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2019 (11) TMI 1182 - AT - Income TaxDisallowance of expenses u/s.14A - HELD THAT - As decided in own case AY 2011-12 2018 (9) TMI 1691 - ITAT PUNE formula adopted by the assessee of allocating the cost to earning of exempt income has been adopted for working out disallowance - Disallowance under section 14A of the Act is to be restricted. Hence, the ground of appeal partly allowed - same parity of reasoning to be applied and we remit the issue back to the file of the Assessing Officer to adjudicate the issue in lines of the order of the Tribunal in assessee‟s own case for assessment year 2011-12 Claim of deduction u/s.35(2AB) - HELD THAT - As relying on assessee;s own case we direct the Assessing Officer to allow weighted deduction under section 35(2AB) Disallowance of additional depreciation - HELD THAT - in the case of Commissioner of Income Tax and another Vs. Rittal India Pvt. Ltd. 2016 (1) TMI 81 - KARNATAKA HIGH COURT and Commissioner of Income Tax Vs. Shri T.P. Textiles Pvt. Ltd. 2017 (3) TMI 739 - MADRAS HIGH COURT and in both these cases, it has been unanimously observed and held that the assessee can claim balance depreciation in the subsequent assessment year. - Decided in favour of assessee
Issues Involved:
1. Transfer Pricing Adjustment 2. Disallowance of Expenses under Section 14A of the Income Tax Act, 1961 3. Claim of Deduction under Section 35(2AB) of the Income Tax Act, 1961 4. Disallowance of Additional Depreciation 5. Initiation of Penalty Proceedings under Section 271(1)(c) of the Income Tax Act, 1961 Detailed Analysis: 1. Transfer Pricing Adjustment The assessee's grounds of appeal numbered 1 to 5 pertained to transfer pricing adjustments. The assessee's representative submitted that, following the directions of the Dispute Resolution Panel (DRP), no transfer pricing adjustment was necessary. Consequently, these grounds were deemed academic in nature and were not further adjudicated. 2. Disallowance of Expenses under Section 14A of the Income Tax Act, 1961 The Assessing Officer (AO) disallowed expenses under Section 14A, calculating the disallowance under Rule 8D at 0.5% of the average value of investments, amounting to ?84,79,657. The assessee had already disallowed ?33,52,000, leaving an additional disallowance of ?51,27,657. The Tribunal referred to its previous decisions in the assessee's own cases for the assessment years 2010-11 and 2011-12, where similar issues were adjudicated. The Tribunal remitted the issue back to the AO to adjudicate in line with its earlier orders, allowing the ground for statistical purposes. 3. Claim of Deduction under Section 35(2AB) of the Income Tax Act, 1961 The AO disallowed a proportionate weighted deduction claimed under Section 35(2AB), amounting to ?9.34 Crore. The assessee's representative argued that this issue was covered by previous Tribunal decisions in the assessee's favor for the assessment years 2010-11 and 2011-12. The Tribunal agreed, noting that the facts and circumstances were identical to those in the earlier years, and directed the AO to allow the weighted deduction, thereby allowing this ground of appeal. 4. Disallowance of Additional Depreciation The AO disallowed additional depreciation claimed by the assessee, arguing that the legislative amendment to Section 32 was substantive and applicable from AY 2016-17 onwards. The assessee cited the Bombay High Court's decision in the case of M/s. Godrej Industries Ltd., which supported the claim for additional depreciation in subsequent years if the asset was used for less than 180 days in the initial year. The Tribunal, referencing this judgment and similar decisions from the Karnataka and Madras High Courts, concluded that the assessee was entitled to claim the balance depreciation in the subsequent year. Thus, this ground was allowed. 5. Initiation of Penalty Proceedings under Section 271(1)(c) of the Income Tax Act, 1961 The issue of penalty proceedings under Section 271(1)(c) was deemed premature and was dismissed accordingly. Conclusion: The appeal was partly allowed for statistical purposes, with specific directions for the AO to re-adjudicate certain issues in line with previous Tribunal decisions and judicial pronouncements. The Tribunal's order was pronounced on November 22, 2019.
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