2020 (11) TMI 1010 - AT - Income Tax

Tribunal Upholds CIT(A)'s Directions, Emphasizes Precedents & Consistency in Decision-Making

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s directions on all substantive grounds. The judgment emphasized the importance of ... Disallowance u/s 14A r.w.r.8D - Suo moto disallowance rejected - AO invoked direct, proportionate interest and administrative expenses disallowance u/Rule 8D(2)(i) to (iii) as against the suo moto disallowance offered at the tax Payer’s behest - revenue argued that in Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] has already settled the law that such a disallowance relating to an assessee’s exempt income has to be made - HELD THAT:- We do not find any merit in the Revenue’s foregoing contention. We make it clear that the issue before us is not that of application but computation of Section 14A r.w.r 8D disallowance since the CIT(A) has only directed the Assessing Officer to quantify the same to the extent of exempt income only as per hon’ble jurisdictional high court’s decision as well as Joint Investment P. Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] - no reason to interfere with the CIT(A)’s directions under challenge. The Revenue fails in its first and foremost substantive ground. Section 14A r.w.r. 8D disallowance for the purpose of Section 115JB of the Act under MAT computation - This tribunal’s Special Bench decision in ACIT Vs Vireet Investments (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has already settled the law that such a disallowance is not to be included in the MAT computation. We thus decline Revenue’s third substantive ground’s argument as well. Admission of additional claim without filing a revised return - additional depreciation - Addition being balance 10% on the cost of machinery which was put to use for less than 180 days during the preceding year - HELD THAT:- We find no merit in the Revenue’s grievance. We make it clear that the hon’ble apex court’s decision in Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] holds that same does not impinge upon the appellate authorities’ jurisdiction vested under the provisions of the Act. Hon’ble jurisdictional high court in Budhewal Co-operative Society Ltd. [2013 (5) TMI 802 - ITAT CHANDIGARH] also holds that a tax payer is very much entitled to raise an additional claim without filing a revised return. The Revenue’s pleadings nowhere indicate that there is any distinction on facts since the assessee’s identical additional depreciation claim stood allowed in A.Y. 2013-14 as well - Decided in favour of assessee. Issues involved:1. Disallowance under Section 14A of the Income Tax Act, 1961.2. Claim of additional depreciation by the assessee.3. Application of Rule 8D while computing disallowance for Book profit under Section 115JB.Detailed Analysis:1. Disallowance under Section 14A:The Revenue appealed against the CIT(A)'s order restricting the disallowance under Section 14A without considering the Supreme Court's decision in Maxopp Investment Ltd. The Tribunal found that the issue was about the computation, not the application, of Section 14A disallowance. The CIT(A) directed the Assessing Officer to quantify the disallowance based on the exempt income, following jurisdictional high court decisions. The Tribunal upheld the CIT(A)'s directions citing relevant case laws and dismissed the Revenue's appeal on this ground.2. Claim of additional depreciation:The Revenue challenged the disallowance of the assessee's additional depreciation claim. The CIT(A) reversed the Assessing Officer's action, allowing the claim based on the appellant's submissions and previous year's appellate order. The Tribunal noted that the Revenue's argument based on Goetze (India) Ltd. case did not affect the appellant's right to raise additional claims during assessment proceedings. Citing relevant precedents, the Tribunal upheld the CIT(A)'s decision to allow the additional depreciation claim, as it was consistent with previous year's treatment, and rejected the Revenue's appeal on this ground.3. Application of Rule 8D for Book profit computation:The Revenue's appeal also questioned the direction to not apply Rule 8D while computing disallowance for Book profit under Section 115JB. The Tribunal referred to a Special Bench decision that clarified such disallowance should not be included in MAT computation. Consequently, the Tribunal declined the Revenue's argument on this issue as well.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s directions on all substantive grounds. The judgment emphasized the importance of considering relevant legal precedents and maintaining consistency in decision-making, ultimately leading to the dismissal of the Revenue's appeal.