9911796707
TMI Blog2022 (1) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that ITAT vide above mentioned order had not adjudicated the ground of appeal No. 2 of the Revenue, pertaining to adding of disallowance made u/s 14A of the Income Tax Act, 1961 (in short "the Act‟) for computing book profit u/s 115JB of the Act. Thereafter, ITAT vide order dated 06.08.2021 allowed the MA of filed by the revenue and recalled the order dated 20.12.2019 to adjudicate the second ground of appeal pertaining to adding of disallowance 14A of the Act for computing the book profit u/s 115JB of the Act. 1.2 We have heard both the parties and perused the material available on record. During the course of assessment, the A.O has added an amount of Rs. 1,84,26,413/- disallowed u/s 14A of the Act for computing the book profit u/s 115JB of the Act. The Ld. CIT(A) has restricted the addition to the extent of Rs. 16,98,745/-. During the course of appellate proceedings before us the Ld. Counsel for the assessee contended that as per the ITAT Special Bench Delhi decision in the case of ACIT Vs. Vireet Investments Pvt Ltd, 165 ITD 27 (Delhi Trib), the disallowance made u/s 14A of the Act cannot be added while computing the book profit u/s 115JB of the Act. 1.3 Heard both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WDV worked out as per assessment orders of the earlier years, the assessee is entitled for depreciation amounting to Rs. 87,44,46,212/- as against the depreciation amounting of Rs. 89,87,65,502/- claimed in the return of income. Consequently, the assessee‟s claim of depreciation to the tune of Rs. 2,43,19,289/- was disallowed and added back to the total income. 2.2 Before the Ld. CIT(A) the assessee has submitted that A.O has not computed the depreciation as per the written down value of the assets, after giving effect to the order of the earlier years. The ld. CIT(A) has not issued any direction to the A.O and simply stated that the assessee would be free to take recourse to the relevant provisions of the Act, once the orders of the earlier years attain finality. 2.3 We have heard both the parties and perused the material available on record. During the course of assessment proceedings the A.O has neither granted the depreciation after taking into consideration of the actual written down value of the assets nor disprove the working of computation of depreciation claimed by the assessee in its submission. The ld. CIT(A) has also not issued specific direction to the A.O for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 2.8 We heard both the parties and perused the material available on record. During the year under consideration, the assessee received subsidy from Government of Maharashtra which was claimed exemt on the ground that the same was capital innature. The A.O was of the view that amount of subsidy was not granted with reference to the assets acquired and treated the subsidy amount as revenue receipt. During the course of assessment and appellate proceedings before the A.O and Ld. CIT(A) the assessee has specifically submitted that it has set up project in the notified backward area of Maharashtra in accordance with the package scheme of Govt of Maharashtra. In accordance with the scheme, the assessee has received subsidy from Govt of Maharashtra which was claimed exempt on the ground that the same was capital in nature. In the light of the facts and material placed on the record it is observed that purpose of the subsidy was to provide incentives for setting up projects in backward areas of Maharashtra and for generation of employment and the benefit of the scheme was available to the new units. Therefore, we consider that the object of the subsidy scheme was to enable the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are clubbed and heard together. 3.2 As regards the ground of appeal of the assessee 1(a) & (b) and revenue ground of appeal No. 1 with regard to upholding action of the A.O by disallowing a sum of Rs. 16,83,942/- under Rule 8D(2)(iii) of the Act, during the course of assessment the A.O noticed that assessee has received huge dividend of Rs. 3,38,12,925/- during the year under consideration, however assessee has not apportioned any expenses incurred for earning this exempt income. Therefore, after examination of the return of income and the submissions of the assessee the A.O stated that he was not satisfied with regard to correctness of the claim of expenditure made by the assessee and computed disallowance u/s 14A r.w.r 8D of the Act to the extent of Rs. 1,16,44,129/- 3.3 Aggrieved, assessee has filed an appeal before the CIT(A). The Ld. CIT(A) after considering the relevant material and evidences found that assessee has not used borrowed funds for making investments on which it has earned exempt income. The Ld.CIT(A) noticed that assessee had used its own interest free funds for making investments on which the dividend income was earned. Therefore, the Ld. CIT(A) had deleted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not satisfied with regard to the correctness of claim of expenditure made by the A.O and provision of Rule 8D of the IT Rules was invoked. Looking to the above facts and circumstances we consider that Ld. CIT(A) has rightly restricted the disallowance to the extent of Rs. 16,83,942/- under Rule 8D(2)(iii) towards administrative expenditure for managing the different kind of investment and administrative support required for such investment etc. In the light of the above facts and findings we do not find any merit in the appeal of the revenue and appeal of the assessee therefore both the grounds i.e. assessee and revenue are dismissed. 3.7 As regard the ground of appeal No. 1(c) of the assessee and ground of appeal No. 2 of the revenue, the Ld. CIT(A) has restricted the addition of Rs. 16,83,942/- as against the disallowance of Rs. 1,16,44,129/- made by the A.O for the purpose of computing the book profits as per the provision of Sec. 115JB of the Act. 3.8 We heard both the parties and perused the material on record. We consider that the Special Bench of the ITAT Delhi in the case of ACIT Vs. Vireet Investments Pvt. Ltd (Supra) held that such disallowance cannot be added for com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the assessee as placed in paper book. In the light of the above facts and findings we restore this issue to the file of the A.O for deciding the same denovo after verification and examination of the additional evidences filed by the assessee. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. 3.14 Ground of appeal No. 3 with regard to disallowance of expenditure incurred for concretization of road as capital expenditure. During the course of assessment the A.O noticed that assessee has claimed deduction of expenses of Rs. 1,22,59,924/- on concretization of existing tar road and claimed the same as revenue deduction while computing the total income. The A.O was of the view that assessee had incurred huge expenditure which had charged the structure of the road and provided enduring benefit to the assessee. Therefore, the A.O has disallowed the assessee‟s claim for treating the expenditure as revenue expenditure. The A.O has treated the same as capital expenditure and added to the total income of the assessee and provided depreciation @ 10% on the aforesaid expenses. 3.15 Aggrieved, the assessee has filed appeal before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal are identical to ITA 2006/Mum/2017, A.Y 2012-13, therefore, the decision rendered at para 2.3 to 2.9 would apply mutatis mutandis for this case also. Accordingly, we allow this ground of appeal of the assessee. 3.20 As regards ground of appeal No. 5 pertains to levying of interest u/s 234B of the Act, in this regard we considered that levying of interest is mandatory as per the provisions of law, therefore we dismiss the ground of appeal as infructuous. 3.21 In the result the appeal filed by the assessee is partly allowed and appeal of the revenue is dismissed. 5840/Mum/2019, A.Y 2011-12 4. The assessee has filed the appeal against the order of the CIT(A)-1, Mumbai. 4.1 As regards ground of appeal No. 1, with regard to disallowing 0.5% of average investment under Rule 8D(2)(iii) of the Act, the facts and circumstances in this appeal are identical to ITA 7261/Mum/2014, A.Y 2010-11, therefore, the decision rendered at para 3.2 to 3.6 of this order would apply mutatis mutandis for this case also. Accordingly, we dismiss this ground of appeal of the assessee. 4.2 As regards ground of appeal No. 2, with regard to capitalizing expenditure incurred for concretization of tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no sales made against the aforesaid purchases. We are of the considered view that without disproving the aforesaid material evidences provided by the assessee it is not justified to disallow the entire purchases. In the light of the above fact and findings to meet the ends of justice. We consider it would be appropriate to restrict the addition @ 12.5% of such purchases. Accordingly, we restrict the addition @ 12.5% of the purchase amount of Rs. 19,76,169/-. Therefore, this ground of appeal of the assessee is partly allowed. 4.7 With regards the ground of appeal No. 4 with regard to setting up of a new unit in a backward area, as the facts and circumstances in this appeal are identical to ITA 2006/Mum/2017, A.Y 2012-13, therefore, the decision rendered at para 2.3 to 2.9 would apply mutatis mutandis for this case also. Accordingly, we allow this ground of appeal of the assessee. 4.8 As regards the ground of appeal No. 5 is general in nature not required any adjudication. 4.9 In the result the appeal of the assessee is partly allowed. 5. In the result the appeals filed by the assessee is partly allowed or statistical purpose and appeal filed by the revenue is dismissed. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
