2022 (10) TMI 29 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - suo moto disallowance made by assessee - HELD THAT - There is force in the contention of the ld counsel that only those investment are required to be considered for the purpose of the calculation under Rule 8D, which had yielded the exempt income. In the present case the dividend income is received in investment in subsidiary companies only as is evident - The provision for investments is certainly not considerable for computing average value of investment which yielded the exempt income during the year. Apart from this there is also substance in the contention of Assessee that the AO had failed to record satisfaction before making any disallowance beyond the suo moto disallowance. At the same time the Assessee's own funds are established to be more than the value of investments yielding exempt income. CIT(A) has failed to appreciate the aforesaid contention. Accordingly, ground is sustained in favour of the Assessee. Valuation of land - Admission of the additional evidence of the Assessee u/s 250(4) - HELD THAT - Once the ld CIT(A) has admitted the valuation report in regard 313 sq mts. of land, then it was not justified to uphold addition in regard 313 sq mts of land on basis that Assessee had failed to furnish the same before the AO. Thus, it is fit case to transmit back the issue to the ld CIT(A) to take into consideration the valuation report in respect of 313 sq mts of land and determine the issue again. The ground is decided in favour of the Assessee for statistical purposes.

Summary

Issues:
1. Disallowances made by the Ld. AO under different sections of the Income Tax Act.
2. Assessee's appeal against the order of the Ld. Commissioner of Income Tax (Appeals).
3. Revenue's appeal against the order of the Ld. Commissioner of Income Tax (Appeals).

Analysis:

Issue 1: Disallowances made by the Ld. AO
The Ld. AO made several disallowances including disallowance under Section 14A read with Rule 8D, disallowance on account of difference in cost of acquisition of property, disallowance of transfer expenses, and disallowance of prior period expenses. The Assessee contested these disallowances by providing detailed submissions and challenging the calculations made by the Ld. AO. The Assessee argued that the disallowances were excessive, based on wrong figures, and made without proper justification. The Assessee also highlighted that similar disallowances were rejected in earlier years by the CIT (A). The tribunal analyzed each disallowance, considered the submissions made by the Assessee, and made decisions based on the evidence presented.

Issue 2: Assessee's appeal against the order of the Ld. Commissioner of Income Tax (Appeals)
The Assessee raised multiple grounds of appeal challenging the order passed by the Ld. Commissioner of Income Tax (Appeals). These grounds included contentions related to the disallowance under Section 14A, disallowance of prior period expenses, and addition on account of the difference in the cost of property sold. The Assessee provided legal arguments, cited relevant case laws, and presented evidence to support their claims. The tribunal carefully examined each ground of appeal, considered the arguments presented by the Assessee, and made decisions based on the merits of the case.

Issue 3: Revenue's appeal against the order of the Ld. Commissioner of Income Tax (Appeals)
The Revenue also filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) challenging the deletion of disallowance of "prior period expenditure" and other issues. The Revenue contended that the Ld. Commissioner of Income Tax (Appeals) erred in allowing relief to the Assessee based on earlier orders and without proper factual verification. The tribunal reviewed the grounds raised by the Revenue, examined the relevant facts and legal principles, and made determinations on each issue raised in the appeal.

In conclusion, the tribunal partially allowed the Assessee's appeal and dismissed the appeal filed by the Revenue after a thorough analysis of the issues raised by both parties. The tribunal's decision was based on the evidence presented, legal arguments made, and relevant provisions of the Income Tax Act.