Tribunal directs reassessment of lease payments, disallowance verification, and upholds tax credit relief.

The Tribunal partially allowed both appeals, directing the reassessment of the amortization of lease payments for certain lands, verification of disallowance under section 14A with Rule 8D, and upholding the deletion of dividend income from OMIFCO and the consequent tax credit relief under the Indo Oman DTAA.

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Issues Involved:
1. Disallowance of amortization of lease payment.
2. Disallowance under section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules.
3. Deletion of dividend income received from OMIFCO, Oman, and consequential deemed tax credit relief under the Indo Oman DTAA.

Issue-wise Detailed Analysis:

1. Disallowance of Amortization of Lease Payment:
The assessee challenged the disallowance of Rs. 45,75,672/- as upheld by the Ld. CIT(A) regarding the amortization of lease payment. The disallowed amount pertains to lease payments for land at Noida, Visakhapatnam, and Tuticorin. The assessee conceded that the issue regarding the Noida land is covered against them by the Delhi High Court's order for the assessment year 2004-05, which is under appeal before the Supreme Court. For the Visakhapatnam and Tuticorin lands, the Tribunal noted that the issue is different from the Noida land and has been previously examined. The Tribunal decided to restore the issue to the Assessing Officer for de novo consideration, following the precedent set for the assessment year 2008-09.

2. Disallowance under Section 14A read with Rule 8D:
The assessee earned dividend income of Rs. 3,42,56,718/- and claimed exemption under section 10(34) of the Act. The Assessing Officer computed the disallowance under section 14A read with Rule 8D at Rs. 10,35,89,041/-, but restricted it to the quantum of dividend received. The Ld. CIT(A) upheld the disallowance but confined it to Rs. 1,12,50,439/-. The assessee argued that the Assessing Officer did not record satisfaction to discard their explanation and should not have disallowed any interest component as they used their own funds. The Tribunal found that the Assessing Officer had considered the assessee's submissions and determined the disallowance proportionately. The Tribunal directed the Assessing Officer to verify if the assessee's own funds exceeded the investments and whether borrowed funds were used for their intended purpose, and to adjust the disallowance accordingly.

3. Deletion of Dividend Income from OMIFCO and Deemed Tax Credit under Indo Oman DTAA:
The Revenue challenged the deletion of the dividend income received from OMIFCO, Oman, and the consequential deemed tax credit relief allowed by the Ld. CIT(A). The Tribunal noted that the issue is covered in favor of the assessee by the Delhi High Court's orders for the assessment years 2010-11 and 2011-12, which upheld that the assessee is entitled to tax credit for the deemed dividend tax under the Indo Oman DTAA. The Tribunal, following the High Court's decision, found that the assessee is entitled to the credit for deemed tax on the dividend income and upheld the findings of the Ld. CIT(A).

Conclusion:
Both the appeals were allowed in part and for statistical purposes. The Tribunal restored the issue of amortization of lease payment to the Assessing Officer for de novo consideration, directed verification of the disallowance under section 14A read with Rule 8D, and upheld the deletion of the dividend income from OMIFCO and the consequential deemed tax credit relief under the Indo Oman DTAA.

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