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TMI Blog2012 (9) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Therefore case remand back to AO. Disallowance of excess depreciation being @ 40% on vehicles - Assessee had claimed depreciation on motor lorries/taxis and motor cars at higher rate of 40% in case of motor lorries/taxies instead of 20% - There was no fresh leasing transactions have been undertaken in the assessment year - 40% has been allowed by the Tribunal in previous assessment year – Held that:- As decided by Delhi High Court in case of MGF (2006 (7) TMI 125) that vehicles owned by a NBFC leased to third party are eligible for higher rate of depreciation @ 40%. Appeal decides in favour of assessee. Addition on account dividend income – Assessee claim exemption u/s 10(33) for the period 1999 to 2007 - AO made addition on the basis that dividend income during that year was not exempt as section not applicable to assessment year 2003-04 – Held that:- AO did not talk about sec. 10(34) or sec. 80M, as same was applicable for the respective year. Since the claim of assessee was not examined by the Assessing Officer u/s 80M. Case remand back to AO. Charging of interest u/s 234B & 234D and withdrawal of interest u/s 244A – Held that:- As charging of interest u/s 234D is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen in fact no such interest was leviable in the alternative, the CIT(A) should have directed consequential reduction. 5. That the CIT(A) erred in upholding the action of the Assessing Officer in withdrawing interest u/s 244A and in any case consequential relief should have been directed. 6. The appellant reserves to itself, the right to add, alter, amend substitute withdraw and or any ground(s) of appeal at or before the date of hearing. 2. The brief facts of the case are that that the assessee is a non banking finance company and is governed by the Reserve Bank of India guidelines issued from time to time. These guidelines are mandatory which an NBFC has to follow while computing the net profits of the company. The assessee is also engaged in the business of letting out on hire motor vehicles, motor taxies and lorries and other commercial vehicles. These assets are purchased by the assessee and are let out to others on lease-hold basis. The return of income for assessment year 2003-04 was filed on 2.12.2003 declaring an income of ₹ 2,69,59,688/-. 3. The case of the assessee was selected for scrutiny. During assessment proceedings, the Assessing Officer made cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the submissions made by Ld AR and perused the order passed by ITAT G Bench, New Delhi in I.T.A. No.611/Del/2005 for assessment year 2000-01 in the appellant s own case. The Hon'ble ITAT Delhi Bench G relied on the decision of Chennai Bench of the Tribunal in the case of Overseas Sanmar Finance Ltd., v. JCT 86 ITD 602 (Chennai) and the decision of the Delhi Bench of the Tribunal in the case of Tedco Investment and Financial Services Pvt. Ltd. v. DCIT 82 TTJ 259 (Del.) and held that the appellant is entitled to deduction for the provision made for doubtful debt in line prescribed by RBI in various circulars that are applicable to NBFC. As the Hon'ble ITAT decided the issue in favour of appellant through the above mentioned orders in appellant s own case, hence respectfully following the same, the Assessing Officer is directed to delete the addition made on account of disallowance of ₹ 27,60,000/- being provision for bad and doubtful debts. 8. Aggrieved, the revenue is in appeal before us. 9. The Ld DR argued that the matter regarding disallowance of provision for bad and doubtful debt though was decided by Hon'ble Tribunal in assessee s own cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced below:- I have perused the appellant s order passed by Delhi Bench D in I.T.A. No.1263/Del./2002 for assessment year 1998-99, Delhi Bench C , New Delhi in I.T.A. No.3695/Del/.2002 for assessment year 1999-00 and Delhi Bench G New Delhi in I.T.A. No.611/Del/2005 in appellant s own case as per which the Tribunal decided the issue in favour of the appellant. Respectfully following the same, I direct the Assessing Officer to delete the addition of ₹ 8,45,000/- on account of income reversal during the previous year under consideration. 14. Aggrieved, the revenue is in appeal before us. 15. The Ld DR explained that similar dispute had arisen for the assessment year 2000-01 and 2001-02 and Hon'ble Tribunal had sent back the matter to the file of Assessing Officer for fresh consideration and she further brought to our notice that Hon'ble ITAT had referred the matter back with the directions to Assessing Officer to allow the expenditure after ascertaining that amount written off is same which was recognized as income in the earlier year. 16. The Ld AR argued that the net profit of NBFC can be calculated only after complying with guidelines of RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish that no expense has been incurred in earning of interest income from bonds. This is specially required in the light of fact that certain expenses like salary, employees welfare expenses, postage and telegram expenses, traveling and conveyance expenses and rent etc. are common expenses with regard to dividend income/interest free income and normal/regular business activity of the assessee company -------- The disallowance of administrative expenses and interest expenses on earning of tax free interest/income claimed exempt is also held/permitted by the verdict of Hon'ble Supreme Court in the case of CIT v. United General Trust Ltd. 200 ITR 488 (SC)------. The Assessing Officer, then calculated an amount of ₹ 79.80 lakhs being amount of interest paid attributable to earning of exempt income and made the addition accordingly. 19. Aggrieved the assessee filed appeal before Ld CIT(A). 20. Before Ld CIT(A), the Ld AR submitted that Assessing Officer has not proved any nexus between the expenditure incurred vis-a-vis earning of exempted income and relied upon the decision of ITAT for assessment year 1999-00 wherein the addition made by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of motor lorries/taxies and 25% and in respect of motor cars instead of normal depreciation @ 20%. The Assessing Officer noted that during previous year also addition were made on similar grounds for claiming excess depreciation. Therefore, following earlier year, the Assessing Officer made an addition of ₹ 1,24,01,235/- on account of excess depreciation. During appellate proceedings, the assessee was asked to submit certain details for the purpose of verification as to whether assessee was eligible for higher depreciation of 40%. However, despite various reminders by ld CIT(A), the assessee did not file the necessary particulars/information. In view of the circumstances, the Ld CIT(A) finally gave notice for upholding the disallowance of excess depreciation if the information was not furnished within certain time. In response to that, the assessee replied that what ever was stated before the Assessing Officer is identical to the submission made before your goodself and we would like to reiterate that at no stage of the proceedings has it been contended that the details pertaining to the vehicles leased out are being filed. Since it is the stand all alone that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) pertains to rate of depreciation of vehicles leased out of which ITAT and CIT(A) in earlier years held the issue in favour appellant being covered issue. The information called for is stated to be of no consequence. Again through letter dated 13.2.2007 you mentioned that since there is no fresh leasing transactions during the year 2003-04 hence the question of depreciation is inconsequential. In a reply dated 26.3.2007 filed before Ld DCIT, Circle-11 (1). New Delhi you have further mentioned that the relevant replies in connection with the aforesaid information have already been filed with the undersigned from time to time. I have gone through the replies filed by you and the contention put forth by you before Assessing Officer are found to be not correct. No information has been filed with this office with respect to leased vehicles. Even on 19.3.2007, Shri JP Chawla, attended this office and in his presence the undersigned talked to telephonically and informed about your willingness and or for filing of necessary particulars/information before the Assessing Officer but despite that you have not filed any detail as asked for by the Assessing Officer knowing fully that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment w.e.f. 1.4.2003. The ld AR had further submitted vide letter dated 13.11.2006 that section 10(33) was omitted by Finance Act, 2002 w.e.f. 1.4.2003 i.e. assessment year 2003-04 and the same was introduced in the guise of section 10(34) of the Act w.e.f. 1.4.2004. The Ld AR also submitted that in the meantime section 80M was introduced w..e.f. 1.4.2003 for the intervening period namely assessment year 2003-04, however, the Ld CIT(A) did not agree with the contentions of assessee and up held the addition made by the Assessing Officer. The relevant portion of Ld CIT(A) s order is reproduced below:- I have considered the submissions made by the appellant on the issue under consideration. The provisions of section 10(33) are not applicable to assessment year 2003-04 as new provisions of section 10(34) came into being through Finance Act, 2003 w.e.f. 1.4.2003 i.e. for assessment year 2003-04. The new provisions mentions about any income arising from the transfer of capital asset being a unite of Unit Scheme, 1964 referred to in Schedule-I to UTI and hence the new provisions are not applicable. The old provisions of section 10(33) were omitted by Finance Act, 2002 w.e.f. 1.3.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in its further submission of dated 13.11.2006 placed at page 86 of the paper book, the assessee talked about section 80-M also which was introduced w.e.f. 1.4.2003. The deduction u/s 10(33) was denied as according to Assessing Officer the dividend income pertained to the period 28.9.1999 to 28.8.2001 and was not covered by section 115-O. However, Assessing Officer did not talk about section 10(34) or section 80M. The Ld CIT(A) upheld the denial of deduction u/s 10(33), 10(34) section 80M on the basis that section 10(33) dealt with only gains arising on account of transfer of units of unit Scheme, 1964 section 10(34) came into being from assessment year 2004-05. As regards deduction u/s 80M the Ld CIT(A) held that deduction was available subject to fulfillment of certain conditions and assessee had not filed any evidence of fulfilling these conditions. From the plain reading of section 80M, it becomes clear that there was a provision for deduction for intercorporate dividends for assessment year 2003-04 subject to the fulfillment of certain conditions. However, since the claim of assessee was not examined by the Assessing Officer u/s 80M, we remit back this point to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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