9911796707
TMI Blog2011 (6) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... ake of convenience. 2. The effective grounds raised by the Revenue in appeal no.3145/Ahd/2010 for the assessment year 2004-05 read as under: 1. The Ld. Commissioner of Income-tax (A) has erred in law and on facts in annulling the assessment order dated 9/12/2009 passed u/s.143(3) r.w.s. 147 of the Act. 2. The Ld. Commissioner of Income-tax (A) has erred in law and on facts in deleting the disallowance of proportionate expenses of ₹ 10,18,445/- u/s. 14A against exempt income u/s.10B is deleted. 3. The Ld. Commissioner of Income-tax (A) has erred in law and on facts in deleting the disallowance U/s.14A with reference to dividend income of ₹ 1,32,715/- exempt u/s. 10(35). 2.1 The effective grounds raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1561/- u/s. 154 dated 19.12.2006 and thereafter it was revised at ₹ 82781/- as per order dated 23.02.2007 giving effect to ld. CIT(A) order dated 15.02.2007. For the assessment year 2005-06, there was no change in assessed income. 2.2 Thereafter, there was audit objection issued by the audit party for assessment year 2004-05 (placed at page nos.31 and 32 of the paper book). In the said audit note it is mentioned that proportionate expenses of ₹ 1018445/- and ₹ 132715/- incurred in relation to income exempt under section 10B and section 10(35) respectively was not disallowed as per provisions of section 14A of the Act. Similarly, there was audit objection for the assessment year 2005-06 (placed at page 85 of the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars and on merit also he held that no disallowance under section 14A is called for. For both the assessment years, the ld. CIT(A) has given the identical findings except variance in amount. Therefore, the reasoning given for the assessment year 2004-05 is reproduced hereunder: 4.2. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. Briefly stated the contentions of the learned A. R. are as follow. Exemption u/s. 10B was allowed after excluding the expenses related to such income. The said exemption was quantified in accordance with Sec. 10B(4). Therefore applying the provisions of Sec. 14A results in duplicating the exercise and is not called for. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals before the Tribunal. 5. At the time of hearing before us, Shri G.S.Souryawansi, D.R. appeared on behalf of the Revenue and relying on the reasoning given by the AO in the assessment order, contended that the reopening was rightly done and the ld. CIT(A) is not justified in annulling the same. On disallowance made under section 14A, the ld. D.R. pointed out that disallowance was rightly done and ld. CIT(A) is not justifying in deleting the same for both the assessment eyars. 6. On the other hand, Shri Mukesh M. Patel, A.R., appearing on behalf of the assessee, vehemently supported the order of the ld. CIT(A). The Counsel of the assessee submitted that assessments for both the assessment years were completed under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that investments were out of own funds. To fortify the view taken by the ld. CIT(A), the Counsel of the assessee relied on the decision dated 28/03/2011 of the Hon ble Gujarat High Court in the case of CIT-vs- Gujarat Power Corporation Ltd. In Tax Appeal No.1587 of 2009 wherein it was held that unless investments were made out of borrowed funds for earning the exempt income, no disallowance of interest under section 14A can be made. 7. Having heard both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that the reopening of assessment for both the assessment years was done on the basis of audit objection. No independent reasons was recorded by the A.O. Therefore, the ratio of decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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