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TMI Blog2017 (6) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... e above, we are of the opinion that there is no need to disturb the order of the FAA. Deduction u/s. 80IA in respect of the total disallowance u/s.14A - Held that:- Issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09 wherein held whatever income was enhanced on account of disallowance computed u/s 14A of the Act, it has been offset by the exemption available on such enhanced profit in terms of section 80IA of the Act. Thus, on facts it is quite clear that the disallowance u/s 14A of the Act does not impact the net taxable profits as assessee becomes eligible to higher exemption u/s 80IA of the Act Treatment given to sale proceeds of CER and reduction of a sum on account of de-merger of investment division while computing the book profit - Held that:- While deciding the appeal for the AY.2008-09 Tribunal had dealt with the issue restoring back the issue to the file of the AO for fresh adjudication - I.T.A. /1334/Mum/2015, And I.T.A. /1091/Mum/2015, - - - Dated:- 2-6-2017 - Shri Rajendra,Accountant Member, And Ram Lal Negi,Judicial Member For The Revenue : Shri Alok Johari-DR For The Assessee : Shri Rakesh Jos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure proceedings various invoices and running bills of GIEPL were seized, that scrutiny of the documents suggested that there were no entries in the inward register,that the log sheets were fabricated, that there was no proof that construction equipments had entered the factory premises,referring to the statements of the DGM recorded during the survey proceedings and from the log sheets he observed that all these documents were prepared on a particular day to serve the purpose of having some supporting evidence for the bills produced by the contractor i.e. GIEPL, that the bills were approved and passed for payment without any cross verification,that the log sheet of the contractor were manipu - lated,that the serially numbered log sheets were not issued in order, that the Log-sheet for July-August,2007 were issued after the Log sheet for the next two months were issued, that the assessee was not able to substantiate the claim that the payment to GIEPL were made for business purposes.He further observed that some of the bills submitted by GIEPL were unsigned,that such unverified bills were processed by the assessee and payments against these bills were made. 3.1. He further state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion between JSW(E) Ratnagiri and GEIPL.Finally, he deleted the addition made by the AO. 3.4. project carried out by Ratnagiri unit, that GEIPL had admitted to have issued bogus bill to JSW(E),Ratnagiri,that the AO had rightly made the disallowance.The Authorised Representa -tive(AR)contended that the assessee was not connected with the bogus bills, even if the fake bills were obtained, same pertained to the erstwhile company.He referred to the order of the Tribunal for the AY.2009-10 and stated that the Ratnagiri Unit amalgamated with the assessee company in the subsequent years. 3.5. We have heard the rival submissions and perused the material before us. We find that the amalgamation of the JSW(E)Ratnagiri took place on 01.04.2010, that before that date Ratnagiri Unit was an independent entity, that the alleged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as the bills were not taken by the assessee in the year under consideration. In our opinion the order of the FAA does not suffer from any legal or factual infirmity.The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed any expenditure in its books of accounts, that disputed amount was disallowed in the case of JSWERL, that during not made by an assessee could not be disallowed. 5.We have heard the rival submissions and perused the material before us.We find that the assessee had not claimed the expenditure in question in its books of accounts for the year under appeal.For disallowing any expense,the AO should first prove the incurring and claiming of of the said expenditure in the regular books of accounts.But, without establishing the basic fact that the assessee had claimed the expenditure,the AO had made the disallowance.The expenditure was incurred by an erstwhile entity namely JSWERL and certain discrepancies were noticed about the transaction.So,if any disallowance was to be made,it should have been in the hands of that assessee or it should have been in the case of successor of JSWERL.The FAA has given a categorical finding of fact that before the amalgamation with JSWERL,the assessee had no connection with that entity,that expenditure was claimed by that company and was disallowed by the AO of that company while completing the assessment for the AY.s 2008-09 and 2009-10,that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09(ITA/463/Mum/2014 dt.31.7.15). We are reproducing para No.16-19 of the above order: 16. Before us, the Ld. Representative for the assessee has not seriously disputed the disallowance of ₹ 9,05,83,986/- made by the Assessing Officer on account of direct interest expenditure related to earning of exempt income. Ostensibly, the said working was provided by the assessee itself in the course of hearing before the Assessing Officer. Nevertheless, it is to be noted that the entire issue of the disallowance made by invoking section 14A of the Act is quite redundant because the CIT(A) agreed to an omnibus alternate plea of the assessee to the effect that the amount disallowed u/s 14A of the Act resulted in increased profits, which qualified for the benefits of section 80IA of the Act. The aforesaid decision of the CIT(A) is challenged by the Revenue by way of Ground of appeal No.2. 17. Pertinently, with respect to the disallowance u/s 14A of the Act made by application of clauses (i) and (ii) of Rule 8D of the Rules amounting to ₹ 24,37,66,836/- the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance u/s 14A of the Act does not impact the net taxable profits as assessee becomes eligible to higher exemption u/s 80IA of the Act. Therefore, the dispute pertaining to the efficacy of the disallowance u/s 14A of the Act, r.w. rule 8D(2) of the Rules, which is manifested in Ground of appeal no. 4 of the assessee and in Ground of appeal no. 1 of the Revenue, is academic in nature. Thus, we refrain from adjudicating the same at the present. Respectfully following the above, Ground three decided against the AO. 6. Sale of Certified Emission Reduction (CER) is the subject matter of Ground No.4.While deciding the appeal file by the assessee we have restored back the issue of sale of CER to the file of AO for fresh adjudication.Ground No.4 is decided in favour of the AO,in part. 7. Next Ground is about computation of book profit u/s.115JB of the Act. It was brought to our notice that the Tribunal in assessee s own case in 2006-07 had decided the issue in favour of the assessee, that the appeal filed by the department before the Hon'ble Bombay High Court (ITA No.1468 of 2013 dt. 30/4/2015) was dismissed. In these circumstances, we are of the opinion that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the Assessing Officer for adjudication on merits as per law after allowing the assessee a reasonable opportunity of being heard. Respectfully following the order for the earlier year we are restoring back the issue to the file of the AO for fresh adjudication.He is directed to afford a reasonable opportunity of hearing to the assessee.First Ground is allowed,in part. 10. Second Ground is about reduction of a sum of ₹ 325.83 crores on account of de-merger of investment division in computing the book profits.We find that similar Ground was taken by the assessee before the Tribunal in the appeal filed by the assessee in the AY 2008-09.We are reproducing the para -24, 25, 26 and 28 of the order. 24. The Additional Ground of appeal no. 2 also involves determination of Book Profits for the purpose of section 115JB of the Act. It is canvassed that assessee is entitled to a deduction of ₹ 3,25,83,13098/- on account of loss arising on demerger of its investment division while computing the Books Profits u/s 115JB of the Act. In this context, brief facts are that the assessee company was holding shares of its group companies in its investment division. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause (2) of part II of Schedule VI of the Companies, Act 1956, where a company receives the amount on account of sale of lease hold rights, the company is bound to disclose in the Profit Loss Account, the said amount as a non-recurring transaction or a transaction of an exceptional nature irrespective of its nature being Capital or revenue and that it would be inappropriate to directly transfer such amount to the Capital Reserve in the Balance Sheet. On the basis of the ratio of the judgment of Hon ble Bombay High Court, the Ld. Representative pointed out that the loss of ₹ 325.83 crores incurred on demerger of the investment division was required to be considered while computing the Book Profits for the purpose of section 115JB of the Act, though assessee did not route the entry through the Profit Loss Account. XXXXX 28. At the time of hearing, though the Ld. DR opposed the prayer of assessee for admission of the aforesaid Additional Ground of appeal, but factually it could not be disputed that the Ground sought to be raised involves a pure point of law for which the relevant and corresponding facts required for adjudication are on record. Therefore, co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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