2014 (4) TMI 779 - AT - Income Tax

Deletion on account of difference between income appearing in the TDS certificates and income offered for taxation Held that - If a particular amount as per TDS certificate has been availed against which no corresponding income is shown, then the course open to the Revenue is to deny the benefit of such TDS credit to the assessee and not to make addition for any income - As no specific instance has been pointed out by the AO that a particular TDS credit was claimed by the assessee against which no corresponding income was shown, the general submission made on behalf of the Revenue cannot be accepted Decided against Revenue. Deletion on account of non-inclusion of Excise duty Duty pertaining to closing stock of raw material Contravention of section 145A of the Act Held that - Similar disallowance was made by the Assessing Officer u/s 145A on account of non-inclusion of Excise Duty pertaining to the closing stock of raw material for the immediately preceding year the decision in CIT Vs Mahavir Aluminum Ltd. 2007 (11) TMI 41 - HIGH COURT, DELHI followed - No distinguishing features for the current year have been pointed out by the revenue the order is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue. Deletion of disallowance of excess claim of depreciation Depreciation on scanners and CD writers @ 60% - Held that - The decision in DCIT Vs Datacraft India Ltd. 2010 (7) TMI 642 - ITAT, MUMBAI followed - when a device is used as part of the computer in its functions, then it would be termed as a computer the order of the CIT(A) for deletion of disallowance is upheld - Decided against Revenue. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules Held that - If an assessee has interest free funds as well as interest bearing funds at its disposal then the presumption would be that the investment were made from interest free funds Relying upon CIT Vs Reliance Realities and Power Ltd. 2009 (1) TMI 4 - HIGH COURT BOMBAY - if the interest free funds available at the assessee s disposal are more than the investments made which give exempt income then the presumption would be that such investments were financed out of the interest free funds available at the assessee s disposal also in CIT Vs Suzlon Energy Ltd. 2013 (7) TMI 697 - GUJARAT HIGH COURT it has been held that no disallowance of interest u/s 14A can be made if own capital is more than the investment fetching exempt income - necessary details are not properly forthcoming, thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
1. Deletion of addition based on difference between income in TDS certificates and income offered for taxation.
2. Deletion of addition due to non-inclusion of Excise Duty in closing stock of raw material.
3. Disallowance of excess claim of depreciation on scanners and CD-writers.
4. Confirmation of disallowance under section 14A r.w Rule 8D.

Issue 1: Deletion of addition based on TDS certificates:
The Revenue challenged the deletion of an addition of Rs. 10,75,37,079 made by the Assessing Officer due to a variance between income in TDS certificates and income offered for taxation. The Tribunal noted that the Assessing Officer's decision was based on a similar view taken in the preceding year, which was ultimately deleted by the High Court. The Tribunal upheld the deletion, stating that if no specific instance of discrepancy was pointed out, the benefit of TDS credit should not be denied. The Tribunal dismissed the Revenue's appeal against the deletion.

Issue 2: Deletion of addition due to non-inclusion of Excise Duty:
The Revenue appealed against the deletion of an addition of Rs. 92,37,687 made by the Assessing Officer for not including Excise Duty in the closing stock of raw material, contravening Section 145A. The Tribunal referred to a previous decision and remitted the matter to the Assessing Officer for reconsideration in line with the judgment of the High Court. The Tribunal set aside the original order on this issue.

Issue 3: Disallowance of excess claim of depreciation:
The Revenue contested the deletion of a disallowance of Rs. 1,57,152 on the excess claim of depreciation on scanners and CD-writers. The Tribunal upheld the deletion, citing a Special Bench order that favored the assessee's claim for depreciation at 60% on these items, considering them as part of computers.

Issue 4: Confirmation of disallowance under section 14A r.w Rule 8D:
The assessee challenged the confirmation of a disallowance of Rs. 19,40,796 made under section 14A read with Rule 8D. The Tribunal noted that from the assessment year 2009-10, disallowance under section 14A was required to be made as per Rule 8D. The Tribunal rejected the contention that disallowance should be based on a reasonable basis, upholding the disallowance as per Rule 8D. The Tribunal remitted the matter to the Assessing Officer for computing any interest disallowance in accordance with Rule 8D. The disallowance of Rs. 6,30,501 at 0.5% of average investment was upheld.

In conclusion, the Tribunal partly allowed the appeal of the assessee and the Revenue for statistical purposes, addressing various issues related to additions, deletions, and disallowances in the assessment for the year 2009-10.