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TMI Blog2021 (9) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order u/s 143(3) of the Act, determining the total loss at 1,06,36,46,685/under the normal provisions of the Act and Rs. 98,21,17,435/- under section 115JB of the Act, after making addition of Rs. 8,03,17,500/-on account of disallowance u/s 14A read with section 8D of the Income Tax Rules (For short 'the Rules'), addition of Rs. 39,56,199/- on account of disallowance u/s 36(1)(iii) allocated to investment in shares and addition of Rs. 1,45,08,967/- on account of interest capitalized under proviso to section 36(1)(iii) of the Act. 3. The assessee challenged the assessment order before the Ld. CIT(A). The Ld. CIT(A) after hearing the assessee deleted the additions made on account of disallowance u/s 36(1)(iii) allocated to investment in shares and interest capitalized under proviso to section 36(1)(iii) of the Act. However, restricted the addition u/s 14A read with Rule 8D to the exempt income earned by the assessee. Further the Ld. CIT(A) upheld the action of the AO in not allowing additional depreciation of Rs. 8,10,89,138/being 10% on the cost of machinery which was put to use for less than 180 days during the preceding year. Still aggrieved, the assessee is in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble President ITAT, we allowed the application for condonation of delay and asked the Ld. counsel for the assessee to argue the appeal of the assessee on merits. 8. Vide ground No. 1, the assessee has challenged the action of the Ld. CIT(A) in sustaining disallowance u/s 14A read with Rule 8D to the extent of the exempt income earned by the assessee company. The Ld. Counsel submitted before us that during the year relevant to the assessment year under consideration the assessee company received divided income of Rs. 72,03,131/- on various investments made in earlier years which was claimed as exempt income. Accordingly, the assessee company made suo motu disallowance of Rs. 3,51,835/- u/s 14A on proportionate basis while computing its income. Further, the assessee company had not made any investment during the previous year. Placing reliance on the judgment of the Hon'ble Supreme Court in the case of Maxop Investment Limited vs. CIT [2018] 91 Taxman.com 154(SC), the Ld. counsel submitted that the assessee has computed the disallowance in accordance with the ratio laid down by the Hon'ble Supreme Court in the said case. The Ld. counsel further submitted that this issue is cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observations of the coordinate Bench read as under: - "7. None of the lower authorities have pointed out any defect in the computation of proportionate disallowance computed by the assessee except that certain part of the administrative expenses were not taken into consideration which has been taken into consideration in the computation made above. Even the assessee has claimed that it has not incurred any administrative expenses for earning of tax-exempt income. The Assessing Officer in this respect has not recorded any dissatisfaction taking into consideration the accounts of the assessee. The Hon'ble Bombay High Court in the case of 'Godrej & Boyce Manufacturing Co.' 328 ITR 81 has held that under section 14A of the Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Sub section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the return of income at Rs. 1,33,928/- and accordingly the addition is restricted to Rs. 8,02,255/-. In view of our findings given above, the appeal of the assessee is treated as partly allowed." 11. We notice that in the aforesaid case the AO had made disallowance u/s 14A read with Rule 8D, rejecting the suo motu disallowance made by the assessee on proportionate basis. As pointed out by the Ld. counsel, the coordinate Bench of the Tribunal has allowed the identical ground of the appeal of the assessee and set aside the findings of the Ld. CIT(A) holding that there is no defect in the suo motu disallowance made by the assessee on proportionate basis. Since the coordinate Bench has allowed the identical ground of appeal in the group company case, we do not find any reason to take a different view. However, in our considered view, the computation submitted by the assessee in this case needs to be verified by the AO to ascertain whether the assessee has computed the same in accordance with the observations made by the coordinate Bench in the said case and in case any defect is found to determine the same afresh after affording a reasonable opportunity of bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the assessee in the case of ACIT vs. M/s Nahar Spinning Mills Ltd. (supra) holding as under: - "7. After giving thoughtful consideration to rival pleadings against and in support of impugned disallowance, we find no merit in the Revenue's grievance. We make it clear that the Hon'ble' apex court's decision in Goetze (India) Ltd. Vs CIT (supra) holds that same does not impinge upon the appellate authorities' jurisdiction vested under the provisions of the Act. Hon'ble jurisdictional high court in Budhewal Co-operative Society Ltd. (supra) also holds that a tax payer is very much entitled to raise an additional claim without filing a revised return. The Revenue's pleadings nowhere indicate that there is any distinction on facts since the assessee's identical additional depreciation claim stood allowed in A.Y. 2013-14 as well (supra). We accordingly reject the Revenue's second substantive ground as well." 16. In the said case the Ld. CIT(A) had allowed the claim of additional depreciation to be carried forward which had not been claimed in the return of income. The revenue challenged the findings of the Ld. CIT(A) before the Tribunal. The contention of the revenue was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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