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TMI Blog2011 (4) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 14A on proportionate basis. The facts of the case stated in brief are that the Assessing Officer in the course of assessment found that the assessee had earned income of ₹ 7,71,04,752/- as dividend on mutual funds and ₹ 39,07,189/- as interest on tax free bonds. The Assessing Officer required the assessee to explain as to why apportionment of expense should not be made. In response to the query raised, it was submitted by the assessee that it had large amount of reserve at it disposal and the Interest expenditure was mainly towards packing credit for export. The Assessing Officer in view of the reply submitted, observed that the assessee had failed to establish and furnish any evidence that no expenditure was incurred for earning dividend income and tax free interest. Certain expenses like salaries, employees welfare expenses, traveling, rent etc. were common expenses with regard to earning of dividend and interest free income and for regular business activities in relation to export/import of sugar. The Assessing Officer by invoking the provisions of Section 14A, disallowed ₹ 28,16,011/- out of interest paid and ₹ 80,18,703/- out of administrative expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not correct. Ld. CIT(A), however, observed that it could not be accepted that no expenditure both direct and indirect, was incurred for earning of exempt income of ₹ 7,71,04,752/- as dividend and interest from tax free bonds of ₹ 39,07,189/-. However, taking into totality of the facts and circumstances, he upheld the addition of ₹ 10 lacs. 8. Aggrieved by the order of CIT(A), the Revenue is in appeal against the deletion of addition of ₹ 28,16,011/- in respect of interest of ₹ 70,18,703/- on account of administrative expenses totaling to ₹ 98,34,814/-. On the other hand, assessee is in appeal against the confirmation of addition of ₹ 10 lacs, on account of administrative expenses. 9. Before us, Ld. CIT (D.R.) submitted that in Assessment Year 2002-03, Ld. CIT(A) has deleted the addition in respect of disallowance made against the interest payment. In Assessment Year 2004-05, Ld. CIT(A) had upheld the disallowance on the ground that the borrowed funds were put into common pool for earning and investment activities. In view of these facts, Ld. CIT (D.R.) submitted that interest paid in Assessment Year 202-03 is also to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer had to enforce the provisions of Section 14A(1). For that purpose, the Assessing Officer was duty bound to determine the expenditure which has been incurred in relation to income which did not form part of total income under the Act. The Assessing Officer must adopt a reasonable basis and method consistent with all the relevant facts and in these circumstances after providing reasonable opportunity to the assessee to place all germane material on record. Since the Assessing Officer as well as CIT(A) have not carried out any exercise in the light of Hon'ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. (supra), we feel it proper to set aside the matter relating to both the disallowances to the file of the Assessing Officer with the direction to examine the claim of the assessee in the light of decision of Hon'ble Bombay High Court referred to above. Needless to say the Assessing Officer shall provide necessary opportunity to the assessee to place all material on record in support of its claim. We order accordingly. 12. The next issue for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of closing stock. The assessee valued closing stock at market cost. The Assessing Officer had valued the closing stock on the basis of cost price which resulted an addition of ₹ 17,20,980/-. On appeal, Ld. CIT(A) deleted the addition relying on the decision of ITAT for Assessment Year 1993-94. 17. We have heard both the parties and gone through the material available on record. During the course of hearing Ld. A.R. for the assessee filed copy of order of ITAT for the Assessment Year 2001-02 in I .T.A. No. 1042/Del/2005 dated 05.12.2008 wherein the addition made on account of valuation of closing stock was deleted. 18. We have gone through the order of ITAT carefully. It is noted that ITAT had decided the issue in favour of the assessee. The assessee valued the closing stock on cost price or market price whichever was lower. This method of valuation of closing stock was followed by the assessee in 1995-96 and had been accepted by the Tribunal in earlier order. Since the facts of the case are identical to the facts of earlier years and since the assessee is following the method of valuation consistently on cost price or market price whichever is lower, Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that when section 28(iiid) specifically deals with profits realized on transfer of DEPB credit, it would be impermissible as a matter of first principle to bifurcate the face value of the DEPB and the amount received in excess of face value of DEPB. Since the issue is now covered by the decision of Bombay High Court in the case of CIT Vs Kalpataru Colours Chemicals (supra) we set aside the issue to the file of the Assessing Officer to decide the issue in the light of the decision of Hon'ble Bombay High Court in the case of Kalpataru Colors Chemicals (supra). 23. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. 24. Now, we take up the appeals for the Assessment Year 2004- 05. The 1st issue for consideration in assessee s appeal relates to sustenance of disallowance of deduction u/s 80HHC of ₹ 3,65,84,950/- on account of sale of DEPB/DFRC. In Assessment Year 2002-03, we have set aside the matter to the file of the Assessing Officer with the direction to decide the issue in the light of the decision of Hon'ble Bombay High Court in the case of Kalpataru Colour Chemicals 328 ITR 451 . Since the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch limits as may be prescribed for the purpose of recognizing the provident fund of approving the superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed on some definite basis by reference to the income chargeable under the head Salaries or to the contributions or to the number of members of the fund . Reading the aforesaid section it is clear that to claim deduction by way of contribution to a recognized provident fund, it has to be demonstrated that the contribution is towards a recognized provident fund. The phrase Recognized Provident Fund is defined in Section 2(38) of the Act. As per the definition it means a provident fund, which has been and continues to be recognized by the Chief Commissioner or Commissioner in accordance with rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees Provident Funds Act, 1952. Since as per the letter issued by CIT, Delhi-III dated 28.5.1976, the provident fund is considered as fund to which Provident Fund Act, 1925 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the assessee, the assessee was not entitled for depreciation. 35. We have heard both the parties. There is no dispute about the fact that assessee had purchased the property in the financial year 1999-2000 and was occupied by the assessee. The assessee had been paying house tax in its own name. The Assessing Officer had disallowed the claim of the assessee on the ground that the conveyance deed was not registered in the name of the assessee. Hon'ble Supreme Court however in the case of Mysore Minerals Vs CIT 239 ITR 775 has held that Section 32 of the Income tax Act, 1961 allows deduction by way of depreciation on building etc. owned by the assessee and used for the purpose of business or profession. The terms owner , ownership , owned are generic and relative terms. They have a wide and also a narrow connotation. The meaning would depend on the context in which the terms are used. The decision in the case of CIT Vs Podar Cement Pvt. Ltd. 226 ITR 625 (S.C.) has to be taken as a trendsetter in the concept of ownership. Assistance from the law laid down therein can be taken for finding out the meaning of the term owned as occurring in section 32(1) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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