Section 14A disallowance deleted as no exempt income earned, TDS matter remanded for DTAA examination

ITAT Chennai ruled on multiple issues in this tax appeal. The tribunal fully allowed the assessee's claim regarding disallowance under Section 14A read with Rule 8D, finding no exempt income was earned, thus no disallowance was warranted. The AO was directed to delete the addition. For TDS under Section 195 on listing charges paid to Bank of New York, the matter was remanded to AO for re-examination considering DTAA provisions. The tribunal upheld CIT(A)'s decision disallowing prior period expenditure claims. Regarding carbon credit income write-off, the issue was remanded to AO for fresh examination, considering the Department's consistent treatment of carbon credit income in previous years from 2007-08 to 2011-12.

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Issues Involved:
The issues involved in this judgment include disallowance u/s 14A r.w.r. 8D, listing charges paid to Bank of New York, disallowance of prior period expenditure, and writing off of carbon income.

Disallowance u/s 14A r.w.r. 8D:
The assessee claimed no exempt income was earned during the year under consideration. The CIT(A) partly allowed the ground of the assessee. The Tribunal observed that as no exempt income was earned, full relief should be given to the assessee. The order of the CIT(A) was set aside, and the addition was directed to be deleted.

Listing charges paid to Bank of New York:
The assessee paid charges to the Bank of New York, and no TDS was deducted. The CIT(A) upheld the disallowance made by the AO, stating the payment was for technical services subject to TDS. The Tribunal directed the AO to re-examine the issue considering DTAA provisions, allowing the appeal for statistical purposes.

Disallowance of prior period expenditure:
The claim related to prior period expenditure was dismissed by the CIT(A) as each year is separate, and prior period expenses cannot be allowed. The Tribunal upheld the CIT(A)'s decision on this issue.

Writing off of Carbon Income:
The assessee wrote off income from carbon credits due to non-recognition of the project. The CIT(A) dismissed the claim, stating carbon credit income is capital in nature. The Tribunal remanded the issue to the AO to re-examine, directing to treat the income as done in the previous years.

In conclusion, the appeal of the assessee was partly allowed, with specific directions given for each issue.

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