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TMI Blog2017 (2) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... for the whole of the previous year. Thus we are of the view that now when in the case of the present assessee the property under consideration had remained let out upto 04.12.2008, and thereafter though could not be let out and had remained vacant during whole of the year under consideration, but also had never remained under the self occupation of the assessee, the computation of the ‘ALV’ u/s 23(1)(c) of the ‘Act’, had rightly been carried out.- Decided in favour of assessee. Recasting of the ‘Book profit’ u/s 115JB - Held that:- We find that the A.O while computing the ‘Book profit’ u/s 115JB of the ‘Act’, being guided by the clear provision so contemplated in Sec. 115JB(2) – Explanation 1(f), had rightly made an addition of ₹ 3,10,868/- (supra), being the amount of expenditure relatable to the dividend income of ₹ 11,36,128/- (supra), which being exempt u/s 10(34) of the ‘Act’, had duly been excluded by the assessee while computing the ‘Book profit’, and accepted as such by the A.O. We thus finding no infirmity in the making of the addition of ₹ 3,10,868/- (supra) by the A.O, which thereafter had rightly been sustained by the CIT(A), therein uphold the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or part thereof, on the amount of such tax, for the period beginning on the date immediately after the last date on which tax was payable and ending with the date on which the tax is actually paid. We find that to the extent the facts had been brought to our notice by the Ld. A.R, and it remains as a matter of fact as claimed by the assessee, that the dividend was declared as on 25.09.2009, and the dividend distribution tax on the same was paid within the stipulated time period of 14 days, i.e. as on 06.10.2009, then if that be so, though subject to the verification of the said averments of the Ld. A.R before us, the assessee cannot be held to have defaulted as regards making of the payment within the stipulated time period of 14 days as required u/s 115-O(3) of the ‘Act’, as a result whereof no interest u/s 115P is liable to be imposed. We thus in light of and subject to our aforesaid observations, delete the interest of ₹ 99,190/- levied on the assessee. - ITA No. 6466 & 6467/MUM/2014 - - - Dated:- 28-10-2016 - SHRI G.S. PANNU (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) For The Revenue : Shri Javed Akhtar For The Assessee : Shri Surinder Mehra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income from the said property is to be assessed at Nil. c) That the C.I.T.-(A) has erred in completely ignoring the decision of the ITAT, Mumbai, in the case of Premsudha Exports Pvt. Ltd. vs. ACIT reported in 110 ITD 158 which was brought to his notice in the detailed facts of the case filed before him during the course of hearing along with copy of judgment. d) That in view of the said decision of the ITAT, Mumbai, income from the said property is to be assessed at Nil. e) That the C.I.T.-(A) has erred in referring to the judgment in the case of Vivek Jain vs. ACIT reported in 337 ITR 74. In the present case since as mentioned above, the premises were let upto 4.12.2008 and evidence was filed by the assessee company before C.I.T.-(A) that the appellant company had tried to let out the said premises, the said decision goes in favor of the assessee and the assessing officer had erred in not accepting the said ground of appeal. 3.a) That the C.I.T.-(A) has erred in not accepting ground number three of grounds of appeal filed before him regarding following additions wrongly made by the assessing officer in computing book profits :- Divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be allowed. 5.a) That the C.I.T.-(A) has erred in not accepting Ground No. 5 of the grounds of appeal filed before him regarding charging of interest of ₹ 99,190/- for late payment of dividend distribution tax. b) That the dividend of ₹ 41,69,100/- was declared on 25.9.2009 and dividend distribution tax on the same of ₹ 7,08,539/- was paid within a period of 14 days on 16.10.2009 vide Challan No. 9 on Bank of Baroda, Nariman Point, BSR Code 0201290 and as such no interest for late payment is leviable. c) That the said facts were brought to the notice of the C.I.T.-(A) and the copy of the challan etc. was also filed before him but he has erred in not accepting the said ground of appeal filed by the appellant company. d) That the C.I.T.-(A) has erred in directing the assessing officer to pass order u/s. 154 before him by the appellant company. e) That the C.I.T.-(A) was duty bound to pass order on the ground raised before him and the said interest charged may please be cancelled. 3. We herein advert to the facts involved in the appeal of the assessee for the A.Y. 2010-11, marked as ITA No. 6466/Mum/2014. The brief facts of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 10A vis-a-vis Disallowance u/s 14A :- That during the course of the assessment proceedings the A.O observed that though the assessee company had made investments of ₹ 6,12,64,076/- and had received exempt income u/s 10 of the Act of ₹ 11,36,128/- on the same, but had not worked out and reflected the disallowance u/s 14A of the Act in its Return of income . The assessee on being confronted though did not dispute the quantification of the disallowance of ₹ 3,10,869/- purported to be carried out by the A.O, but however submitted that pursuant to the carrying out of disallowance by the A.O u/s 14A, the consequential enhancement to its claim of deduction u/s 10A was required to be given effect to, as a result whereof the net business income would remain at Rs. Nil. The A.O however being of the view that the disallowance u/s 14A did not fall within the sweep of Sec. 28 to 44 of the Act , which regulated the computation of the income under the head Business or Profession , therefore the same thus would not go to increase the business profit eligible for deduction u/s 10A of the Act , for the said reason rejected the contention of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit as per P Loss A/c ₹ 2,95,37,024/- ADD : 1. Disallowance u/s 14A ₹ 3,10,868/- 2. Income computed by the A.O under the head House property ₹ 8,40,000/- 3. Dividend paid or proposed ₹ 41,69,100/- LESS : 1. Amount of income to which provisions of Chapter III applies (Dividend u/s 10(34) (-) ₹ 11,36,128/- Total income as per MAT ₹ 3,37,20,864/- The assessee being aggrieved with the aforesaid recasting of the Book profit u/s 115JB of the Act , assailed the modifications carried out by the A.O before the CIT(A), who though agreed with the contention of the assessee to the extent addition of the income from house property was made by the A.O for computing the Book profit u/s 115JB, but however upheld the disallowance u/s 14A considered by the A.O while recasting of the aforesaid Book profit . 6. That the assessee assailing the order of the CIT(A) to the extent the latter had upheld the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereof the net business income would remain at Rs. Nil only. The A.O pursuant to the aforesaid contention raised by the assessee, therein dealt with the same, but however not finding himself as being in agreement with the same, therein rejected the claim of the assessee and carried out a disallowance of ₹ 3,10,868/- u/s 14A, without enhancing the claim of the assessee towards deduction u/s 10A of the Act . The assessee being aggrieved with the refusal on the part of the A.O to enhance the deduction allowable u/s 10A of the Act , consequent to disallowance of ₹ 3,10,868/- u/s 14A, therein specifically challenged the same by way of Ground of Appeal No. 1(d) before the CIT(A), which we find had been reproduced by the CIT(A) at Page 2 of his order, who also took due cognizance of the written submissions filed by the assessee on the said issue and reproduced the same at Page 3 4 Para 4.1 of his order. However, we find that the CIT(A) thereafter while adjudicating the Ground of Appeal No. 1 so raised by the assessee before him, therein digressed from the issue which was assailed by the assessee before him, and though adjudicated the correctness of the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the statutory provisions s. 43B in the case of the employer‟s contribution and s. 36(v) r/w s. 2(24)(x) in the case of the employees contribution which has been deemed to be the income of the assessee. The plain consequence of the disallowance and the add back that has been made by the A.O is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under s. 10A the addition made on account of the disallowance of the PF/ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the AO must follow. We thus in light of the aforesaid facts of the case r.w the settled position of law, herein direct the A.O that pursuant to the disallowance of ₹ 3,10,868/- so made by him u/s 14A, a consequent enhancement of the entitlement of the assessee towards claim of deduction u/s 10A of the Act be carried out. The Ground of appeal No. 1 is thus allowed. 7. The Ld. A.R. further adverting to the addition of ₹ 8,40,000/- made by the A.O under the head Income from House Property , therein submitted that as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Hon ble High Court had though concluded that the benefit of computing the ALV u/s 23(1)(c) could not be extended to a case where the property was not let out at all, however the same would duly encompass and take within its sweep cases where the property had remained let out for two or more years, but thereafter had remained vacant for the whole of the previous year. It was thus submitted by the Ld. A.R. that now when in the case of the present assessee the property under consideration had remained let out upto 04.12.2008, and thereafter despite best of the efforts of the assessee, though could not be let out, but the same during the said period had however never remained under the self occupation of the assessee, therefore the assessee in light of the aforesaid judgment of the Hon ble High Court had rightly computed the ALV u/s 23(1)(c) of the Act . It was thus submitted by the assessee that the aforesaid judgment of the Hon ble High Court rather came to the rescue of the assessee and had wrongly been construed by the CIT(A). It was thus averred by the Ld. A.R. that the addition of ₹ 8,40,000/- made by the A.O and sustained as such by the CIT(A) may t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the owner for self-occupation i.e self occupied property (i.e SOP) because even income on account of SOP, excluding one such SOP of which annual value is to be adopted at nil, is also to be computed under this head as per Clause (a) of Section 23(1) if we see the combined reading of Sub-section (2) and (4) of Section 23. One thing is more important because we find that where the legislature have considered that actual letting out is required, they have used the words house is actually let‟. This can be seen in Sub-section (3) of same Section 23. But in Clause (c) above, actually let‟ words are not used and this also shows that meaning and interpretation of the words property is let‟ cannot be property actually let out‟. In our opinion, it talks of properties which are held to letting out having intention to let out in the relevant year coupled with efforts made for letting it out. If these conditions are satisfied, it has to be held that property is let and the same will fall within the purview of this clause. We find ourselves to be in agreement with the aforesaid observations of the coordinate bench of the Tribunal, which analyzing the sco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property at Rs. Nil by taking recourse to Sec. 23(1)(c) of the Act . In this regard we are further of the view that the CIT(A) had misconceived the judgment of the Hon ble High Court of Andhra Pradesh in the case of Vikas Jain (supra), and on a perusal of the said judgment therein find that the Hon ble High Court in the concluding Para 14 15 had though concluded that the benefit of computing the ALV u/s 23(1)(c) could not be extended to a case where the property was not let out at all, would however duly encompass and take within its sweep cases where the property had remained let out for two or more years, but had remained vacant for the whole of the previous year. Thus we are of the view that now when in the case of the present assessee the property under consideration had remained let out upto 04.12.2008, and thereafter though could not be let out and had remained vacant during whole of the year under consideration, but also had never remained under the self occupation of the assessee, the computation of the ALV u/s 23(1)(c) of the Act , had rightly been carried out in light of the aforesaid judgment of the Hon ble High Court. 7.2 That in light of our aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained as such by the CIT(A). 8.1 We have considered the rival submissions of either side and perused the relevant material on record, including the orders of the authorities below. The issue under consideration for adjudication before us is as to whether the computation of the Book profit for MAT purposes u/s 115JB had rightly been carried out by the A.O and sustained as such by the CIT(A), to the extent the same had been assailed before us by the assessee company. The contention of the assessee as regards the issue under consideration is two fold, which is dealt with by us as under :- (i) Bearing of disallowance u/s 14A on computation of Book profit : The contention of the Ld. A.R is that the A.O had gravely erred in law in making an addition of ₹ 3,10,868/-, being the amount of disallowance u/s 14A, while computing the Book profit u/s 115JB of the Act , and the CIT(A) had further erred in upholding the order of the A.O. The Ld. D.R on the other hand relied on the orders of the lower authorities and submitted that the disallowance was made by the A.O as per the clear provisions of Sec. 115JB, and had rightly been sustained as such by the CIT(A). We have gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking a separate addition of the provision for dividend of ₹ 41,69,100/-. We have given a thoughtful consideration to the issue under consideration before us, and at the threshold find substantial force in the contention of the Ld. A.R that once the Profit adopted by the A.O as the starting point for computing the Book profit u/s 115JB of the Act , is the amount before provision for dividend, then there remains no occasion to make a separate addition of the provision for dividend. Though the working of Book profit as per MAT provisions by the assessee company itself, as is found reproduced by the A.O in the body of the assessment order, therein prima facie reveals that the assessee company had adopted the same amount of ₹ 2,95,37,024/- (supra) as the starting point for computing the Book profit , followed by a separate addition of ₹ 41,69,100/- towards dividend paid or proposed , which if that be so, is in self contradiction of the claim raised by the assessee in appeal, however, as the said working is neither found to be in conformity with the settled position of law, nor free from doubts and mistakes, the same thus does not inspire much confidence. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was further submitted by the Ld. A.R. that aggrieved with the aforesaid omission on the part of the A.O, the assessee carried the matter in appeal before the CIT(A). It was further submitted that prior to filing of the appeal as on 17.01.2013, the assessee had moved a rectification application u/s 154 of the Act on 04.01.2013, which fact was brought to the notice of the CIT(A) during the course of the appellate proceedings. It was averred by the Ld. A.R. that the CIT(A) instead of disposing of the aforesaid issue on merits, rather directed the A.O to pass an appropriate order u/s 154 of the Act in light of CBDT Instruction No. 03/2013, dated 05.07.2013, issued vide F.No. 225/76/2013/ITA.II, after proper verification of the facts as per record. The assessee being aggrieved with the failure on the part of the CIT(A) to dispose of the issue after considering the merits, and rather merely directing the A.O to dispose of the said application, had therein carried the matter in appeal before us. 9.1 We have given a thoughtful consideration to the facts of the case and are pained to find that an A.O who as per Sec. 154(8) of the Act was under a statutory obligation to have suo m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so claimed by it, as per law. That needless to say, the A.O while adjudicating the aforesaid issue shall afford sufficient opportunity of being heard to the assessee. Thus the Ground of Appeal No. 4 of the assessee is allowed for statistical purposes. 10. We now advert to the Ground of Appeal No. 5 raised by the assessee, therein challenging the levy of interest of ₹ 99,190/- for alleged late payment of Dividend distribution tax (for short DDT ). It is claimed by the Ld. A.R that the assessee company had declared dividend of ₹ 41,69,100/- as on 25.09.2009, and the DDT on the same amounting to ₹ 7,08,539/- was paid within a period of 14 days, i.e. on 06.10.2009, vide Challan No. 9 of Bank of Baroda, Nariman Point (BSR Code : 0201290), and as such, as the amount was paid within the stipulated time period, therefore no interest was leviable. It is further claimed that a rectification application u/s 154 of the Act was also filed with the A.O as on 04.01.2013, which thereafter was followed by a reminder application, however the said application of the assessee had not been disposed till date. The assessee being aggrieved with the levy of interest of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. That failing such compliance within the stipulated time period, the assessee as per Sec. 115P is liable to be saddled with interest @ 1% for every month or part thereof, on the amount of such tax, for the period beginning on the date immediately after the last date on which tax was payable and ending with the date on which the tax is actually paid. We find that to the extent the facts had been brought to our notice by the Ld. A.R, and it remains as a matter of fact as claimed by the assessee, that the dividend was declared as on 25.09.2009, and the dividend distribution tax on the same was paid within the stipulated time period of 14 days, i.e. as on 06.10.2009, then if that be so, though subject to the verification of the said averments of the Ld. A.R before us, the assessee cannot be held to have defaulted as regards making of the payment within the stipulated time period of 14 days as required u/s 115-O(3) of the Act , as a result whereof no interest u/s 115P is liable to be imposed. We thus in light of and subject to our aforesaid observations, delete the interest of ₹ 99,190/- levied on the assessee. The Ground of Appeal No. 5 is thus allowed. 11. That the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for not other provisions. In view of the same, the addition of disallowance u/s. 14A to the book profit is bad in law and may be cancelled 13. The Ld. A.R. adverting to the addition of ₹ 9,24,000/- made by the A.O under the head Income from House Property , therein submitted that the issue involved in the present appeal is identical as that involved in the appeal of the assessee for A.Y. 2010-11, marked as ITA No. 6466/Mum/2014, except for the difference in the amount of the ALV , which factual position was fairly admitted by the Ld. D.R. Thus in light of the aforesaid facts, we adjudicate the present issue in terms of our order passed in context of the said issue, while disposing of the Ground of appeal No.2 in the appeal of the assessee for A.Y. 2010-11, marked as ITA No. 6466/Mum/2014, as a result whereof, on the basis of the same very reasoning adopted by us while adjudicating the said issue in the case of the assessee for A.Y. 2010-11, we herein delete the addition of ₹ 9,24,000/- so made by the A.O and sustained as such by the CIT(A). Thus the Ground of appeal No. 1 of the assessee is allowed in terms of our aforesaid observations. 14. We now advert to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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