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TMI Blog2015 (9) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 112 - A.O. has not examined whether the units sold by the assessee would fall within the definition given in Explanation to section 115AB and whether the proviso to section 112 would apply to the assessee as the said proviso would appear to apply only to those shares, bonds or units which are eligible for indexation benefit under second proviso to section 48 read with third proviso thereof - Held that:- In the assessment order, the Assessing Officer has not examined the issue at all and simply allowed the claim of the assessee. The order passed by the ld. CIT is valid in view of the inadequate enquiry by the Assessing Officer since the Assessing Officer has not examined the applicability of proviso to section 112 of the Act and also not examined whether the Sundaram Bond Saver is a unit as per section 10(23D) of the Act. Therefore, we are of the opinion that the Assessing Officer has failed to discharge his duty to examine the issue. Accordingly, the ld. CIT has rightly invoked section 263 of the Act on this issue.- Decided against assessee. Non consideration of disallowance of expenditure relating to exempt income as provided in section 14A - Held that:- The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. No. 756/Mds/2009 filed by the assessee is directed against the order of the ld. Commissioner of Income Tax, Chennai I, Chennai, dated 31.03.2009 relevant to the assessment year 2004-05 passed under section 263 of the Income Tax Act. The other cross appeals filed by the Revenue and the assessee are directed against the order of the ld. Commissioner of Income Tax (Appeals) III, Chennai dated 21.02.2011 for the assessment year 2004-05. I.T.A. No. 756/Mds/2009 2. Brief facts of the case are that the assessee company is engaged in the business of manufacture and sale of two wheelers. The assessment was completed under section 143(3) of the Act on 29.12.2006 by determining total income of the assessee at Rs. .201,90,40,968/-. Thereafter, the ld. CIT, while exercising power under section 263 of the Act issued notice for the following reasons: a) The assessee has claimed arrears of additional depreciation of Rs. .5,82,81,045 relating to assets installed in the previous year relevant to A.Y. 2003-04 at its Mysore plant and the same was allowed by the A.O. The A.O. has not examined whether the same is admissible under section 32(iia) as additional depreciation can be claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of 7.5% out of 15% if the asset is not put to use for more than 180 days. 4. In so far as set off of brought forward capital loss and benefit under section 112 of the Income Tax Act are concerned, the assessee has submitted before the ld. CIT that the Sundaram Mutual Funds are registered under SEBI Act, 1992. Therefore, they fall under the explanation to section 115AB of the Act. As the units are held for more than 12 months, the units are long term capital assets as per section 2(42A) of the Act. The ld. CIT, after considering the above submissions, has held as under: 4.1 I have carefully considered the assessee s reply. While it is accepted that the units of Sundaram Mutual Fund is a long term capital asset and a unit u/s.10(23D) of the Income-tax Act, whether it is eligible for the benefit of 10% under proviso to Sec.112 has not been explained. The mutual fund referred by the assessee is not eligible for indexation with third proviso thereof. Only the capital indexed bonds issued by the Government are eligible for indexation benefit under second proviso to Sec. 48. That being the case, the question is whether the assessee will be eligible for the benefit of proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to redo the assessment. 6. The assessee carried the matter in appeal before the Tribunal. 7. With regard to additional depreciation, the ld. Counsel for the assessee has submitted that the Assessing Officer, during the course of assessment proceedings, specifically asked the eligibility in respect of additional depreciation which has been pointed by the ld. Counsel for the assessee from paper book page No. 11. He further submitted that as per the question raised by the Assessing Officer, the assessee has replied with regard to additional depreciation in paper book page Nos. 17, 22 27 and therefore, the ld. Counsel for the assessee has submitted that the Assessing Officer, after considering the detailed submissions made by the assessee and application of his mind, allowed the claim of the assessee. Therefore, it cannot be subject matter under section 263 of the Act. Alternatively, he has submitted that the issue involved is in respect of additional depreciation and two views are possible and the view which was taken in favour of the assessee has to be upheld, but it cannot be taken under section 263 for that he has relied on the decision of the Tribunal in the case of Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 32(1) provides for an allowance of 20% of the actual cost of the asset of certain conditions are fulfilled. We have complied with such conditions and hence we are eligible and claimed additional depreciation. However, as per second proviso to section 32(1)(ii), the additional depreciation should be restricted to 50% when the asset was not put to use for more than 180 days. As we are entitled for additional depreciation @ 20% on the eligible assets, the same has been claimed over a period of two years i.e. for the assets used for less than 180 days, 50% is claimed in the assessment year 2003-04 and the balance 50% in the assessment year 2004-05. We wish to confirm that we have not claimed more than 20% as additional depreciation considering both the years together . The Assessing Officer, by following the above computation given by the assessee, allowed the claim of the assessee. For the sake of convenience, the relevant provision of section is reproduced as under: Provided: (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2002, by an assessee engaged in the business of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority as well as that of the Appellate Authority and the Tribunal in having affirmed the action of the Assessing Authority. We, therefore, do not find any scope to entertain the said question of law. 15. In view of the above decision of the Hon ble Jurisdictional High Court, there is no possibility of two views and there is only one view which was expressed by the Hon ble High Court. Even if there is difference of opinion of Coordinate Bench of the Tribunal, the view expressed by the Hon ble High Court has to be accepted. Therefore, the argument of the ld. Counsel for the assessee is rejected. 16. In so far as set off of brought forward loss and benefit under section 112 of the Act are concerned, the ld. Counsel for the assessee has submitted that all the details in respect of the above are filed before the Assessing Officer as pointed out from paper book page No. 43, 46, 47 48. He further submitted that the issue involved in this appeal is covered by the judgement of the Hon ble Bombay High Court in the case of CIT v. Anuja A Sheth, HUF 324 ITR 191. Therefore, he has submitted that the order passed by the Assessing Officer cannot be said that it is prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the Assessing Officer has failed to make sufficient enquiries, which is necessary to determine the tax and therefore, the ld. CIT has exercised his power under section 263 of the Act and directed the Assessing Officer to redo the assessment. Thus, we uphold the order passed by the ld. CIT under section 263 of the Act. Accordingly, the appeal filed by the assessee is dismissed. I.T.A. No. 942/Mds/2011 (Revenue appeal) 21. Brief facts of the case are that in this case, the assessment was completed on 21.09.2006 under section 143(3) of the Act. Thereafter, the ld. CIT, Chennai I, Chennai has passed an order under section 263 on 31.03.2009 by directing the Assessing Officer to examine the claim of the assessee with regard to set off of brought forward capital loss and benefit under section 112 of the Act. In the assessment order, the Assessing Officer has clubbed both the issues of set off of brought forward capital loss and benefit under section 112 of the Act and denied the claim of the assessee. On appeal, the ld. CIT(A) allowed the benefit under section 112 of the Act to the assessee. In so far as brought forward capital loss is concerned, by considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is concerned, the Assessing Officer was of the opinion that the Sundaram Bond Saver is only a bond and not unit and he has not considered explanation (b) to section 115 and clause 23(D) to section 10 of the Act. For the purpose of examining whether the Sundaram Bond Saver is a unit or not, it is necessary for the Assessing Officer to examine whether the Sundaram Bond Saver is recognized by the Securities and Exchange Board of India Act, 1992 or regulations made thereunder. In the assessment order, the Assessing Officer has not discussed the above details and the ld. CIT(A) has simply allowed the claim of the assessee under section 112 of the Act by considering the Sundaram Bond Saver is a unit. 26. Further, before the ld. CIT(A), the assessee has placed reliance on the certificate dated 21.08.2009 issued by the Sundaram BNP Paribas Mutual, which reads as under: This is to certify that Sundaram BNP Paribas Mutual (formally known as Sundaram Mutual Fund) is registered with Securities and Exchange Board of India (SEBI) vide Registration No.MF/034/97/2. Sundaram BNP Paribas Bond Saver (formally known as Sundaram Bond Saver) is a scheme floated by Sundaram BNP Pariba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessment proceedings, the assessing authority has disallowed 2% of the expenditure as pertaining to earning of dividend income. Even through this disallowance was raised before the Commissioner of Income-tax (Appeals) in first appeal, the issue was not pressed before him. But the Commissioner of Income-tax (Appeals) found that the disallowance of 2% made by the assessing authority was not correct in view of the Rule 80 introduced subsequently. The Commissioner of Income-tax (Appeals) held that the disallowance should be made in accordance with Rule 8D. Accordingly, he directed the Assessing Officer to enhance the quantum of disallowance. The Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd v. DCIT (320 ITR 81) has held that the operation of Rule 8D is only prospective and not retrospective. In view of that judgment, Rule 8D does not apply to the impugned assessment year 2005-06. I.T.A. T. Mumbai Bench G in the case of M/s Godrej Agrovet Ltd. v. ACIT (2010- T/OL-ITAT-MUM) has held that Rule is prospective in nature and therefore, cannot be applied in respect of earlier assessment years. In view of the above, we vacate the direction of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant regarding additional depreciation and allowed all other claims made by the appellant. Against which the department filed an appeal before the Tribunal and is pending. The Appellant did not pursue appeal before the Tribunal with regard to disallowance of additional depreciation. 4. I state that now the assessing officer for the assessment year 2007-08 has levied the penalty u/s.271 (1)1 as the Appellant has not pursue appeal before the Tribunal against the disallowance confirmed by the CIT(A), with regard to additional depreciation. 5. I state that in view of the above, the appellant is afraid that the Assessing office may levy penalty under section 271 (1)1 of this year 2004-05 also as the appellant has not filed appeal regarding disallowance of additional depreciation confirmed by the CIT(A) by order dated 21.02.2011. Subsequently during discussions with our advocates we were advised that it is better we should file an appeal against the order of the first appellate authority to the tribunal. I submit that the omission to file the appeal was because of the mistaken interpretation of the provisions by me and it was inadvertent and not willful. 33. The ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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