9911796707
TMI Blog2019 (9) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 8D2(iii) - We noted that the assessee has made suo motto disallowance of ₹46,85,029/-, this will meet any anticipated cost that some expenditure was incurred by the company. At best cost of the funding and investment department of the company which has been assigned the task of managing the investment portfolio of the company as one of their many responsibility could possibly be covered. The said funding and investment department is in-charge of the financial activities of the company besides handling strategic function. Hence, we are of the view that the expenditure attributable to the earning of dividend income which has been offered by assessee suo motto for disallowance u/s.14A of the Act r.w.r. 8D2(iii) is reasonable. Order of CIT(A), directing the AO to take the average rate of investment by excluding from the total investments, the investment income from which are subject to tax and the investment in subsidiary companies, excluding investments which are giving rise to income which are subject to tax - We are of the view that the assessee suo motto disallowed a sum which is quite reasonable and AO is directed to restrict to that extent only. This issue of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same - Decided in favour of assessee Depreciation on the opening written down value of the block of assets - HELD THAT:- As observed that the issue involved therein relating to assessee s claim for depreciation on the opening written down value of the block of assets as per the appellate order for immediately preceding assessment year is also squarely covered against the assessee by the decision of the Tribunal in assessee s own case for A.Ys. 2003-04 to 2010-11, this has also been affirmed by the ITAT. Respectfully, following the same, we uphold the impugned order of CIT(A) on this issue. This issue of assessee s appeal is dismissed. - Sri Mahavir Singh, JM And Sri Rajesh Kumar, AM For the Appellant : Shri Rajendra Prasad, DR For the Respondent : Shri F.V. Irani, AR ORDER PER MAHAVIR SINGH, JM: These cross-appeals filed by the assessee and Revenue are directed against the order of the Commissioner of Income Tax(Appeals)-22, Mumbai, dated 08-12-2016. 2. The first common issue in these cross-appeals is as regard the order of CIT(A), restricting the disallowance of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t further submits that the learned CIT(A) erred in holding that only strategic investments in subsidiary companies were required to be reduced from the average value of investment for the purpose of calculating amount of disallowance of administrative and other expenditure and in ignoring the fact that there were other group companies which were held as strategic investments as the Appellant had a controlling stake in such entities. 6) The learned Commissioner of Income Tax (Appeals) erred in relying on the provisions ofSection 14A of the Act and Rule 8D of the Rules while computing the amount liable for being added back to the book profits lobe computed under Section 115JB of the Act. The Appellant submits that Section I15JB of the Act is a separate code by itself and the provisions of Section 14A and Rule 8D cannot be applied for computing the book profits under Section 115JB of the Act. But, the assessee has agitated only Ground Nos.4 6. Hence, the grounds raised by assessee vide 1, 2, 3 and 5 are dismissed, as not argued. 3. Brief facts relating to the issue of disallowance of expenses relatable to exempt income are that the assessee-company is carrying on several businesses an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above directions. 5. However, the assessee came in appeal against the directions of CIT(A), directing the AO to restrict the disallowance u/s.14A of the Act while computing the book profits u/s.115JB of the Act in the respective rules under 8D(2) of the Rules as restricted by the CIT(A).Aggrieved, now, both Revenue as well as the assessee came in appeal before the Tribunal. 6. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the CIT(A) has categorically given a finding that whatever the investments made by assessee out of own funds are the interest free funds available with the assessee in the instruments giving rise to exempt income, the same should not be disallowed. This view has support of Hon ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd., [366 ITR 505]. The CIT(A) has discussed the availability of own funds and even in earlier years, identical is the position, the CIT(A) has discussed this in para 7.3 of this order which is reproduced as under: 7.3 I have considered the facts and circumstances of the case and the appellant s submissions. I find that this issue of disallowance u/s 14A has been considered by m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidiary companies, excluding investments which are giving rise to income which are subject to tax, we are of the view that the assessee suo motto disallowed a sum of ₹46.85 Lakhs, which is quite reasonable and AO is directed to restrict to that extent only. This issue of assessee s appeal is allowed and that of Revenue is dismissed. 9. As regards the disallowance made by AO and restricted by CIT(A) of expenses relatable to exempt income u/s.14A of the Act r.w.r.8D(2) while computing book profits u/s.115JB of the Act, we noted that this issue is squarely covered in favour of assessee and against Revenue by the decision of the Special Bench of this Tribunal in the case of ACIT Vs. Vireet Investment Pvt. Ltd., in ITA No.502/Del/2012, dt.16-06-2017, ITAT-Delhi, wherein it was held that - the provisions of Section 14A r.w.r.8D(2) of the Rules will not apply wherever book profit is computed u/s.115JB of the Act. Respectfully following the said decision of the Special Bench, we direct the AO not to make any disallowance under rule 8D(2) while computing book profits u/s.115JB of the Act. This issue of assessee s appeal is allowed. 10. The next issue in this appeal of assessee is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The increase, if any, on account of these adjustments should be added to the income of assessee. We find that this issue is squarely covered in favour of assessee and against Revenue in assessee s own case by the decision of the Hon'ble Bombay High Court for the AY.2008-09 in ITA No.1126 of 2016 dated 09.01.2016, wherein Hon ble Bombay High court held as under: - 2 The issue pertains to inclusion of cenvat credit balance as part of the closing stock. We noticed that the Supreme Court in the case of Commissioner of Income Tax v/s Indo Nippon Chemicals Co Ltd reported in 261 ITR 275 confirmed the decision of the High Court in which the accounting practice consistently followed by the Assessee of excluding Modvat credit (which was prevailing at the relevant time and which was later on replaced by cenvat in the valuation of closing stock.) Following the judgment of the Supreme Court in the case of Indo Nippon Chemicals Co Ltd (supra), a Division Bench of this Court in the case of Commissioner of Income Tax v/s Diamond Dye Chem Ltd 396 ITR 536 dismissed the Revenue's Appeal making following observations: - We have considered the submissions. It is not disputed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
