2019 (2) TMI 41 - AT - Income Tax

Disallowance u/s.14A r.w. Rule 8D - Held that - Assessee during the Assessment Year under consideration received exempt income of ₹.57,539/- and the CIT(A) following the decision of the Punjab & Haryana High Court in the case of Pr. CIT v. Empire Package (P.) Ltd. (2016 (2) TMI 505 - PUNJAB AND HARYANA HIGH COURT) and Nimbus Communication ltd v. ACIT (2016 (5) TMI 166 - ITAT MUMBAI) restricted the disallowance u/s. 14A to the exempt income received by the assessee during the Assessment Year under consideration. This bench is consistently holding that the disallowance u/s. 14A should not exceed exempt income. Thus, we do not find any infirmity in the order passed by the Ld.CIT(A) in restricting the disallowance u/s. 14A to the exempt income received by the assessee. Claim for depreciation on the Bizerba Weighing Scales as part of computer - Held that - We find that this issue has been decided against the assessee and in favour of the Revenue by the Tribunal upholding the disallowance made by the AO. The Tribunal held that Bizerba Weighing Scale is not part of the computer and therefore not entitled for depreciation @60% as claimed by the assessee. respectfully following the said decision, we uphold the disallowance made by the Assessing Officer in respect of Bizerba Weighing Scales. This ground of Revenue is allowed. Disallowance made u/s. 14A - Held that - We do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the disallowance made u/s. 14A of the Act by the assessee since the assessee has not earned any exempt income during the Assessment Year 2012-13. Disallowance u/s 14A - whether suomoto disallowance made in the return of income should not be considered for disallowance in the absence of any exempt income - Held that - CIT(A) restricted the disallowance to the suomoto disallowance which was already made by the assessee in the return of income and deleted the disallowance made by the Assessing Officer. Since the CIT(A) failed to consider the submissions of the assessee apparently by oversight, we are of the considered view that this issue in assessee s appeal should be restored to the file of the CIT(A) for adjudicating the claim in accordance with law. Issue raised by the assessee in its appeal is restored to the file of the CIT(A) who shall decide in accordance with law, after providing adequate opportunity of being heard to the assessee.

Summary

Issues:
1. Disallowance under section 14A r.w. Rule 8D of I.T. Rules for Assessment Year 2011-12.
2. Claim for depreciation on Bizerba Weighing Scales as part of computer.
3. Disallowance made u/s. 14A and depreciation on Weighing Scale for Assessment Year 2012-13.

Issue 1: Disallowance under section 14A r.w. Rule 8D of I.T. Rules for Assessment Year 2011-12:
The appeal dealt with the deletion of disallowance under section 14A r.w. Rule 8D of I.T. Rules for the Assessment Year 2011-12. The Assessing Officer disallowed a certain amount, which was later restricted by the Ld.CIT(A) to the exempt income received by the assessee during that year. The ITAT upheld the Ld.CIT(A)'s decision, citing precedents from the Punjab & Haryana High Court and the Mumbai Bench. The ITAT emphasized that the disallowance under section 14A should not exceed the exempt income, leading to the rejection of the Revenue's grounds on this issue.

Issue 2: Claim for depreciation on Bizerba Weighing Scales as part of computer:
The dispute revolved around the claim for depreciation on Bizerba Weighing Scales as part of a computer. The ITAT referred to a previous Tribunal order that decided against the assessee, upholding the disallowance made by the Assessing Officer. The ITAT concurred with this decision, stating that the Weighing Scale did not qualify as part of a computer and therefore was not entitled to the claimed depreciation. Consequently, the Revenue's ground on this issue was allowed.

Issue 3: Disallowance made u/s. 14A and depreciation on Weighing Scale for Assessment Year 2012-13:
For the Assessment Year 2012-13, the Revenue appealed against the deletion of disallowance under section 14A and depreciation on Weighing Scale. The assessee also appealed against the Ld.CIT(A)'s decision to sustain the suomoto disallowance made by the assessee under section 14A. The ITAT upheld the Ld.CIT(A)'s deletion of the disallowance under section 14A as the assessee had not earned any exempt income during that year. Citing a Bombay High Court decision, the ITAT emphasized that disallowance under section 14A requires income that does not form part of the total income. On the issue of higher depreciation on Weighing Scale, the ITAT followed a previous Tribunal order against the assessee, upholding the disallowance made by the Assessing Officer. The assessee's appeal regarding the disallowance in the absence of exempt income was restored to the Ld.CIT(A) for further consideration. Consequently, the Revenue's appeals were partly allowed, and the assessee's appeal was allowed for statistical purposes.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the decisions rendered by the ITAT in each case.