2018 (5) TMI 745 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - disallowance in relation to its exempt income (s) without establishing the relevant nexus between the corresponding income and expenditure - Held that - CIT(A) has already granted relief to the assessee in former two assessment years 2010-11 and 2011-12 deleting proportionate interest expenditure disallowance under Rule 8D(2)(ii) of Income Tax Rules. It further transpires that the assessee had suo moto disallowed the relevant direct and administrative expenditure in the two assessment years. Learned counsel fails to dispute the same during the course of hearing. We therefore see that there can hardly be any grievance on assessee s part so far as these two remaining components of the impugned disallowance are concerned. The assessee had not challenged the said two disallowance (s) during the lower appellate proceedings as well. The assessee s grievance is not maintainable therefore. Denying section 80IE deduction in respect of its unit/garden situated in north-east - Held that - As referring to assessee s own case 2018 (4) TMI 1511 - ITAT KOLKATA we adopt judicial consistency in all these three assessment years to remit the instant issue as well back to the Assessing Officer for the purpose of limited verification on quantum of investment in plant and machinery the concerned. The assessee s latter grievance is accepted for statistical purposes accordingly.

Summary

Issues:
1. Disallowance under section 14A r.w.r. 8D in relation to exempt income.
2. Denial of section 80IE deduction for unit/garden in north-east.

Analysis:
1. The appellant filed appeals for A.Y. 2010-11, 2011-12 & 2013-14 against CIT(A)'s orders under section 143(3) of the Income Tax Act, 1961. The issue of disallowance under section 14A r.w.r. 8D was raised. The CIT(A) had already granted relief to the appellant in the former two assessment years by deleting interest expenditure disallowance under Rule 8D(2)(ii). The appellant had not challenged the disallowances during the lower appellate proceedings. The tribunal rejected the substantive ground in the former two assessment years as the appellant's grievance was deemed not maintainable.

2. The appellant challenged the denial of section 80IE deduction for its unit/garden in the north-east. The CIT(A) upheld the disallowance based on the completion of substantial expansion within the same financial year. The tribunal referred to a previous order in the appellant's case and noted that there is no time limit prescribed in Section 80IE for completing substantial expansion. The tribunal found that the authorities had not verified the investment in plant and machinery as required by the definition of substantial expansion. Therefore, the issue was remanded to the Assessing Officer for verification. The tribunal accepted the appellant's grievance for statistical purposes in all three assessment years, ordering a remand for verification of investment in plant and machinery.

In conclusion, the tribunal partly accepted the appeals for former two assessment years and accepted the appeal for the last assessment year for statistical purposes, remanding the issues back to the Assessing Officer for verification.