Benches.
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