9911796707
TMI Blog2024 (3) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... going into the grammatical issue of debt or bad debts or receivables, since the facts clearly prove that the assessee has incurred loss by the way of his business with M/s Philip Commodities India Pvt. Ltd. and the loss has been in the current year itself, in the peculiar facts and circumstances of the case, such loss incurred in such transaction with regard to NSEL is allowable Addition u/s 14A - procedural requirements and the satisfaction of the Assessing Officer (AO) with the assessee's claims - HELD THAT:- As decided in U.K. Paints India Ltd. [2020 (12) TMI 440 - ITAT DELHI] AO failed to follow the procedural aspects of invocation of Section 14A(2) which is a sine qua non for re-computation of the disallowance. There cannot be any thing like deemed satisfaction or employed dissatisfaction while invoking the provisions of Section 14(2). There is no mention by the Assessing Officer as to how the AO is not satisfied with the correctness of the claim of the assessee. AO who however failed to draw any dissatisfaction as to how the voluntarily disallowance was unreasonable and non-satisfactory with regard to the correctness of the claim of the assessee. We hereby hold that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a long commentary on Section 14A and Rule 8D but has not recorded satisfaction in respect of the suo moto disallowances made by the assessee with reference to the accounts of the assessee. 4. The AO observed that the assessee has paid interest expenditure of Rs. 3.59 cr. on the amount of investments in Mutual Fund and Equity Shares of Rs.145.70 cr. The assessee has disallowed Rs.14, 00, 000/- on accounts of earnings of exempt income on 3 dIfferent dates viz. part salary of the Director of Rs. 8,00, 000/-, part salary of the CFO, DGM and another officials of Rs. 4,00,000/- and other administrative expenses of Rs. 2,00,000/-. 5. During the hearing before us, the ld. AR specIfically argued that the non- satisfaction as required u/s 14A(2) has not been recorded with reference to the claim of the assessee in respect of the expenditure in relation to the income which was not includable in the total income. On the other hand, the ld. DR vehemently argued that the AO has mentioned from page nos. 3 to 12 about the dissatisfaction and the disallowances have been completed in accordance with the provisions of Rule 8D(2). He relied on the judgments in the case of Haryana Land Reclamatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :] [Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. ]" 11. The above provision is in a sense a taxing exception to the stream of income which is otherwise exempt, i.e. tax exempt income. The principle of disallowance is stated in Section 14A(1). Section 14A(2) prescribes the mode or methodology for the disallowance and the steps for its calculation. Unlike the other part of the statute which decree or enjoin the actual methodology and are substantive, Parliament deemed it appropriate to leave it to the rule making authority to prescribe the methodology, i. e. computation. For instance, what are taxable and in what proportion and the principles applicable are embedded in the statute in certain provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the prescribed mode, methodology and steps for calculation envisaged u/s 14A(2) is liable to be deleted. Disallowance u/s 37: 13. During the year, the assessee has invested Rs. 1,50,66,407/- with NSEL in the month of July 2013 and lost the amount owing to the scam. Out of which an amount of Rs. 49,01,320/- is yet to be recovered. This amount has been written off in the P&L account. The Assessing Officer held that since this amount of Rs. 49,01,320/- has not been taken into account while calculating the income in the previous year, the deduction u/s 36(2) is not allowable. 14. Be fore the ld. CIT (A), the assessee has taken twofold arguments, one that the amount is allowable u/s 36(2)(ii), the other being the amount is allowable u/s 28 of the Income Tax Ac t, 1961. The ld. CIT (A) held that since the amount has not been offered to tax hither to, it cannot be considered for application of provision u/s 36(2)(ii). The judgment of the Hon'ble Supreme Court in the case of TRF Ltd. 323 ITR 397 found to be inapplicable by the ld. CIT (A). The ld. CIT (A) has also not allowed the loss as capital loss on the grounds that there has not been any existence of a capital asset. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
