2023 (4) TMI 985 - AT - Income Tax

Tribunal partially grants appeals for multiple assessment years, remands issues for re-evaluation.

The Tribunal partly allowed the appeals for A.Ys. 2013-14, 2015-16, 2016-17, and 2017-18. The issues concerning Section 14A and Section 10AA were remanded ... Disallowance u/s 14A r.w.r. 8D - contention of the assessee that interest free funds available with the assessee in the form of Share Capital and free Reserves are much in excess then the investments and therefore no disallowance of interest expenditure under Rule 8D(2)(ii) - HELD THAT:- Since the issue raised in the present ground as admitted by Learned AR is identical to that of A.Y. 2014-15, we following the same reasoning of the Co-ordinate Bench while deciding the issue for A.Y. 2014-15 and similar reasons restore the issue back to the file of AO and direct him to rework that disallowance u/s 14A r.w.r 8D in accordance with law and the decisions of Hon’ble Jurisdictional High Court. AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of the claim. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Disallowance of loss - whether the loss was a business loss or a capital loss and if it is a capital loss whether the loss can be allowed as a business expenditure? - HELD THAT:- The loss in the present case is on account of depreciation in the value of investments. It is not the case of assessee that the loss is a business loss. In such a situation, when the loss is not a business loss, we do not find any infirmity in the order of CIT(A) and thus this ground of assessee is dismissed. Deduction u/s 10AA - AO after making the adjustment on account of allocation of office expenses and interest and other adjustment recomputed the exemption u/s 10AA - HELD THAT:- We find that identical issue arose in assessee’s own case in A.Y. 2014-15 [2020 (9) TMI 403 - ITAT DELHI] and Co-ordinate Bench of Tribunal on this issue restored the issue back to the file of AO - We therefore following the order of Co-ordinate Bench for A.Y. 2014-15 and with similar directions restore the issue back to the file of AO and direct him to re-compute the exemption under 10AA of the Act in accordance with law. Assessee shall be free to file such documents, explanations, submissions as it deems fit in respect of the claim and AO shall also be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Issues Involved:1. Speculation Loss in Future Trading2. Speculation Loss in Share Dealings3. Disallowance under Section 14A4. Disallowance of Loss on Revaluation of Shares5. Deduction under Section 10AASummary:1. Speculation Loss in Future Trading:The assessee did not press ground Nos. 1.1 and 1.2 related to the speculation loss in future trading and share dealings. These grounds were dismissed as not pressed.2. Disallowance under Section 14A:The AO disallowed Rs. 97,92,030/- under Section 14A, invoking Rule 8D, which the CIT(A) restricted to Rs. 28,14,818/-. The Tribunal restored the issue back to the AO to rework the disallowance under Section 14A r.w.r 8D, considering interest-free funds and investments yielding tax-free income, following the precedent set in A.Y. 2014-15.3. Disallowance of Loss on Revaluation of Shares:The AO disallowed Rs. 14,99,999/- claimed as a loss on revaluation of shares, which was upheld by the CIT(A). The Tribunal agreed with the lower authorities that the loss was not a business loss and dismissed this ground.4. Deduction under Section 10AA:The AO reduced the exemption claimed under Section 10AA by Rs. 52,06,176/- after allocating head office expenses and interest. The CIT(A) upheld the AO's decision. The Tribunal restored the issue back to the AO to re-compute the exemption under Section 10AA, considering the allocation of expenses and interest, following the precedent set in A.Y. 2014-15.Result:The appeals for A.Ys. 2013-14, 2015-16, 2016-17, and 2017-18 were partly allowed, with issues related to Section 14A and Section 10AA remanded back to the AO for re-evaluation.