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TMI Blog2014 (1) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... at:- A sum of ₹ 28.32 lakhs had been wrongly booked twice in the accounts of the assessee - The assessee has been taxed twice on this income - The issue has been restored for fresh adjudication. Municipal taxes relating to preceding financial year - Held that:- If the expenditure incurred towards additional municipal taxes and actually paid by the assessee has been disallowed in the subsequent assessment year on the reason that the same were prior period expenses, then the claim must be considered during the financial year under consideration - The issue has been restored for fresh adjudication. Disallowance under section 14A - Held that:- Following Rule of consistency the disallowance has been restricted to 1% of the administrative expenses as decided by the Tribunal in earlier years - Decided in favour of assessee. Write-off of bad debts - Held that:- The assessee was engaged in activity of purchase and sale of shares as business - The loss on shares is thus business loss liable to be written-off u/s 36 - Decided in favour of assessee. - ITA No.8040/M/2010, ITA No.8055/M/10 - - - Dated:- 15-1-2014 - Shri D. Karunakara Rao And Shri Sanjay Garg,JJ. For the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act erred in confirming the action of the AO on disallowance under section 14A of the Act to the extent of ₹ 26,84,000/- i.e. 0.5% of the average value of investments of the assessee. The Assessee craves leave to consider each of the above grounds of appeal without prejudice to each other and crave leave to add, alter, delete or modify all or any of the above grounds of appeal. Ground No.1 : Rental Income whether Business Income or Income from House Property 3. The issue raised vide ground No.1 is whether the income earned by the assessee by way of rent on leasing the property as detailed in ground No.1 above, to be assessed as income from house property or income from business. At the outset, ld. representative of the assessee has been fair enough to admit that the first ground of appeal is covered against the assessee by the decision of the co-ordinate bench of this Tribunal dated 30.11.11 in assessee's own case for assessment years 2005-06 and 2006-07 in ITA No.3720/M/09 and ITA No.2965/M/10 respectively. The co-ordinate bench of the Tribunal while adjudicating the said issue in para 6 of the said judgment has observed as under: 6. We have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has contended that the assessee has been doubly taxed on this amount. It is the settled position of law that the tax cannot be charged twice on the same income, so if, there has crept any mistake in the accounts in booking the income on account of advisory fees of ₹ 28.32 lakhs twice, the assessee is not liable be doubly taxed for the same. Accordingly, this issue is restored to the file of the AO to verify the claim of the assessee and if found genuine to allow the same accordingly. Ground No.3 : Municipal taxes of ₹ 57.52 lakhs 5. Vide ground No.3, as reproduced above, the assessee has claimed deduction of ₹ 57.52 lakhs paid towards additional municipal tax to the land lord during the year under consideration. The contention of the assessee has been that the additional municipal taxes were crystallized during the A.Y. under consideration. However, the same were paid during the financial year relevant to assessment year 2008-09. His claim for the allowability of the said expenditure was rejected for the assessment year 2008-09 as the said expenditure was held to be prior period expenditure i.e. relating to the assessment year under consideration. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the ld. CIT(A) erred in deleting the disallowances, out of interest expenditure amounting to ₹ 3.32 crores made u/s. 14A of the Income- Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the claim of write-off of ₹ 5.10 crores consisting of preference shares of ATCOM Technologies Ltd. (Rs.5 Crore) and equity shares of Mahakali Flyovers Ltd. (Rs.0.10 Crores) as bad debts without appreciating the fact that the provisions of section 36(1)(vii) of the Income-Tax Act for claiming write-off are not satisfied. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the AO to reduce the total income by the amount representing the principal recovery portion of lease rentals on the lease transactions with Konkan Railway Corporation, Andhra Pradesh State Electricity Board I II . 4. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. Ground No.1 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd. (Rs.5 crores) and equity shares of Mahakali Flyovers Ltd. (0.10 crores) as bad debts. The AO, while disallowing the said claim, had observed that the above said both the entities were not listed at any recognized stock exchange. The shares had not been sold by the assessee as on the date i.e. 31.03.07; until the shares were actually sold the quantum of loss could not be determined. The assessee was following lower of cost or market value as the value of the closing stock. In the case of the assessee while the cost was ascertained, the market value was unascertained. The decrease in the value of investment was therefore nothing but provision for diminution in the value of investment/stock. He therefore observed that such provision in the above two cases was unascertained and therefore not allowable. 14. The ld. CIT(A), however, while deleting the said disallowance in para 5.2 of the impugned order, has observed as under: 5.2 I have considered the facts of the case and the submissions made by the appellant. I do not agree with the assessing officer that the loss is not allowable because the shares are not sold and the write off merely represents a provision. The A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above, has deleted the addition observing that the whole of the investment made by the assessee has turned bad and its market value thus was nil. 17. As observed above, it has already been held in the own case of the assessee that the assessee has been engaged in the business of sale and purchase of shares. The ld. CIT(A), while deleting the disallowance, has categorically observed that the same was a business loss. We therefore do not find any infirmity in the order of the CIT(A) in deleting the disallowance so made by the AO. This ground of the Revenue's appeal is thus also dismissed. Ground No.3 18. Vide ground No.3, as reproduced above, the Revenue has contested the action of the CIT(A) in directing the AO to reduce the total income of the assessee by the amount representing the principal recovery portion of lease rentals on the lease transactions with Konkan Railway Corporation Andhra Pradesh State Electricity Board I II. The issue before the CIT(A) was whether the above said transactions with Konkan Railway Corporation Andhra Pradesh State Electricity Board I II were in fact lease transactions or the finance loan transactions. 19. It was brought int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) or by the AO who has gone by the reasoning it is a colourable device either in the case of Konkan Railway Corp. Ltd. (supra) even in the case of Fujitsu ICIM Ltd. (supra) and Datar Switchgear Ltd. (supra) the issue has not been examined properly. In the absence of any proper material and record to come to such a finding, we are of the opinion that this matter needs to be restored back to the file of the Assessing Officer to examine it afresh. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) on these three transactions and restore the matter back to the file of the Assessing Officer who shall examine the issue of sale and leaseback agreement afresh and also in the light of the judgment of Delhi High Court in Cosmo Films Ltd. (supra), as have been referred to by the learned Counsel, the decision of Special Bench decision of the Tribunal in Indusind Bank (supra) and other decision on this issue. Thus, the claim of depreciation on the assets pertaining to aforesaid three sale and leaseback transactions which have been entered into this year is set aside to the file of the Assessing Officer to decide the issue afresh. Thus, groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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