2021 (5) TMI 355 - AT - Income Tax

Addition on account of provision of after sales costs - HELD THAT - The outstanding unpaid amount at the end of the year is at ₹ 38.12 lakhs. The assessee also submitted list of projects along with amount of provisions against each projects. However, in the assessment proceedings, the Assessing Officer found the same not acceptable and proceeded to disallow the claim of the assessee - from chart furnished by the Ld. AR, that, the same allowance has been granted in favour of the assessee from assessment year 1998-99 - appellant Revenue did not prefer an appeal before the Income Tax Appellate Tribunal for assessment year 2008-09 which clearly shows the appellant Revenue accepted the findings rendered by the Tribunal in earlier years. Further we note that the AO also has given effect by allowing the claim of the assessee for assessment year 2005-06. We also find order passed by the Assessing Officer for assessment year 2009-10 where no disallowance was made by the Assessing Officer under the head after sales costs. Thereby it clearly shows appellant Revenue has given effect of the order of the Tribunal in assessee‟s own case from assessment year 1998-99 and allowed the claim of the assessee. We find the latest order being passed by the Tribunal for the assessment year 2011-12 wherein we find similar grounds were raised by the Revenue against the order of the Ld. CIT(Appeals) and this Tribunal did not interfere with the findings of the Ld. CIT(Appeals) in allowing the claim of the assessee. - Decided against revenue. Disallowance u/s 14A - HELD THAT - Admittedly the fact remains undisputed that there was no exempt income earned by the assessee. It is a settled principle that no disallowance could be made u/s.14A of the Act when there is no exempt income - we are of the considered view that since the assessee did not received any exempted income against the investment made; no disallowance u/s.14A is warranted. - Decided in favour of assessee.

Summary

Issues:
1. Appeal and cross-objection against the order passed by the Ld. CIT(Appeals)-4, Pune for the assessment year 2013-14.
2. Justification of deleting the addition made on account of provision of after sales costs.
3. Disallowance made under Rule 8D(2) of the Income Tax Rules, 1962.

Analysis:
1. The appeal filed by the Revenue challenged the deletion of the addition made on account of provision of after sales costs. The Assessing Officer disallowed the amount claimed by the assessee, stating that no liability accrued at the date of sale. The Ld. CIT(Appeals) allowed the claim, citing consistent provisions made over the years and reliance on a Supreme Court decision. The Tribunal noted the history of similar claims being allowed in favor of the assessee from assessment year 1998-99 onwards, with no appeals filed by the Revenue in certain years, indicating acceptance of previous decisions. The Tribunal, based on past precedents, dismissed the appeal of the Revenue, upholding the Ld. CIT(Appeals)' decision.

2. The cross-objection filed by the assessee challenged the disallowance made under Rule 8D(2) of the Income Tax Rules, 1962. The Assessing Officer disallowed certain amounts under different rules, despite no exempt income being earned by the assessee. The assessee contended that no disallowance is warranted in the absence of exempt income, citing a Bombay High Court decision. The Tribunal agreed that no disallowance could be made under Section 14A of the Act when there is no exempt income. Relying on legal precedents, the Tribunal allowed the grounds raised by the assessee in the cross objection, leading to the dismissal of the appeal by the Revenue and the allowance of the cross objection by the assessee.

This detailed analysis covers the key issues and the Tribunal's reasoning behind the decisions made in the legal judgment.