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TMI Blog2017 (4) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... ground. Ground No. 1 to 4 of the appeal of the assessee are allowed. Deduction of provisions no longer required written back claimed during the assessment proceedings - HELD THAT:- Hon‟ble Delhi High Court in case of CIT versus J parabolic Springs Ltd. [ 2008 (4) TMI 3 - DELHI HIGH COURT] has held that considering the decision of Honourable supreme court in Goetz (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. In appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of the assessing authority to entertain claim for deduction otherwise than by a revised return, and did not impinge on the power of the Tribunal. Therefore, according to us there is no restriction on the powers of the appellate authority to entertain such claim. In view of this we set aside this ground of appeal to the file of the Ld. CIT (A) to examine whether the provisions no longer written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, we have already remitted the issue of chargeability of the above income to the file of the Ld. assessing officer and applicability of the provisions of section 234C with respect to chargeability of interest would also depend on the decision of the assessing officer in that ground as it is consequential in nature. In the result we also set aside the appeal of the assessee against chargeability of interest under section 234C of the income tax act back to the file of the Ld. assessing officer to decide the issue on merit after deciding the additional ground raised by the assessee. - ITA No.2181/Del/2009, ITA No.4853/Del/2010, ITA No.4455/Del/2010 - - - Dated:- 10-4-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Assessee : Sh. Pradeep Dinodia, CA Sh. RK Kapoor, Adv For the Revenue : Sh. SS Rana, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the appeals filed by the assessee and revenue against the order of the ld CIT(A)-XII, New Delhi dated 13.03.2009, 13.08.2010 for the Assessment Year 2006-07. 2. The assessee has raised the following grounds of appeal:- 1. That on the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts circumstances of the case and in law, the Learned Commissioner of Income tax(A) erred in upholding the action of Learned AO by not excluding the Interest on term loan of ₹ 1232.10 lakhs, which the appellant company has used for capitalization of its fixed assets, while calculating disallowance as per Rule 8D. V. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in upholding the action of Learned AO in not allowing the deduction of provision no longer required written back for ₹ 1,14,00,0007- which was claimed during the assessment proceedings. 4. The revenue has raised the following grounds of appeal in ITA NO. 4853/Del/2010 for the Assessment Year 2006-07:- 1 On the facts and circumstances of the case the Ld. CIT(A) erred in law as well as on merits in directing the AO to re-compute the disallowance u/s 14A as per Rule-8D after reducing the financial charges from the interest considered in the assessment order and not to reduce current liabilities form the total assets for the purpose of calculating disallowance under Rule-80, while the AO computed the disallowance correctly at ₹ 54,76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproached the Ld. CIT appeal that held that financial charges could not be part of interest for calculating the disallowance under rule 8D. However, he upheld the applicability of rule 8D of the income tax rules for the impugned assessment year and therefore directed the Ld. assessing officer to recompute the disallowance accordingly. Assessee being aggrieved with the finding of the first appellate authority is in appeal before us. 7. The Ld. authorized representative submitted that the impugned assessment year is assessment year 2006 07 and in view of the decision of the Hon‟ble Mumbai high court as well as Hon‟ble Delhi High Court , rule 8D does not apply to this assessment year, but from assessment year 2008 09 onwards. Therefore, it was submitted that order of Ld. CIT A is not correct. He further submitted that it is also mandatory for the Ld. assessing officer to record his satisfaction that assessee has incurred some expenditure for the purpose of incurring exempt income and in absence of such satisfaction, which should be objective and based on examination of the books of accounts no disallowance can be made under section 14 A of the income tax act. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 14A of the Income-tax Act, 1961, the Assessing Officer is required to examine the accounts of the assessee and only when he is not satisfied with the correctness of the claim of the assessee in respect of incurring no expenditure in relation to exempt income, can he determine the amount of expenditure which should be disallowed in accordance with such method as prescribed, i.e., rule 8D of the Income-tax Rules, 1962. Therefore, the Assessing Officer at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempt income. If and only if the Assessing Officer is not satisfied on this count after referring to the accounts, determine the disallowance. ld AO has failed in his duty to do so. In view of this, we direct the assessing officer to delete the disallowance of ₹ 5 476618/ made under section 14 A of the income tax act. In view of this, we reverse the order of the Ld. CIT (A) on this ground. Ground No. 1 to 4 of the appeal of the assessee are allowed. 10. The fifth ground of appeal of the assessee was against the finding of the Ld. CIT (A) in not allowing the deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer even in the revised return. Therefore, the Ld. assessing officer is correct in not accepting the claim of the assessee. 13. We have carefully considered the rival contentions and perused the orders of the lower authorities. We fully agree with the order of the Ld. assessing officer in not entertaining the claim of the assessee in view of the decision of the Hon‟ble Supreme Court in case of Goetz India V CIT (supra), however, we do not agree with the view of the Ld. CIT (A) in not entertaining the above claim. In fact, he is fully authorized to examine the above claim and if the deduction is available to the assessee, he should have granted despite there being no claim before the assessing officer in the return of income or in the revised return of income. Hon‟ble Delhi High Court in case of CIT versus J parabolic Springs Ltd 306 ITR 42 has held that considering the decision of Honourable supreme court in Goetz (India) Ltd. v. CIT [2006] 284 ITR 323 (SC) wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions. The issue involved is whether the income shown by the assessee on sale of carbon credit certificates is income‟ chargeable to tax or not. The issue is legal in nature and the income has been disclosed by the assessee in its profit and loss account and stated in the notes on accounts that sale of such certificate is recognized as income, therefore no fresh facts are to be investigated. In view of the decision of the Hon‟ble Supreme Court in case of NTPC Ltd versus CIT 229 ITR 383 wherein the purpose of any assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with the law. It is further held therein that if as a result of a judicial decision given while the appeal is pending before the tribunal if it is found that a non-taxable item is taxed or a permissible deduction is denied, The assessee cannot be prevented from raising that question before the tribunal. The assessee has demonstrated in view of the decision of the Hon‟ble Andhra Pradesh High Court that such income cannot be taxed. Therefore the case of the assessee squarely falls within the law laid down by the Hon‟ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the Hon‟ble Delhi High Court. It was further submitted that the assessee has credited the above sum to the profit and loss account and not offered to taxation for the reason that it does not represent the written back of any amount earlier claimed as allowable expenses and hence it does not fall within the purview of section 41 (1) of the income tax act. The Ld. assessing officer rejected the claim of the assessee. However, Ld. CIT (A) allowed the claim of the assessee as the expenditure has not been allowed as deduction in the earlier years. Hence, revenue is in appeal before us. 20. The Ld. departmental representative vehemently supported the order of the Ld. assessing officer. The Ld. authorized representative relied upon the order of the Ld. CIT (A). 21. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The Ld. CIT (A) has recorded a finding that the recovery of loan cannot be taxed under section 41 (1) because this amount has never been debited in the profit and loss account and never allowed to assesseee as deduction. The Ld. CIT appeal further noted the provision of the law u/s 41(1) of the act and hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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