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TMI Blog2019 (12) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... erative Union Federation and other Organization u/s. 36(1)(xii) alternatively allowable u/s. 28/37 - HELD THAT:- As in assessee's own case [ 2017 (6) TMI 1146 - ITAT AHMEDABAD] Tribunal had recalled the earlier order, and it was held that the grant is allowable as an expenditure under section 36(l)(xii) of the Act, and the matter was sent back to the AO for verification (j) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as only when fund are already utilised/ fund utilisation report are received. He also submitted that under similar facts, in A.Y.2004-05, 2005-2006 and 2006-2007, the Tribunal has restored back the matter to the file of the AO for readjudication. Disallowance u/s. 14A - HELD THAT:- We restrict the adhoc disallowance to ₹ 10 lacs being administrative expenditure incurred towards earning exempt income. Accordingly, the appeal of the assessee is partly allowed on this issue. Interest income of NKPDF project - HELD THAT:- In the preceding assessment years the same issue was travelled upto ITAT and the ITAT in assessment year 2003-04 and subsequent years till a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not allowable under section 36(1)(vii), write back of such provision cannot give rise to an income under section 41(1) - ITA No. 2003/Ahd/2014, ITA No. 1872/Ahd/2014 - - - Dated:- 4-12-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : Shri Alok Singh, CIT-D.R. For the Respondent : Shri Sanjay R. Shah, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- These two appeals filed by assessee and revenue for A.Y. 2009-10, arise from order of the CIT(A)-IV, Baroda dated 24-03-2014, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. Both the appeals of the assessee and revenue are pertained to the same assessment year arising against the order of ld. CIT(A) and for the sake of convenience both the appeals are adjudicated together by this common order. ITA No. 2003/Ahd/2014 filed by assessee 3. The assessee has raised following grounds of appeal:- 1. The order passed by the learned Commissioner of Income Tax (Appeals) is erroneous and contrary to the provisions of law and facts and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in the facts and circumstances of the case, the appellant was acting as a nodal agency and income is diverted at source. Therefore, the appellant neither has any legal claim to retain such interest nor does it have discretion towards use of such interest. 6.1 Without prejudice to above, if the interest is considered as income of the assessee, direction be given to allow the expenditure in the same year in which they are incurred as deduction. It be so done now. 6. The learned Commissioner of Income Tax (Appeals) has erred in not granting the deduction in respect of contribution made to Employee's Recreation trust of ₹ 3,20,775/- following the decision by the ITAT, Ahmedabad in its own case for AY 2003-04. It is submitted that in the facts and circumstances of the case, no disallowance was required to be made. 7. The learned Commissioner of Income Tax (Appeals) erred in confirming the interest charged under section 234B and 234D under the Act. 4. The fact in brief is that the return of income declaring loss of ₹ 33,97,340/- was filed on 4th Nov, 2011. The assessee is a statutory body constituted under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard the rival contentions and perused the record. Through this ground assessee has challenged the action of ld. CIT(A) confirming disallowance claimed u/s 36(l)(viii) for ₹ 3,56,37,425/-. We observe that the issue in this ground stands decided by the Co-ordinate Bench in ITA No.454/Ahd/2006 pronounced on 21.04.2011 in assessee s own case for Asst. Year 2003-04. We observe that Co-ordinate Bench has adjudicated the issue by deciding as below :- 51. We have heard the parties and considered the rival submissions. As regards status of Public Financial Institution as the assessee applied on 10-07-2002, i.e., within a year under consideration and though the notification granting the status of public financial institution was granted to it on 23-02-2004 it would relate back to the date of application in view of the decision of Marshall Sons Co. Vs. ITO 88 Company cases 528. The time taken by the Department of Company Law Affairs was beyond its control. In any case it is only a procedural delay and ministerial work and therefore, the date of application should be taken as the effective date for granting status of Public Financial Institution. On this issue we do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was to be paid by the said union. On verification of the evidences filed by the assessee, the ld. CIT(A) has noticed that the Bangalore unit had disputed 9 such sanction letters having loan value of ₹ 13,69,559/- as the equipment under these loans were not reported to have been received by them and the assessee had failed to prove the genuineness of such transactions. Accordingly, the appeal of the assessee was dismissed by the ld. CIT(A). 10. We have heard both the sides and perused the material on record. It is noticed that the identical issue on similar fact in assessment year 2008-09 was adjudicated by the ITAT in the case of assessee itself vide ITA No. 1041/Ahd/2012 and the matter was restored to the file of the assessing officer for re-adjudication. The relevant part of the decision of ITAT is reproduced as under:- 15. We have heard the rival contentions and perused the record placed before us. The issue raised in this ground is against the action of ld. CIT(A) sustaining the disallowance of ₹ 89,75,600/- being grant given to various unions and federations, claimed as expenditure u/s 36(1)(viii) of the Act. Further appreciating the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... store this issue to the file of assessing officer for re-adjudication as directed above in the decision of the Co-ordinate Bench after providing adequate opportunity to the assessee. Therefore, this ground of the assessee is allowed for statistical purposes. Ground No. 4 (Disallowance u/s. 14A) 11. During the course of assessment the assessing officer noticed that assessee has claimed income exempt from tax to the amount of ₹ 8,38,03,988/- and dividend amount of ₹ 3,17,16,827/- as exempt income. The assessee has submitted that investment in the securities from which exempt income received were made from own fund and no other expenses were incurred for earning the exempt income. The assessing officer has not accepted the explanation of the assessee and computed the disallowance as per section 14A r.w. Rule 8D to the amount of ₹ 2,32,10,571/- and added to the total income of the assessee. 12. The ld. CIT(A) has dismissed the appeal of the assessee. 13. During the course of appellate proceedings before us, the ld. counsel has contended that ITAT for assessment year 2008-09 vide ITA No. 1041/Ahd/2012 has held that assessee was having suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end income. We observe that there is no much reshuffling of the investment made by the assessee and they have been invested for as long term investments which do not require regular monitoring by the concerned persons. This fact gets further support with the audited balance sheet that total investments of ₹ 907.23 crores at the end of the year pertains to long term investments only which too has brought forward investments in subsidiary companies at ₹ 287.39 crores and remaining investments are term deposits in bank exceeding one year ₹ 273.03 crores and debenture/bonds in the government companies, financial institution and banks at ₹ 344,72 crores and miscellaneous other investments. 28. However, taking overall view in the given facts and circumstances mainly the assessee being a non taxable entity before Asst. year 2002-03 majority of investments are into Gvoernment bonds, source of funds in the investments are through Government grants for co-ordinating the activities of NDDB mainly for promoting development of dairies, specific research, training etc. and also the fact that Revenue has been unable to prove any expenditure directly incurred fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of the SAR Infracon Pvt. Ltd. referred by the assessee is not applicable. The assessee has not been able to point out any documentary evidences in this regard. Therefore, on the basis of facts the ld. CIT(A) has accepted the action of the assessing officer of not accepting the claim of the assessee. 17. We have heard rival contentions on this issue and noticed that in the preceding assessment years the same issue was travelled upto ITAT and the ITAT in assessment year 2003-04 and subsequent years till assessment year 2008-09 has adjudicated the issue against the assessee. We have gone through the decision of ITAT for assessment year 2008-09 1041/Ahd/2012 and noticed that at para 40 of the order ITAT has held that consistently following the decision of Co-ordinate Bench for assessment year 2004-05 and subsequent years the interest income of North Kerala Dairy Project is to be considered as taxable income. Respectfully following the decision of ITAT for assessment year 2008- 09 and other preceding assessment years as cited above, we are of the view that interest income of North Kerala Dairy Project at ₹ 23090542/- is to be considered as ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue has been adjudicated by the ITAT in assessment year 2007-08 and 2008-09 in favour of the assessee and also furnished the copy of decision. The ld. departmental representative was fair enough not to contradict the above submission of the assessee. We have gone through the above cited order and it is noticed that in assessment year 2007-08 vide ITA No. 3206/Ahd/2010 the Co-ordinate Bench has decided the similar issue on identical facts in favour of the assessee. The relevant part of the decision is reproduced as under:- 34. We have considered rival submissions. We find that the addition made by the AO is not sustainahle for two reasons. The first reason is that when provision was made, the assessee was not liable to tax, hence, if the provision is reversed in the year of making the provision, it is not resulting into any tax liability, because the assessee was not taxable in that year, and therefore, reversal of such a liability cannot give rise to tax in the year of reversal, when it is not giving any benefit to the assessee, in the year of making the provision. The second reason is that even, if it is held that income has to be assessed in the year of making the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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