2023 (8) TMI 1401 - AT - Income Tax

Assessee's Section 14A interest disallowance remanded for fresh consideration regarding surplus interest-free funds for exempt income investments

M/s. Aditya Birla Nuvo Limited. Versus Addl. Commissioner of Income Tax-LTU, Mumbai.

M/s. Aditya Birla Nuvo Limited. Versus Addl. Commissioner of Income Tax-LTU, Mumbai. - TMI Issues:1. Non-adjudication of additional ground of appeal regarding disallowance of interest u/s 14A of the Act rw second limb of Rule 8D(2) of the Rules.2. Non-adjudication of original ground raised by the assessee regarding the allowability of provision made for leave salary.Issue 1:The Appellate Tribunal recalled the order to decide on the additional ground raised by the assessee concerning the disallowance of interest under Rule 8D(2) of the Rules. The Tribunal admitted the additional ground for deleting the interest disallowance made voluntarily by the assessee, as the assessee had sufficient interest-free funds for investments. The Tribunal acknowledged the mistake of not adjudicating this additional ground and deemed it fit to recall the order for the limited purpose of adjudicating the issue.Issue 2:Regarding the provision for leave salary, the Tribunal found that the original contention raised by the assessee in the ground for the provision's deductibility was not adjudicated. The Tribunal noted that this issue had been decided in favor of the assessee in an earlier year, which was missed during the appeal's disposal. The Tribunal agreed to recall the order to adjudicate the original contention raised by the assessee in ground No. 3, ensuring a uniform decision on the issue.Separate Judgment:In a separate judgment, the Tribunal addressed the issue related to Section 14A, where the Tribunal directed the Assessing Officer to recompute the disallowance under Rule 8D(2)(iii) by considering only investments that yielded exempt income. The Tribunal partially allowed the grounds raised by both the assessee and the revenue concerning the disallowance of indirect expenses. Additionally, the Tribunal recalled the order for adjudicating the disallowance of interest under Rule 8D(2)(ii) and remanded the issue back to the Assessing Officer for fresh examination in light of the assessee's surplus interest-free funds for investments. The Tribunal referred to a previous decision and allowed the issue in favor of the assessee based on similar circumstances in another appeal.This judgment highlights the Tribunal's careful consideration of the issues raised by the assessee, ensuring that all grounds are properly adjudicated to reach a fair and just decision in line with the applicable laws and precedents.