9911796707
TMI Blog2019 (2) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year has not been withdrawn. Mere initiation of proceedings under Section 148 of the Act to reopen the assessment of the past year cannot be understood to mean that the ‘claim is withdrawn’. Therefore, in our view, the Assessing Officer could not have rejected the claim for deduction under Sections 80IB as well as 80IC of the Act in the subject assessment order because the relief allowed in the initial assessment year was not withdrawn at the time of such rejection in the instant year. Disallowance u/s 14A - Held that:- Disallowance under Section 14A of the Act cannot exceed the exempt income is being generally accepted by the Benches of the Tribunal. The learned representative for the respondent-assessee submitted that the respondent does not wish to press its Cross-objection once the view taken by the CIT(A) is accepted. We find no reasons to distract from the stand taken by the CIT(A) on this aspect, which is in conformity with the judgment of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. MAT - direction by the CIT(A) not to include the disallowance u/s. 14A for the purpose of computing tax liability u/s. 115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrict the same to amount of income earned. 3. Subsequently, the Revenue has also preferred an Additional Ground of appeal, which reads as under: - (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. not to include the disallowance u/s. 14A for the purpose of computing tax liability u/s. 115JB of the Act relying on decision of Jurisdictional Bombay High Court in CIT vs. JSW Energy Ltd., (2015) 60 taxmann.com. 303, which is not settled proposition and is pending before the Hon'ble Supreme Court. 4. As a perusal of the aforesaid Grounds reveal, the substantive dispute arises from the action of the Assessing Officer in denying the deduction claimed by the assessee under section 80IC of the Act as well as under section 80IB of the Act. In order to appreciate this controversy, the brief background can be summarised as follows. The respondent assessee is a company incorporated under the provisions of Companies Act, 1956 and is, inter-alia, engaged in the business of manufacturing and marketing of fabric whiteners, soaps, detergents, mosquito repellents, scrubber and incense sticks. It is undertaking manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e preliminary point brought out by the learned A.R. for the respondent assessee. Before going to the preliminary point and to impart completeness, it would suffice to note that when the matter was carried in appeal by the assessee before the CIT(A), all the objections raised by the Assessing Officer were assailed; the CIT(A) has dealt with all the objections of the Assessing Officer after obtaining a remand report from the Assessing Officer; and, he has ultimately found the claims of the assessee to be in order. As the CIT(A) allowed assessee s claim for deduction under section 80IC as well as under section 80IB of the Act, the present appeal by the Revenue is before us. 7. Before us the learned A.R. for the respondent assessee made a preliminary point in defence of the ultimate conclusion of the CIT(A), which is based on the judgement of the Hon'ble Bombay High Court in the case of Simple Food Products (P) Ltd. vs. CIT (2017) 84 taxmann.com 239. 8. The point raised is that when the deductions under section 80IC as well as under section 80IB of the Act have been granted in the initial assessment years, the same could not be rejected for the subsequent assessment years unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year passed under section 143(3) of the Act for A.Y. 2002-03 dated 24.12.2004, which is the first year of claim of deduction under section 80IB of the Act with regard to Wayanad Unit, whose date of commencement of production/manufacture is 23.05.2001. Similarly, the date of commencement of manufacture/production of Himachal Unit is 25.08.2002, and the initial assessment year being 2003-04 for which also, a copy of the assessment order passed under section 143(3) of the Act dated 30.01.2006 has been furnished, wherein the relevant claim under section 80IB has been allowed. In so far as the claim under section 80IC for Uttranchal Unit is concerned, the date of commencement of manufacture/production is 06.05.2008, and therefore the initial assessment year of claim is Assessment Year 2009-10. For Assessment Year 2009-10 also, a copy of the assessment order passed under section 143(3) of the Act dated 23.03.2011 has been furnished wherein the claim under Section 80IC of the Act has been accepted. In Assessment Year 2010-11 also, vide order under section 143(3) of the Act dated 06.12.2012 aforesaid claims have been accepted. It has also been pointed out that when the two claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the initial Assessment Year of 1996-97 the deduction under Section 80IB of the Act stood allowed. The point raised by the assessee was that the claim of deduction in respect of Assessment Year 1999-2000 onwards could not be rejected as the deduction granted in Assessment Year 1996-97, i.e. the first year, had not been withdrawn. In this background, the following discussion in the judgment of the Hon'ble Bombay High Court is relevant:- (j) According to us, the entire issue is no longer res-integra. The impugned order of the Tribunal has, after recording that the appellant Assessee relies upon the decision of this Court in Paul Brothers (supra) has not dealt with the same. It gives no finding as to why and in what manner it would not apply to the present facts. Further, we find that distinction which has been made in the impugned order of the Tribunal with regard to Dnishaw Frozen Foods Ltd. (supra) viz. that the assessment in that case has been completed under Section 143(3) of the Act in initial year and it is only in such cases that the Revenue be barred from denying the claim for deduction in the subsequent Assessment Years, unless the claim for deduction has been wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led. Therefore, once deduction is granted in the initial Assessment Year, the same would continue for the period of 10 consecutive year unless the relief for initial year is also withdrawn at the time of withholding the relief under Section 80IA/IB of the Act. 13. The aforesaid discussion by the Hon'ble High Court clearly brings out that once deduction is granted in the initial assessment year, the same would continue for the period of ten consecutive years unless the relief for initial assessment year is also withdrawn. We are conscious of the fact that in coming to such decision, the Hon'ble High Court did notice the absence of the Revenue to establish that for the subsequent assessment years in dispute, the facts were different from the facts on which the claim for deduction in the initial year was allowed. 14. A point that has been raised is that when the assessment for the instant year was finalised under Section 143(3) of the Act dated 31.03.2014, a notice under Section 148 of the Act was issued on 21.03.2014 to reopen the assessment for Assessment Year 2009-10 in order to withdraw the claim earlier granted under Section 80IC of the Act, therefore, it could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the respondent-assessee and the appeal of Revenue on this point deserves to be dismissed. Thus, in the final analysis, we uphold the ultimate conclusion of the CIT(A) to allow the benefit under Sections 80IB and 80IC of the Act to the assessee, albeit on a different ground. 18. The other issue raised by the Revenue in this appeal is with regard to the disallowance made by the Assessing Officer under Section 14A of the Act amounting to ₹ 34,15,155/-. In this context, the relevant facts are that the assessee had earned exempt income of ₹ 8,84,898/- representing dividend income. The Assessing Officer applied Rule 8D of the Income Tax Rules, 1962 and computed a disallowance of ₹ 34,15,155/- under Section 14A of the Act. Before the CIT(A), assessee assailed the disallowance on varied facets, but one of the points was that the disallowance under Section 14A of the Act cannot exceed the exempt income. The CIT(A) concurred with the assessee on this aspect and held that the disallowance under Section 14A of the Act could not exceed the exempt income. Against such a decision, Revenue is in appeal before us. On this aspect, assessee has also filed a Cross-objection ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
