Assessee's Appeals Partly Allowed; Relief on Disallowance and Deductions Granted

The appeals filed by the assessee were partly allowed for statistical purposes, and the cross-appeal by the Revenue was also partly allowed. The Tribunal provided partial relief to the assessee in relation to the disallowance under Section 14A and directed the AO to recompute the disallowance per the Jurisdictional High Court's decision for certain years. Additionally, the Tribunal favored the assessee in allowing deductions under Section 80IA and directed the AO to charge interest as per the law. The Tribunal confirmed the CIT(A)'s findings regarding the claim of deduction under Section 35DD for certain assessment years.

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Issues Involved:
1. Disallowance in respect of provisions for lease rent.
2. Disallowance under Section 14A.
3. Denial of deduction under Section 80IA.
4. Levy of interest under Sections 234B/234C.
5. Allowing the claim of deduction under Section 35DD (Revenue's appeal).

Detailed Analysis:

1. Disallowance in Respect of Provisions for Lease Rent:
At the outset, the assessee's counsel stated that they are not pressing the ground relating to the disallowance of provision for lease rent. Consequently, this ground was dismissed for all years under consideration.

2. Disallowance under Section 14A:
The assessee received UTI income of US-64, claimed as exempt under Section 10(33). The AO disallowed expenses under Rule 8D, which was confirmed by the CIT(A) for A.Y. 2005-06 and 2006-07 based on the Special Bench decision in Daga Capital Management Pvt. Ltd. For A.Y. 2007-08, the CIT(A) directed the AO to recompute the disallowance per the Jurisdictional High Court's decision in Godrej & Boyce Manufacturing Co. Ltd. The AO accepted a 10% disallowance of the salary paid to G.M. (Finance) for A.Y. 2008-09, which was also accepted by the assessee for other years. The Tribunal directed the AO to disallow 10% of the salary paid to G.M. (Finance) for all years under consideration, providing partial relief to the assessee.

3. Denial of Deduction under Section 80IA:
The AO denied the deduction for A.Y. 2005-06 and 2006-07 due to the non-filing of the audit report with the return. For A.Y. 2007-08 and 2008-09, the AO computed the deduction after deducting notional brought forward losses and depreciation. The CIT(A) confirmed these findings, relying on Section 80AC and previous decisions. The Tribunal, however, held that the audit report filed before the assessment completion suffices, referencing CIT Vs Shivanand Electronics and Web Commerce (India) (P) Ltd. The Tribunal also allowed additional claims during appellate proceedings, citing Pruthvi Brokers & Shareholders (P) Ltd. Regarding notional set-off of losses, the Tribunal favored the assessee, referencing Velayudhaswamy Spinning Mills (P) Ltd. and Emerald Jewel Industry, and directed the AO to verify the set-off of losses in earlier years before allowing the deduction.

4. Levy of Interest under Sections 234B/234C:
The Tribunal directed the AO to charge interest as per the law after providing the assessee with a reasonable opportunity to be heard. This ground was allowed for statistical purposes.

5. Allowing the Claim of Deduction under Section 35DD (Revenue's Appeal):
The CIT(A) had allowed the deduction under Section 35DD for A.Y. 2005-06 and 2006-07, which the department did not appeal against. Following the rule of consistency, the Tribunal confirmed the CIT(A)'s findings for A.Y. 2007-08.

Conclusion:
The appeals filed by the assessee were partly allowed for statistical purposes, and the cross-appeal by the Revenue was also partly allowed. The Tribunal's order was pronounced in the open court on 25.7.2014.

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