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TMI Blog2017 (9) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 8D(2)(ii). Coming to the disallowance under Rule 8D(2)(iii), we find that the Ld.CIT(A) in so far as Assessment Year 2008-09 is considered entire disallowance as made by the Assessing Officer is sustained and in respect of the Assessment Years 2009-10 and 2010-11 he restricted the disallowance to ₹.9,50,000/- and ₹.8,75,000/- respectively. He also noticed that the assessee earned dividend income of ₹.9,62,500/-, ₹.8,75,200/- and ₹.5,50,000/- during these Assessment Years. In the circumstances the restriction of disallowance under Rule 8D(2)(iii) made by the Ld.CIT(A) cannot be disturbed since it is more than the dividend income earned by the assessee. Thus we sustain the order of the Ld.CIT(A) on this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty is an ascertained liability and no adjustment is warranted while computing book profit. This ground is dismissed. - ITA NO.4415/MUM/2012, ITA NO.1855/MUM/2013 And ITA NO.5716/MUM/2013 - - - Dated:- 13-9-2017 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHAN, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri Bhupendra Karkhanis For The Department : Shri M.C. Omi Ningeshen ORDER PER C.N. PRASAD (JM) 1. These appeals are filed by the Revenue for the Assessment Years 2008-09 to 2010-11 against the different orders of the Commissioner of Income Tax (Appeals)-7 Mumbai. 2. The first common issue in the grounds of appeal is regarding the deletion/restricting the disallowance u/s 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to meet its investments and at the same time the assessee also raised a loan it can be presumed that investments were from interest free funds available, the Ld.CIT(A) deleted the disallowance made in respect of the interest disallowance made under Rule 8D(2)(ii) of the I.T. Rules. Coming to the disallowance u/s 14A r.w. Rule 8D(iii) of the Act the Ld.CIT(A) sustained the disallowance for the Assessment Year 2008-09 and restricted the disallowance for the Assessment Years 2009-10 and 2010-11 to ₹.9,50,000/- and ₹.8,75,000/- respectively. 4. The Ld. DR submits that Ld.CIT(A) has given a finding that own funds are exceeded investments by simply looking at balance sheet which is not correct. Ld. DR vehemently supported the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of the Ld.CIT(A) could not be rebutted with evidences by the Revenue to show that there were no surplus funds for making investments. In the circumstance we uphold the order of the Ld.CIT(A) in deleting disallowance u/s 14A r.w. Rule 8D(2)(ii). 7. Coming to the disallowance under Rule 8D(2)(iii), we find that the Ld.CIT(A) in so far as Assessment Year 2008-09 is considered entire disallowance as made by the Assessing Officer is sustained and in respect of the Assessment Years 2009-10 and 2010-11 he restricted the disallowance to ₹.9,50,000/- and ₹.8,75,000/- respectively. He also noticed that the assessee earned dividend income of ₹.9,62,500/-, ₹.8,75,200/- and ₹.5,50,000/- during these Assessment Years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and while computing the income under normal provisions the assessee in the computation added back this provision. The Assessing Officer was of the view that since this was not added back to the book profits u/s 115JB, assessee was required to explain why this provision for warranty expenses should not be added back to the book profit. Assessee contended that provision made for warranty is not a mere provision for meeting unascertained liability but it is an ascertained liability provided based on the customer s claims and past records. Not convinced with the submissions of the assessee Assessing Officer added back the provision for warranty expenses to the book profits treating them contingent liability as per clause (c) of Explanation-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds that since the provision for warranty liability being made on basis of calculation as per the past experience it cannot be added back while computing book profits and placed reliance on the decision of the Supreme Court in the case of Bharat Earth Movers v. Commissioner Of Income Tax [245 ITR 428] wherein it was held that if the business liability has arisen in the accounting year the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability and it should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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