9911796707
TMI Blog2024 (11) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... t and appropriate to restore this issue to the file of the ld AO for verification of the fact as to whether the assessee had not claimed the very same expenditure in earlier year - Ground No. 1 raised by the assessee is allowed for statistical purposes. Addition of depreciation on estimated increase in cost of properties - AO observed that the assessee has accounted for estimated cost of 10% towards stamp duty/ registration charges in respect of properties where lease/ sub lease is yet to be executed and has provided depreciation on this addition - HELD THAT:- We find that the issue is no longer res integra in view of the decision in assessee s own case where the very same issue has been remitted back to the file of the ld AO for de novo verification for AY 2003-04. We find that the Hon ble Jurisdictional High Court had restored the issue for verification by the ld AO. AR made a statement from the bar that no addition was made by the ld AO up to AY 2009-10 thereof. However, in the interest of justice, we feel it appropriate to restore this issue to the file of the ld AO - Ground No. 2 raised by the assessee is allowed for statistical purposes. Addition on account of revenue de-reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, ground No. 5 raised by the assessee is allowed. Addition on account of revenue recognition on realization basis in respect of loan application fees, front-end fees, administrative fee and processing fees of loans as against accrual basis - HELD THAT:- First of all loan processing/ front-end fees becomes payable to the company only when the loan is actually disbursed and not when the loan is sanctioned. There is no certainty as to when the concerned borrower would draw the loan amount from the assessee. Hence, taxing the loan processing fee, front-end fee etc on accrual basis would be wrong as there is no certainty of its realization. Further, C AG had also directed the assessee to recognize income respect of these services on realization basis instead of accrual basis by duly appreciating the fact that there is no certainty of its realization. Further, this is done only for Government borrowers by the assessee because the Government may choose not to draw the disbursement from the assessee, even though the loan is sanctioned to it. Depending upon the political climate, financial need and the financial strain that could be managed or tolerated by the particular Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as leased to Indian Railways. The expenditure which was incurred on bonds was for ensuring finance and availability of funds for carrying out the business of finance and leasing. To procure and get funds in the form of bonds etc, some expenditure had to be incurred. These funds, when procured, were used for the business activities to earn income. It is not a case wherein the respondent-assessee was yet to set up or commence their business. The business, it is accepted, had commenced much earlier and not during the year in question. Disallowance made by the AO on account of prior period expenses - AR submitted additional evidences in terms of Rule 29 of the ITAT Rules, giving the complete break up of the prior period expenses together with an affidavit supporting the Rule 29 petition - HELD THAT:- we find that these additional evidences at the first instance are required to be admitted as it would be relevant for adjudication of the appeal and moreover we find that all these correspondences are pertaining to year 2007 i.e. the additional evidences submitted by the assessee constitutes internal correspondences between officers of the assessee company giving certain authorization to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of expenditure cannot exceed the same. We direct the ld AO accordingly. Accordingly, ground is partly allowed. Addition on account of accrued interest receivables on account of advance paid on property tax to MCD - CIT(A) held that the assessee is a agency of the Govt of India and was held not liable to pay property tax in respect of community centre developed by the Govt and therefore, the interest recoverable from the property tax from the MCD becomes the assessee s income - HELD THAT:- Before us, the ld AR stated that in AY 2006-07 the very same addition was deleted by the ld CIT(A) and the revenue did not prefer any appeal before this Tribunal. Having accepted this situation in AY 2006-07 the revenue cannot have any grievance on the same issue in the year under consideration. Applying the principles of consistency as decided by the Hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] we hold that the interest income cannot be brought to tax in the sum in the hands of the assessee. Accordingly, ground raised by the assessee is allowed. Disallowance of expenses u/s 14A of the Act read with Rule 8D of the Rules, with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year under consideration ; that the assessee is a massive organization and located in multiple locations and that the exercise of collation of data does not get completed before the time of finalization of annual accounts. Hence, there would be always certain delays in receiving the data from multiple locations and the same would be received by the head office only after the completion of audited financial statements. Accordingly, the details which were received after the completion of audit were booked as prior period expenditure and also where the expenditure stood crystallized during the year under consideration, even though the assessee pertains to earlier years were also booked under prior period expenditure. As per the mandate of Companies Act to show prior period items separately in the financial statements, this sum of Rs. 3 lakhs was reflected by the assessee separately in the profit and loss account. The assessee gave the details of the said expenditure before the ld AO as under:- Rs. In thousand Office Rent Rs. 149 Water and Electricity Rs. 16 Interest in investment Rs. 130 Other expenditure Rs. 5 Total Rs. 300 3.2. The ld AO however did not heed to the contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 207/2015 dated 17.05.2015 for AY 2003-04. We find that the Hon ble Jurisdictional High Court had restored the issue for verification by the ld AO. The ld AR made a statement from the bar that no addition was made by the ld AO up to AY 2009-10 thereof. However, in the interest of justice, we feel it appropriate to restore this issue to the file of the ld AO in the light of the directions given by the Hon'ble Delhi High Court in AY 2003-04. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purposes. 5. Ground No. 3 raised by the assessee is challenging the confirmation of addition made by the ld AO in the sum of Rs. 3,75,67,456/- on account of revenue de-recognition in the books of the assessee. 5.1. We have heard the rival submissions and perused the material available on record. The assessee being a public finance institution and a housing finance company is governed by the National Housing Bank Act, 1987. As per the mandate of NHB Act, revenue shall be recognized only on the standard assets on accrual basis. In respect of non-performing assets, interest income is to be recognized only on receipt basis. The assessee derecognized interest income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame issue has been decided against the assessee by the Hon ble Jurisdictional High Court. The said decision of Hon'ble Delhi High Court in assessee s own case has been stayed by the Hon'ble Supreme Court. In these circumstances, the assessee before us had filed a petition in terms of section 158A(1) of the Act in Form 8 read with Rule 16 of the Income Tax Rules. The ld DR vehemently argued before us that the issue is settled in favour of the revenue by the decision of the Hon ble Jurisdictional High Court in assessee s own case and also by the decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd reported in 320 ITR 577 (SC). Hence he vehemently argued that this ground raised by the assessee should be dismissed. 5.2. We have gone through the judgment of the Hon'ble Supreme Court in the case of Southern Technologies Ltd referred (supra). In our considered opinion, the said decision would have the effect only for allowability of deduction in respect of provision made for non performing assets (i.e. provision of bad and doubtful debts), which was made as per RBI Prudential Norms for income recognition and classification of assets and as to whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Jurisdictional High Court in Income Tax Appeal No. 339/2014 dated 27.10.2014 in assessee s own case for AY 2002-03. This issue has been decided in favour of the assessee by observing as under:- 6. Along with the grounds of appeal, the appellant before us has filed copy of minutes of the meeting held on 7th September, 1995 and after making reference to the same has pointed out that the said minutes have been misread and misunderstood by the Assessing Officer and the appellate authorities, including the Tribunal. The said minutes specifically make reference to the community centre complex at Andrews Ganj, New Delhi as is clear from the very first paragraph. The subsequent paragraphs, including the paragraph quoted by the Assessing Officer entailing payment of administrative expenses @ 1.5% relate to the development of community centre complex at Andrews Ganj, New Delhi and not to residential quarters which was not the subject matter of the said meeting and the recorded memorandum. 7. Having read the said record of minutes of meeting, we felt that there was merit in the submission made as the recorded minutes specifically refer to the position with reference to development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is challenging the confirmation of addition made by the ld AO in the sum of ₹1,69,91,000/- on account of expenditure on grants- in-aid. 7.1. We have heard the rival submissions and perused the material available on record. The ld AO observed that the assessee has claimed to have spent an amount of ₹1,69,91,000/- as grant-in-aid. The assessee furnished the ledger account of this expenditure during the course of assessment proceedings. The ld AO observed that these expenditures are merely provisions made by the assessee. Hence, the same cannot be allowed as deduction in the assessment. The main contention of the ld AO is that expenditure incurred towards grant-in-aid are akin to donation paid by the assessee. Hence, the same cannot be treated as having been incurred wholly and exclusively for the purpose of business of the assessee, and hence not allowable as deduction. When the matter travelled to ld CIT(A), the assessee submitted that such grants were paid to HUDCO Chair program with the object of capacity building in the housing and urban development sector and in order to strengthen the research and capacity building in the housing and urban development sector. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the business nexus of the expenditure incurred in the form of grant- in-aid vis- -vis the payee institutions stand clearly established. We find a sum of ₹1,69,91,000/- is debited to profit and loss account and the outstanding (i.e. unpaid balance) is reflected as other liabilities in the balance sheet. The entire approach as stated earlier by the ld CIT(A) is tangential and hence no serious thought need to be given to the observation made by the ld CIT(A) qua this ground. Hence the same is hereby ignored as it is not germane to the issue in dispute. We find that the ld AR relied on the decision of the Hon ble Madras High Court in the case of CIT Vs. Madras Refineries reported in 266 ITR 170 (Mad) wherein, it was held that even a remote nexus to a business of the assessee is allowable revenue expenditure. The relevant observation is reproduced herein below:- 5. The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. Being known as a good corporate citizen brings goodwill of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectfully following the judicial precedents relied upon hereinabove, we hold that assessee would be entitled for deduction in respect of grant-in-aid expended by it on the ground that same are to be construed as wholly and exclusively incurred for the purpose of business of the assessee. Accordingly, ground No. 5 raised by the assessee is allowed. 8. Ground No. 6 raised by the assessee is challenging the confirmation of addition of ₹1.50 crores on account of revenue recognition on realization basis in respect of loan application fees, front-end fees, administrative fee and processing fees of loans as against accrual basis. 8.1. We have heard the rival submissions and perused the material available on record. The ld AO had sought to tax income on account of application fees, front-end fees, administrative fees and processing fees of loans as against actual basis which was recognized as income upon realization. The ld AO failed to appreciate that as per the accrual system of accounting, the income is recognized only when there is reasonable certainty of its collection. The Ld. AO considered such recognition of processing fee, etc, on cash basis of accounting to be in violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial impact due to change in accounting policy in respect of revenue recognition of application fee, front end fees, administrative fee and processing fee of loans (hereinafter collectively referred as 'fees') from the date of signing of the loan agreement to the date of realization. The background of the aforesaid addition is that the appellant was following accrual/mercantile system of accounting and was accounting the 'fees' as its revenue from the date of signing of the loan agreement. The amount was finally deducted/realized from the loan amount, when it was actually disbursed to the borrower. There were instances when the loan agreement was signed and the borrower would not take the disbursement and, accordingly, fees would not be realized. The CAG objected to the same on the ground that the accounting treatment was not in accordance with Accounting Standards (hereinafter referred as 'AS-9), issued by ICAI which provides guidance for determination of income on accrual basis. Appellant, vide letter dated 6th November, 2006, assured the CAG that the accounting policy shall be reviewed for FY 2006-07 and, accordingly, the Board approved the change in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive effect. Evidently, the appellant is a company incorporated under Companies Act 1956. As per Accounting Standards, it follows mercantile system of accounting. Therefore, even though the company may have changed the accounting policy, which as mentioned was on a faulty premise that it did not have financial impact, in line with the Accounting Standards as per Section 145 A of the Act, it could have added back the amount of Rs. 1.28 crores on account of such receipts in the computation of income. This would have ensured compliance with the CAG objections as also compliance with the provisions of the Act. Moreover, the decision of the Company's Board cannot override the provisions of the statute. Keeping in view the above, the addition made on this ground is upheld and this ground is accordingly dismissed.' 22. The ITAT upheld the addition holding as under: (4.1.1) The Assessee is now in appeal against the aforesaid order dated 28-8-2014 of the Ld. CIT(A). At the time of hearing before us, the Ld. AR of the Assessee submitted that the change in the Accounting Policy was made in order to comply with objection/observation of the Audit Party of Comptroller Auditor General. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw by not adding back the aforesaid amount of Rs. 1.28crores in the computation of Total Income for the purposes of I.T. Act. This error of law is further aggravated by the error of fact, in that the change of accounting policy was based on faulty premise (ie, error of fact) that there was no financial impact. The fact is, there was financial impact to the extent of aforesaid amount of Rs. 1.28 crores. In view of the foregoing discussion and unambiguous position in law; and the clear error of law and fact on the part of the Assessee, we uphold the addition of aforesaid amount of Rs. 1.28 crores. The Ld. AR of the Assessee failed to bring to our notice any specific provisions of law or any judicial precedents to support this ground of appeal. We find that the order of the Ld. CIT(A) is well reasoned and in accordance with law in the facts and circumstances of this case. The Assessee has failed to make any case for inference with the impugned order of the Ld. CIT(A) on this issue. Therefore, the second ground of appeal in the appeal filed by the Assessee in the ITA No. 5705/Del/2014 is dismissed and the impugned order of the Ld. CIT(A) on this issue, sustaining the aforesaid addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevance, and the same read as 17. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas Co. [1962]46 ITR 144(SC) it was held as follows: Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income , which does not materialize. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual not receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. 18. The above passage was cited with approval in Morvi Industries Ltd. v. CIT (Central), [1971] 82 ITR 835 (SC) in which this Court also considered the dictionary meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cash basis. The assessee-company has also placed reliance upon the Accounting Standard 9 of ICAl which lays down that when uncertainties exist regarding hence shall not be recognised until collection. 5. The recognition of revenue on accrual basis presupposes the satisfaction of two conditions viz., the revenue is measurable and that the revenue is collectable without any uncertainty. Taking into account these standards also, the assessee submitted that the overdue on financial charges on hire purchase and lease had been admitted only on cash basis. Rejecting the said submission, the Assessing Officer passed the assessment order. ** ** ** In the instant case, learned counsel for the Revenue is not in a position to demonstrate or satisfy us that due to the change of accounting method adopted by the respondent/assessee, which is permissible in law as per the ratio laid down in 1) CIT v. Matchwell Electricals (I.) Ltd. [2003]. 263 ITR 227 (Bom.) and (ii) Hela Holdings (P.) Ltd. v. CIT [2003/ 263 ITR 129 (Cal.), the Revenue suffered any loss or such a change of methodology attracts tax evasion. Concededly, there is no finding to that effect in the assessment order or in the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wering this question, it was held that the Court may take help of external aids such as the ICAI guidelines and standards if the Act is silent, and there exists no internal aid for the interpretation of the same. The relevant portion of the decision reads as under: 16. The method of accounting followed, as derived from the ICAl's Guidance Note, is a valid method of capturing real income based on the substance of finance lease transaction. The rule of substance over form is a fundamental principle of accounting, and is in fact, incorporated in the ICAI's Accounting Standards on Disclosure of Accounting Policies being accounting standards which is a kind of guidelines for accounting periods starting from 1-4-1991. It is a cardinal principle of law that the difference between capital recovery and interest or finance income is essential for accounting for such a transaction with reference to its substance. If the same was not carried out, the respondent would be assessed for income tax not merely on revenue receipts but also on non-revenue items which is completely contrary to the principles of the IT Act and to its scheme and spirit. ** ** 18. Without a doubt, in a catena of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we do not find any force in the contentions of the Revenue that the accounting standards prescribed by the Guidance Note cannot be used to bifurcate the lease rental to reach the real income for the purpose of tax under the IT Act. 20. To sum up, we are of the view that the respondent is entitled for bifurcation of lease rental as per the accounting standards prescribed by the ICAI. Moreover, there is no express bar in the IT Act regarding the application of such accounting standards. (Emphasis Supplied] 29. The Supreme Court has held that accounting process is to ensure the real income from the transactions in the form of revenue receipts is accounted for the purpose of income tax. The application of accounting standard is to show fair and real income which is liable to tax under the Act. The accounting standards of ICAI lays down that when uncertainties exist regarding determination of the amount in its collectability, the revenue shall not be treated as accrued and shall not be recognized until collection. It would be apposite to extract the relevant portion of the AS-9, issued by ICAI with regards to the effect of uncertainties on revenue recognition. The same reads as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the same, since it remains uncertain whether the borrower -who has signed the loan agreement, would, eventually, avail of the loan, or not. Merely because the appellant may have signed the agreement with the borrower, that, by itself, does not lead to the certainty of income accruing to the Appellant, so as to bring it within the ambit of income . Here, the addition has resulted on account of change in accounting policy by recognizing the realised revenue, instead of the assumed revenue on the date of signing of loan agreement. The tax authorities fell in error by laying emphasis on the impressibility of change in accounting in the context of section 145 of the Act. The conspectus of the case law cited by both parties is that, even for an income to be recognized under mercantile law, it is necessary that income should have accrued with certainty. It is trite law that there can be no liability to pay Income-tax on hypothetical income. The regular method of accounting determines only the mode of computing the taxable income and the particular stage at which the tax liability arises. If there is no income, then merely because the assessee had followed the mercantile system of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Electricity Act, and the additions made in the income as per the provision of section 41 of the Act. The factual scenario in the said case is clearly distinguishable from the facts of the present case. 8.3. Further, we find that there is no absolutely no basis at all for the revenue to tax a sum of ₹1.50 crores as it is made purely only on ad hoc basis. In view of the above observations and respectfully following the decisions of the Hon ble Jurisdictional High Court referred supra, the ground No. 6 raised by the assessee is hereby allowed. 9. Ground No. 7 raised by the assessee is challenging the confirmation of disallowance of Rs. ₹26,40,710/- u/s 14A of the Act. 9.1. We have heard the rival submissions and perused the material available on record. We find that the assessee had derived exempt income of ₹1,46,000/- and had duly offered the same to tax in the return of income itself. Hence, there was no exempt income claimed by the assessee at all warranting application of application of provision of Section 14A of the Act. Reliance in this regard is placed on the decision of the Hon ble Jurisdictional High Court in the case of PCIT Vs Era In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed deduction of ₹2,47,66,000/- as financial expenses paid during the year. He observed that the assessee has debited financial charges of ₹22,87,32,000/- in its books of account which has been added back in the computation. Accordingly, the ld AO show caused the assessee to explain why the other financial expenses of Rs. 2,47,66,000/- should also not be disallowed. The assessee submitted that these financial expenses were incurred by it on account of deferred expenditure on the issue of bonds and term loans in its books of account whereas, the same were fully claimed as deduction in the year on incurrence for the purpose of computing the taxable income. The break up of claim of assessee towards financial expenses is enclosed in page 176 of the Paper Book. The issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in case of CIT Vs. IRFC Ltd reported in 362 ITR 548 (Del) as under:- 16. The respondent-assessee had incurred expenditure of Rs. 10,09,92,445 towards bond issue expenses of different series during the year in question. The Tribunal referred to their earlier order in the case of the respondent-assessee for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave petition filed by the Revenue was dismissed. Having regard to the predominant view taken in the above judgments, in which the judgment of the Supreme Court in India Cements Ltd. [1966] 60 ITR 52 (SC) has been noticed, we are inclined to uphold the view taken by the Tribunal that the expenditure is revenue in nature. 18. The respondent-assessee was/is a Government of India undertaking and was engaged in the business of leasing and financing to Indian Railways. It procured funds from various sources and acquired rolling stock which was leased to Indian Railways. The expenditure which was incurred on bonds was for ensuring finance and availability of funds for carrying out the business of finance and leasing. To procure and get funds in the form of bonds etc, some expenditure had to be incurred. These funds, when procured, were used for the business activities to earn income. It is not a case wherein the respondent-assessee was yet to set up or commence their business. The business, it is accepted, had commenced much earlier and not during the year in question. 17.2. This aspect has been duly appreciated by the ld CIT(A) and granted relief to the assessee on which we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional evidences do not suggest that the liabilities had crystallized during the year and that the same represents only provisions made for expenses, on perusal of the additional evidences, we find that these additional evidences at the first instance are required to be admitted as it would be relevant for adjudication of the appeal and moreover we find that all these correspondences are pertaining to year 2007 i.e. the additional evidences submitted by the assessee constitutes internal correspondences between officers of the assessee company giving certain authorization to book certain expenses. But we find that these authorization dates are in the year 2007 whereas the appeal before us pertains to AY 2004-05. Hence, it is very clear that the authorization were indeed obtained by the assessee company after the claim of deduction was made. Hence, there is no evidence has rightly pointed out by the ld DR that the liabilities had indeed crystallized during the year. Hence, the disallowance made by the ld AO on account of prior period expenses and confirmed by the ld CIT(A) is in order. Accordingly, ground No. 1 raised by the assessee is dismissed. 21. Ground No. 2 challenging the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival submissions and perused the material available on record. During the year under consideration, the assessee company had debited in its profit and loss account a sum of Rs. 4,98,75,665/- under the head CSR, details of which were called for and provided by the assessee company. The assessee explained as under:- The Mission of HUDCO's Corporate Social Responsibility is to Promote, facilitate and, support inclusive human settlement development with focus on sustainability and marginalized communities. The focus is on two distinct thrust areas viz, sustainability and/or issues related to marginalized community. Disaster rehabilitation is of the components of the HUDCO CSR Policy. The intention is to identify and associates with projects/ interventions that would help to achieve environmental sustainability or help improving the conditions of the weaker sections of the community in urban society. HUDCO sets apart 3% of its annual net profit for CSR activities. On 6th August, 2010, Ladakh was struck by a cloud burst that washed away houses across Ladakh region and resulted in the loss of 191 civilians and 26 army personnel. HUDCO officials alongwith representatives of Hindusta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 266 ITR 170 (Mad) wherein, it was held that even a remote nexus to a business of the assessee is allowable revenue expenditure. The relevant observation is reproduced herein below:- 5. The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. Being known as a good corporate citizen brings goodwill of the local community, as also with the regulatory agencies and the society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill. Monies spent for bringing drinking water as also for establishing or Improving the school meant for the residents of the locality in which the business is situated cannot be regarded as being wholly outside the ambit of the business concerns of the assessee, especially where the undertaking owned by the assessee is one which is to some extent a polluting industry. 25.3. Further, we find that the Hon ble Karnataka High Court in the case of Kanhaiyalal Dudheriya Vs. JCIT reported in 418 ITR 410 (Kar) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with cogent evidence with the said expenditure had been crystallized during the year so as to make it eligible for claiming deduction. This action was upheld by the ld CIT(A). Before us, no arguments were advanced by the ld AR on the said issue. Hence, we hold that there is no further submission that is required to be made by the assessee with regard to this issue. Hence, we do not deem it fit to interfere in the order of the ld CIT(A) in this regard. Accordingly, ground No. 2 raised by the assessee is dismissed. 27. Following grounds are identical with grounds raised by the assessee in AY 2010-11 in ITA No. 3261/Del/2015 and hence the decision rendered thereon by us hereinabove for AY 2010-11 shall apply mutatis mutandis for this Assessment Year also:- Ground in AY 2011-12 Ground in AY 2010-11 Result 3 2 Set aside to AO 4 3 Set aside to AO 5 4 Allowed 6 5 Allowed 8 6 Allowed 10 8 Set aside to AO 11 9 Set aside to AO 28. Ground No. 7 raised by the assessee is challenging the disallowance of expenses of Rs. 25,56,653/- u/s 14A of the Act. 28.1. We have heard the rival submissions and perused the material available on record. The assessee has derived exempt income of Rs. 21,06,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the assessee before the Hon'ble Delhi High Court which was decided against the assessee, after which the assessee had filed a Special Leave Petition ( SLP ) before the Hon'ble Supreme Court. While considering the SLP, the Hon'ble Supreme Court, vide interim order dated 21.02.2000 directed the assessee to deposit 50% of the disputed amount with the MCD with a rider that in case the assessee succeeds in the SLP finally, the amount paid by it shall be refunded by MCD with the interest @ 12%. Finally, the Hon'ble Supreme Court vide order dated 13.12.2000 decided that the assessee was not liable to pay property tax on the said Andrews Ganj project and gave a specific direction to MCD to repay the amount of deposit along with 12% interest thereon. In pursuance to the same, the assessee received refund of an amount of Rs. 11,45,69,541/- on 06.10.2005. This amount was taxed in the hands of assessee for the AY 2005-06. This addition has been confirmed by the CIT(A) in his appellate order for AY 2005-06. Since, the assessee was not showing any such interest income on the deposit of advance property tax given to MCD, in the course of assessment proceedings, the AR was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Commissioner of Income Tax (Appeals)-4, New Delhi [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. 367/13- 14/CIT(A)-4 dated 26.03.2015 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 11.02.2014 by the Assessing Officer, Addl CIT, Range-12, New Delhi (hereinafter referred to as ld. AO ). 32. The only issue to be decided in the appeal of the revenue is challenging the deletion of disallowance of expenses u/s 14A of the Act read with Rule 8D of the Rules, with regard to investment in bonds. 33. We have heard the rival submissions and perused the material available on record. We find that the ld CIT(A) had directed the ld AO to consider only those investments which yielded exempt income while computing the disallowance in terms of Rule 8D(2) of the Income Tax Rules, 1962. Admittedly the investment in bonds made by the assessee had yielded interest income to the assessee which is taxable receipt. Hence, the provisions of section 14A per se cannot be made applicable for the same. The error committed by the ld AO in this regard has been duly rectified by the ld CIT(A) in his order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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