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TMI Blog2016 (4) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year are A.Ys. 2004-05 and 2005-06 and Rule 8D is not applicable in these two assessment years - HELD THAT:- As assessee stated that prior to the applicability of Rule 8D of the Rules, the disallowance should be restricted to a reasonable extent, i.e., 1% to 2% in view of the decision of M/s. Godrej Agrovet Ltd [ 2014 (8) TMI 457 - BOMBAY HIGH COURT ] On query form the Bench, the ld. Sr. (DR) also conceded that of reasonable disallowance on this issue can be made and requested for estimation of disallowance of 2%. On this, the ld. Counsel for the assessee very fairly agreed for the same. In view of the above concession given by both the parties, we direct the A.O. to recompute the disallowance by estimating at 2% of the exempt income. The A.O. is directed accordingly. Disallowance of deduction u/s. 80-HHC - Whether CIT(A) erred in holding that in case there is negative profit as per computation under clause (a), (b) and (c) of sub section (3) of section 80HHC, the appellant would not be entitled to deduction as per proviso of the section - HELD THAT:- As computation of the deduction u/s. 80HHC, and which was, at the very outset, again, admitted by the ld. AR to be squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars. He has not appreciated the facts that the assessee is following mercantile system of accounting and has made the provisions on accrual basis and also the provision made at the end of the year gets reversed in next year. 2. The Ld. CIT(A) erred in disallowing the provisions made for water bills of ₹ 15,13,564/- on the ground that the assessee has not furnished any supporting evidence in support of its claims. He has not appreciated the fact that the assessee has submitted the payment vouchers in support of its claim of ₹ 2,53,924/- and balance provisions was made on the basis of notice issued by the BMC. 3. The Ld. CIT(A) erred in disallowing the provisions for various expenses of ₹ 28,22,863/- on the grounds that the assessee has not furnished any supporting evidence in supports of its claim. He has not appreciated the facts that the assessee is following mercantile system of accounting and has made the provisions on accrual basis and also the provision made at the end of the year gets reversed in next year. And in AY 2005-06, the assessee has raised following ground no. 2: 2. The Ld. CIT(A) erred in disallowing the provisions for vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtended sufficient opportunity to present its case. Needless to add, the assessee is a liberty to make a fresh claim for the subsequent year/s, even as it shall have to be shown by it that expenditure as claimed had arisen for those years, i.e., of payment, each year being independent. We may though clarify that we are not making any observation with regard to the deduction of the said expenditure for those years/s. We decide accordingly, dismissing the assessee s third ground. 4. The ld. Counsel for the assessee conceded that this issue now stands covered against the assessee. Accordingly, we dismiss this issue of the assessee s appeals in both the years. 5. The next common issue in these two appeals of the assessee, is as regards to the order of CIT(A) in restricting the disallowance u/s. 14A of the Act. 6. At the outset, the ld. Counsel for the assessee stated that these two assessment year are A.Ys. 2004-05 and 2005-06 and Rule 8D is not applicable in these two assessment years in view of the decision of the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom). The ld. Counsel for the assessee stated that prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance of expenses for earning exempt income u/s. 14A while computing income u/s. 115JB of the Act. For this, the assessee has raised following ground nos. 6 and 7 in A.Y. 2004-05 and ground nos. 3 and 4 in A.Y. 2005-06. AY : 2004-05: 6. The CIT(A) erred in disallowing a sum of ₹ 79,60,000/- u/s. 14A without looking into the fact that he himself has given the relief under normal and restricted the disallowance to the extent of ₹ 7,00,000/- but he erred in giving relief under MAT. 7. The CIT(A) erred in disallowing notional expenditure u/s. 14A while computing book profit u/s. 115JB. AY: 2005-06: 3. The CIT(A) erred in disallowing a sum of ₹ 44,04,750/- u/s. 14A without looking into the fact that he himself has considered the reasonableness and restricted the disallowance to the extent of 1% of exempt income in earlier year on reasonable basis. 4. The CIT(A) erred in disallowing notional expenditure u/s. 14A while computing book profit u/s. 115JB. 10. At the outset, the ld. Counsel for the assessee stated that the additions to be restricted to the amount disallowed u/s. 14A of the Act by CIT(A) in the normal provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll amounting to ₹ 15,13,564/- and provision for various expenses amounting to ₹ 28,22,863/- in A.Y. 2005-06. The ld. Counsel for the assessee stated that these expenses are already taxed as provision for expenses and now these are reversed it should not be taxed. On query from the Bench, the ld. Sr. DR stated that the issue can be remitted back to the file of the A.O. for verification of the fact, whether the provision for expenses have been taxed in earlier year or not. Let the assessee produce these evidences, whether these provisions for expenses have been taxed in earlier year or not. On this, the ld. Counsel for the assessee fairly conceded that he has no objection if the issue is remitted back to the file of the A.O. for verification purpose. In terms of the above, we are of the view that once the disallowance of provision of expenses is made in earlier year, the same now reversed should not be taxed. The ld. Counsel to showed his bona fide and drew our attention to para 6 of the tribunal s order for A.Y. 2003-04 in ITA No. 2250/Mum/2010, wherein ground no. 3 relating to disallowance of provisions for various expenses amounting to ₹ 31,26,703/- have been t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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