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TMI Blog2025 (3) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tribunal in the case of assessee for AY 2007-08 [2019 (1) TMI 36 - ITAT DELHI] and such order was followed by the Tribunal further in Assessee's won case for AY 2010-11 to 2012-13 [2021 (10) TMI 1455 - ITAT DELHI] wherein considered the fact that with respect to the miscellaneous income and compensation being part of eligible profit for the purpose of computing the deduction u/s 10B and revenue has already accepted this issue. Tribunal has set aside the matter to the file of AO for verification of the nature of income and then allow the claim. Thus by following the principle of consistency in this year also we set aside the issue to the file of the AO for making verification of the nature of income and compute the deduction u/s 10B of the Act in terms of directions given by tribunal for Ay 2007-08. Reduction in export turnover towards the amounts which have been received in foreign currency, AO has reduced such amount from the export turnover however, the same is also required to be reduced from the total turnover because the total turnover comprises of export turnover and legal turnover. The Tribunal in its order for AY 2010-11 to 2012-13 following the judgment in case of CIT V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember For the Assessee : Shri Salil Agarwal, Sr. Adv., Shri Shailesh Gupta, Adv For the Revenue : Shri Sahil Kumar Bansal, Sr. DR ORDER PER MANISH AGARWAL, AM: 1. These are the two appeals filed by the assessee having common issues therefore, they are taken up together and decided by a single order. 2. First we take ITA No. 2736/Del/2019 dated 2009-10. This is the appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-16, New Delhi dated 31.01.2019 in appeal No. 10048/2012-13 for AY 2009-10. The assessee has taken the following grounds of appeal:- "1. That the learned CIT (Appeals) has erred in law and on facts in sustaining a disallowance under section 14A of the Act which disallowance is unjustified and untenable in law and thus should be deleted as such. 2. That the learned CIT (Appeals) has further failed to appreciate the fact that the investments were made in past and that too out of surplus funds and internal accruals and as such there was no requirement or occasion to have computed disallowance on account of interest paid on borrowings as no investment was made out of borrowed funds and thus the disallowance so made should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired u/s 195(2) read with section 40(a)(i) has not been complied with by the assessee company; 11. That the learned CIT (Appeals) has grossly erred in sustaining the abovesaid disallowance by ignoring the replies and evidences furnished by the assessee appellant and the learned CIT (Appeals) has made the said disallowance on irrelevant and extraneous considerations without there being any adverse material and evidence and purely on surmises and conjectures as such disallowance made is wholly untenable on facts and in law 12. That the learned CIT (Appeals) has erred in law and on facts in sustaining a disallowance of a sum of Rs. 73,51,056/- towards proportionate interest on capital work in progress; 13. That the learned CIT (Appeals) has grossly erred in sustaining the said disallowance of proportionate interest by ignoring the replies and evidences furnished by the assessee appellant and the learned CIT (Appeals) has sustained the said disallowance on irrelevant and extraneous considerations without there being any adverse material and evidence and purely on surmises and conjectures as such disallowance made is wholly untenable on facts and in law. 14. That the Assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce made u/s 14A by observing as under:- "10. We have considered the rival submissions as well a Though the assessee has 10 material available on record. challenged the disallowance sustained by the Ld. CIT(A) u/s 14A of the Act to the extent of Rs. 7,21,646/-, however, as it is clear from the details of the disallowance made by the Assessing Officer on account of interest expenditure that the correct amount of disallowance is Rs. 7,11,740/-plus some disallowance was made by the Assessing Officer on account of administrative expenses which were deleted by the Ld. CIT(A) while accepting the plea of the assessee that the average investment in tax free securities/shares be considered only by taking exempt income yielding investment. Therefore, the dispute before the Tribunal is only in respect of disallowance u/s 14A on account of interest expenditure of Rs. 7,11,740/- On perusal of the balance sheet of the assessee, it is evident that the assessee was having more than Rs. 160 Crores of reserve and surplus as on 31.03.2010, which is many times more than the total investment made by the assessee in the shares. The Hon'ble Supreme Court in the latest judgment in the case of South I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the shape of reserve and capital. Therefore, respectfully following the judgment of the Tribunal in the case of the assessee for preceding year as stated above, we direct the AO to delete the addition. However, since the assessee has made suo moto disallowance of Rs. 6,30,937/- therefore, the disallowance to this extent be restricted. Further, from the assessment order it is seen that the AO has made the disallowance of Rs. 766968/- which is in addition to Rs. 630937/- suo moto disallowed by the assessee, therefore, the disallowance of Rs. 766968/- is directed to be deleted. 9. Ground Nos. 4 and 5 are in relation to the disallowance of Rs. 87,71,616/- made towards exemption u/s 10B of the Act and Rs. 1,96,985/- towards exemption u/s 10AA of the Act by not treating the other income (misc income, compensation, profit on exchange gain) earned from export activities. Besides the assessee has certain foreign exchange included in export sale which was not received by the assessee upto the stipulated date and the same was included in the turnover for claiming exempt income by the assessee. The AO has reduced the deductions claimed u/s 10B on such amount received later. 10. Before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee had been treated as profits derived from the undertaking. Reliance was placed on the judgment of the Hon'ble Apex Court in the case of CIT vs. Excel Industries Ltd reported in 358 ITR 285 wherein it was held that it is inappropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years and the Revenue cannot be allowed to flip-flop on the issue and it ought to let the matter rest. It was submitted that once the revenue has accepted that miscellaneous income and compensation is profit derived from the undertaking in the earlier assessment years, there was no justification to deny such claim in the instant year where it is not in dispute that nature of income was same as was in the preceding years. 4.0 In response, the Ld. Sr. DR placed reliance on the orders of the authorities below, but could not rebut the fact that the department had accepted that miscellaneous income and compensation was part of income for the purpose of computation of eligible profit u/s 10B of the Act. 5.0 On a query from the Bench, both the parties had no objection if the issue was restored to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for Ay 2007-08. 12. With regard to the reduction in export turnover towards the amounts which have been received in foreign currency, AO has reduced such amount from the export turnover however, the same is also required to be reduced from the total turnover because the total turnover comprises of export turnover and legal turnover. The Tribunal in its order for AY 2010-11 to 2012-13 following the judgment in case of CIT Vs. Genpact India reported in 203 taxmann 632 (del) has directed the AO to recomputed the exemptions u/s 10B of the Act by reducing the said amount from the total turnover also. The facts in this year are identical. Therefore, by respectfully following the decision of the Tribunal, we direct the ld AO accordingly. As a result, this ground of appeal are allowed for statistical purposes as per the direction given herein above. 13. Ground Nos. 7 and 8 are in respect of bad debts of Rs. 1,23,11,728/- disallowed by the AO and such disallowance was confirmed by the ld CIT(A). 14. In this regard the ld AR submit that during the year under appeal the assessee in its Profit and Loss Account had claimed bad debts written off of Rs. 12,27,174/- and further claim for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 9 to 11 assessee challenging the disallowance of Rs. 1,12,69,843/- made by the lower authorities on account payment made in foreign currency without deducting tax at source as provided u/s 195(2) read with Section 40(a)(ia) of the Act. During the course of hearing the ld AR fairly admitted that this issue has been decided by the Tribunal in assessee's own case for earlier AYs. 2010-11 to 2012-13 wherein, the Tribunal has confirmed the disallowance. After perusal of the facts we find that the Tribunal in its order dated 14.10.2021 in ITA Nos. 4306 to 4308/Del/2017 has confirmed the disallowance made in earlier year. The relevant observation of the Tribunal is as under:- "23. We have considered the rival submissions as well a material available on record. At the outset, we note that the Assessing Officer has the made disallowance Rs. 1,15,64,807/- u/s 40(a)(i) of the Act for want of TDS as well as the explanation of the assessee. The Ld. CIT(A) has granted part relief to the assessee in respect of expenditure incurred for bank charges, spares parts and general charges. The rest of the disallowance to the extent of Rs. 62,71,694/- was confirmed by the Ld. CIT(A) on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans which is not utilized for capital working in progress cannot be attributed towards the capital work in progress. However, it is a matter of fact to be verified whether any unsecured loan is taken by the assessee for specific purpose being part of the capital working in progress. As regards the unsecured loans, it is primary onus of the assessee to prove that the unsecured loan is not utilized for the expenditure incurred towards capital work in progress. In the absence of these specific details, this issue cannot be decided conclusively. Accordingly, in the facts and circumstances of the case, we set-aside the issue to the record of the Assessing Officer for verification of the facts regarding purpose of taking secured and unsecured loans and also to verify the details whether any part of the loans was utilized by the assessee in respect of the expenditure forming part of the capital work in progress. The Assessing Officer then decide the issue after giving an opportunity of hearing to the assessee." 21. Accordingly, by respectfully following the direction given by the Tribunal in earlier years, we set aside this issue to the file of the AO for necessary verification as dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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