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TMI Blog2024 (1) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, we set aside the orders of the ld. CIT(A) on this issue and remit the matter back to the file of the Assessing Officer to examine and compute the property u/s 45(2) of the Act keeping in view of the above observation and decide the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. Thus, the ground raised by assessee is allowed for statistical purposes for all the assessment years under appeal. Disallowance u/s 14A - contention of the assessee is that the disallowance made u/s 14A should not be in excess of the exempted income of the relevant assessment years - HELD THAT:- By referring to various case law including the decision in the case of Joint Investments Private Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] , the decision in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] the Hon ble Madras High Court has held that the disallowance u/s 14A of the Act should be restricted to the extent of exempt income earned during the previous year. Respectfully following the judgement of Envestor Venture Ltd. [ 2021 (1) TMI 922 - MADRAS HIGH COURT] we direct the Assessing Officer to restrict the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber For the Appellant : Shri K. Ramakrishnan, CA For the Respondent : Shri D. Hema Bhupal, JCIT ORDER PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against separate orders of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, all dated 31.01.2023 relevant to the assessment years 2008-09, 2012-13, 2013-14, 2016-17, and 2017-18. 2. Brief facts of the case are that the assessee is engaged in the business of property development and filed its return of income for the assessment years under appeal. The first ground raised by the assessee for consideration is whether the income earned out of sale of property has to be treated as business income or capital gains. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the nature of lands sold and the reason as to why it should not be taxed under the head 'Business'. The assessee explained that these lands were purchased long back in 1994-95 and till now they are held only as investments, and that only recently, the assessee has decided to use those lands for construction purposes. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as business income. We find that the assessee has not filed any details before the Assessing Officer or ld. CIT(A) or even before the Tribunal as to when the asset was converted into stock-in-trade. Therefore, the assessee has furnish the details, such as how long the asset was treated as long term capital gain and when the assessee has converted the property into stock-in-trade and accordingly up to conversion of the property, the Assessing Officer has to treat it as capital asset and after conversion of the property, it has to be treated as business asset. In this case, neither the assessee nor the Assessing Officer properly computed the property of the assessee. Thus, we set aside the orders of the ld. CIT(A) on this issue and remit the matter back to the file of the Assessing Officer to examine and compute the property under section 45(2) of the Act keeping in view of the above observation and decide the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. Thus, the ground raised by assessee is allowed for statistical purposes for all the assessment years under appeal. 6. The next common ground raised in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, what has been provided as computation method in rule 8D cannot go beyond the roof limit of section 14A itself under any circumstances. Held, that the Tribunal was right in restricting the disallowance under section 14A of the Act to the extent of exempt income earned during the previous year relevant to the assessment year 2015-16. 6.2 By referring to various case law including the decision in the case of Joint Investments Private Ltd. v. CIT [2015] 372 ITR 694 (Delhi), the decision in the case of Maxopp Investment Ltd. v. CIT [2018] 402 ITR 640 (SC), the Hon ble Madras High Court has held that the disallowance under section 14A of the Act should be restricted to the extent of exempt income earned during the previous year. Respectfully following the judgement of the Hon ble Madras High Court in the case of PCIT v. Envestor Venture Ltd. (supra), we direct the Assessing Officer to restrict the disallowance to the extent of exempted income earned by the assessee. Thus, the ground raised by the assessee is allowed. 7. The next ground raised in the assessment year 2008-09 relates to confirming the disallowance made under section 14A of the Act when the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 798, the Assessing Officer has held that this expenditure is not allowable a it is capital in nature and accordingly disallowed ₹.3,30,000/- and brought to tax. On appeal, by following the decision in the case of Punjab State Industrial Corporation v. CIT 225 ITR 792 (SC), the ld. CIT(A) confirmed the addition made by the Assessing Officer. 8.1 Before us, the ld. Counsel for the assessee has submitted that the fee was paid in relation to statutory compliance for increase in authorized share capital. The assessee raised more resources by way of capital for the purpose of increasing/scaling up the operations/business. Since paid up capital cannot exceed authorized capital, the assessee had to increase the authorized capital Thus, it is in the nature of revenue expenditure. 8.2 On the other hand, the ld. DR strongly supported the orders of authorities below. 8.3 We have heard the rival contentions. The point at issue is whether the fees paid to Registrar of Companies for enhancing the working capital of the company should be treated as revenue expenditure or capital expenditure. We have perused the order of the Hon ble Supreme Court in the case of Punjab State Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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