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2018 (5) TMI 50 - AT - Income TaxAddition u/s. 14 r.w.r 8D - Held that - As relying on case REI Agro 2013 (12) TMI 1517 - CALCUTTA HIGH COURT we direct the AO to recompute the disallowance afresh taking into consideration the investments, which yielded the dividend income for the purpose of section 14A of the Act. Thus, ground no. 1 raised by the assessee is allowed for statistical purpose. Addition of shuttering expenses - Held that - CIT-A was not correct in confirming the impugned additions made on account of steel shuttering materials 1/3 written off and wood shuttering materials 1/3 written off. The same is directed to be deleted. Addition on account of difference between income as per ITR and as per books of account of assessee - Held hat - We find from the order of CIT-A that the assessee pleaded that this very sum of ₹ 6,09,193/- has been offered to tax in the next assessment year by him. AR fairly pleaded let this sum be taxed in the A.Y under appeal and consequently, a direction be given to AO to reduce a sum of ₹ 6,09,193/- from the income of next assessment year i.e. A.Y 2011-12 in order to avoid double taxation. We find force in this argument of AR. Ground no. 3 is dismissed subject to direction to AO that a sum of ₹ 6,09,193/- shall be reduced from the income of assessee in next assessment year i.e. A.Y 2011-12.
Issues Involved:
1. Confirmation of addition under Section 14A read with Rule 8D. 2. Confirmation of addition of shuttering expenses. 3. Confirmation of addition due to the difference between income as per ITR and as per books of account. Issue-wise Detailed Analysis: 1. Confirmation of addition under Section 14A read with Rule 8D: The assessee made a suo moto disallowance of ?13,810 for computing expenditure under Section 14A, which the AO did not accept. The AO disallowed ?5,24,639 by invoking Section 14A read with Rule 8D(2) (i), (ii), and (iii) of the IT Rules, estimating the disallowance based on total interest and average total investment. The CIT-A confirmed this disallowance based on the Special Bench decision in Cheminvestment Ltd. However, the assessee argued that the disallowance should not exceed the dividend income earned, citing the High Court's decision in REI Agro Ltd. The Tribunal directed the AO to recompute the disallowance considering only those investments that yielded dividend income, thus allowing the ground for statistical purposes. 2. Confirmation of addition of shuttering expenses: The AO added ?23,48,094 under deferred revenue expenditure, which included site development expenses, steel shuttering materials, and wood shuttering materials. The assessee argued these were revenue expenses, citing the Punjab & Haryana High Court decision in Random Constructors P. Ltd. The CIT-A allowed the site development expenses but confirmed the additions for steel and wood shuttering materials. The Tribunal, following the Punjab & Haryana High Court's decision, held that the shuttering materials expenses were revenue in nature and directed their deletion, thus allowing the ground. 3. Confirmation of addition due to the difference between income as per ITR and as per books of account: The AO found discrepancies between income reported in the ITR and as per books, totaling ?43,58,671. The CIT-A, after considering the assessee's reconciliation, restricted the addition to ?6,09,193. The assessee argued this amount was offered to tax in the subsequent year and requested a direction to avoid double taxation. The Tribunal upheld the addition for the current year but directed the AO to reduce the same amount from the subsequent year's income, thus dismissing the ground subject to this direction. Conclusion: The appeal was partly allowed for statistical purposes, with directions for recomputation and adjustments to avoid double taxation.
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