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TMI Blog2015 (11) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with regard to the availability of surplus funds for investment in domestic companies, no further disallowance can be made in succeeding years. We accordingly confirm the order of the ld. CIT(A) on this issue. - Decided in favour of assessee. Disallowance under section 35D - CIT(A) deleted the disallowance -Held that:- A similar disallowance was made by the Assessing Officer in assessment year 2009-10, but it was deleted by the ld. CIT(A) and the Assessing Officer in the impugned assessment year has also made disallowance following his earlier order for assessment year 2009-10 and the same was deleted by the ld. CIT(A) following his order for assessment year 2009-10 which attained finality, as the Revenue has not challenged the findings of the ld. CIT(A) in this regard before the Tribunal though an appeal was filed on different grounds. Under these circumstances, we are of the view that the ld. CIT(A) has decided the issue following his earlier order which attained the finality - Decided in favour of assessee. Disallowance payment of bonus - CIT(A) deleted the disallowance - Held that:- Now the Revenue is in appeal before the Tribunal, but could not point out any specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated order. 4. Apropos grounds No.1 2, it was contended on behalf of the assessee that this issue is covered by the judgment of the Hon'ble jurisdictional High Court in the assessee's own case for assessment years 2007-08 and 2009-10. Copy of the judgment of the jurisdictional High Court is placed on record. 5. The ld. D.R. did not dispute this factual aspect. 6. Identical issue was examined by the Hon'ble High Court in earlier assessment year, in which it has been categorically held that the assessee is a manufacturer and is entitled for benefit of section 10B of the Income-tax Act, 1961 (hereinafter called in short the Act ). We, however, for the sake of reference extract the relevant portion of the judgment of the Hon'ble High Court as under:- 19. In the light of above discussion, we are of the view that the assessee is a manufacturer of the 'Ballistic Helmets' and 'Bullet Proof (bullet resistant) Jackets'. Only a part of the manufacturing activities was got done by the assessee from outside agency and that too under the direct control and supervision of the managerial and technical staff available with the assessee. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition. 10. Aggrieved, the Revenue is in appeal before the Tribunal and has placed reliance upon the order of the Assessing Officer, whereas the ld. counsel for the assessee has invited our attention to the fact that in assessment year 2009-10 similar disallowance was made and the ld. CIT(A) has deleted the disallowance. The deletion of disallowance was not challenged by the Revenue before the Tribunal though they have filed an appeal on different grounds. Copy of the order of the Tribunal and the order of the ld. CIT(A) pertaining to assessment year 2009-10 are placed on record. The ld. counsel for the assessee has further contended that since the ld. CIT(A) has followed his earlier order, which has attained the finality, there is no infirmity or illegality in the order of the ld. CIT(A), therefore, it deserves to be confirmed. 11. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing Officer has invoked the provisions of section 14A of the Act and made disallowance having applied rule 8D(2) of the Rules with respect to the investment made in domestic companies. Since the dividend income generated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure by way of interest. B stands for the average of value of investment, income from which does not form part of the total income and C stands for the average of total assets as appearing in the balance sheet of the assessee on the first day and the last day of the previous year. The total expenditure of interest which is not directly attributable to any particular income in the case of the assessee comes to ₹ 43159795/- (A) whereas average investment is ₹ 24665352/- (B) and average of total assets comes to ₹ 586682412/- (Rs.511712345 + ₹ 661652480)/2. By applying the formula as provided in Rule 8D(2)(ii), the disallowable amount of interest comes to ₹ 1814528/- which would be disallowed and added to the total income of the assessee company. Hence the total disallowance under section 14A read with Rule 8D(2), would be of ₹ 1937855/- (Rs.123327/- + ₹ 1814528/-). This would be added to the total income. The learned counsel has stated that no disallowance as made by the Assessing Officer was called for. The explanation given the appellant in the written submission is reproduced as under:- About the disallowance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment it is submitted that the appellant company had sufficient funds by way of shares capital of ₹ 73880236/- and reserve and surplus fund of ₹ 238246304/- as on 31.3.2008 and 401114768/- as on 31.3.2009. it was further submitted that the appellant had arranged loan of 7.84 lakhs Euro (equivalent to Indian ₹ 49392000.00 on 25.3.2008) from Exim Bank. It was submitted that the first instalment of repayment was due on 25.3.2009 amounting to 65333 Euro (equivalent to ₹ 4197645.00) and during the year under consideration no interest was either paid or claimed on such loan. In this connection we had clarified this position in reply to query No.12 vide our letter dated 14.12.2011 which reads as under:- REPLY QR NO 12 That no interest has been paid on the term loan during the year under consideration. The amount of 12.00 lakhs Euro has been disbursed by the bank as per following details 25.3.2008 784000 Euro 11.9.2009 416000 1200000 That the payment schedule for the aforesaid loan had been started with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.3799970/- Investment of shares of Cancord Safety Solutions Pvt. Ltd. made in the year under consideration Rs.45420735/- Investment in share of AST Securities Equipment GMBH Germany in the year under consideration. Rs.49275705/ The disallowance of ₹ 123327/- has been made as per provisions of Rule 8D(2) of IT Rules on above investment related to exempted income. About such disallowance I do not agree with the submission of the learned AR as the disallowance has been made as per prescribed Rules. Hence the disallowance of ₹ 123327/- is confirmed. The other disallowance of ₹ 1814528/- has been made in respect of disallowance of Intt on above Investment in shares. The Assessing Officer has given the working of such disallowance in Para 5-6 of the assessment order. From the replies, Balance sheet and other details I find that the appellant had sufficient Intt free funds by way of share capital Reserves surplus as compared to investment in share of first two companies as per details given below:- Intt free funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,38,322/- under section 35D of the Act having noted from Shedule-20 relating to 'Administrative Selling Miscellaneous Expenses' annexed to and forming part of profit and loss account and balance sheet that the assessee has claimed ₹ 4,38,322/- towards bad debts and claims written off covered under section 35D as against ₹ 9,65,072/- claimed in the immediately preceding year following his earlier order for assessment year 2009-10. 15. Before the ld. CIT(A), the assessee has challenged the disallowance and being convinced with the explanations of the assessee, the ld. CIT(A) has deleted the disallowance having followed the order of the ld. CIT(A) pertaining to assessment year 2009-10. Copy of the order is placed on record and it was further contended that the Revenue has not challenged this order before the Tribunal though appeal was: filed on different grounds. Therefore, the order of the ld. CIT(A) attained the finality and the same was followed by the ld. CIT(A) in the instant year while deleting the disallowance. 16. Aggrieved, the Revenue is in appeal before us and the ld. D.R. has placed reliance upon the order of the Assessing Officer; whereas the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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