TaxTMI 
TaxTMI 
2012 (9) TMI 473
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....years. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 79,80,000/- made in the assessment u/s 14A. 4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing of the appeal. I.T.A. No. 3818/Del/2007: (Assessee's appeal): 1. That the CIT(A) erred both on facts and in law in disallowing depreciation @ 40% on vehicles which had been leased out. 2. That the CIT(A) erred in taking the view that the principles of res judicata did not apply in as much as during the year under consideration, there were no fresh leasing transactions and the brought forward WDV was entitled to depreciation @ 40% which had been allowed by the Hon'ble Tribunal till assessment year 2002-03. 3. That the CIT(A) erred both on facts and in law in confirming an addition of Rs. 21,75,000/- on account of dividend when iln fact the same was exempt within the meaning of section 10(34) read with the provisions of section10(33) of the Act. 4. That the CIT(A) erred in upholding the levy of interest u/s 234B and 234D when in fact no such interest....
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....d from the business income as are incurred in the previous year and since provisions were created to meet out the liability on account of expenditure that are likely to be incurred in subsequent year, the same should not be allowed to be deducted and therefore he made an addition of Rs. 27,60,000/- to the income of assessee. 7. During appellate proceedings before Ld CIT(A), the Ld AR argued that provisions of Rs. 27,60,000/- for bad and doubtful debts was created in accordance with Reserve Bank of India guidelines. He further argued that similar additions were made in the earlier years also for assessment year 1998-99, 1999-00 and 2000-01 and the Hon'ble ITAT had allowed deduction for these provisions. The ld CIT(A) after hearing submissions of assessee deleted the addition of Rs. 27,60,000/-. The relevant portion of Ld CIT(A) is reproduced below:- "I have considered the submissions made by Ld AR and perused the order passed by ITAT 'G' Bench, New Delhi in I.T.A. No.611/Del/2005 for assessment year 2000-01 in the appellant's own case. The Hon'ble ITAT Delhi Bench 'G' relied on the decision of Chennai Bench of the Tribunal in the case of Overseas Sanmar Finance L....
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....ecided in favour of the revenue. Excess Income Reversals for previous year: 12. During assessment proceedings, the Assessing Officer noted that assessee had debited to its P&L Account a sum of Rs. 8,45,000/- being income reversal relating to earlier years. The Assessing Officer further noted that during previous year also, similar addition was made on similar grounds and therefore in this year under same circumstances, he added back the amount of Rs. 8,45000/- to the income of assessee. 13. During appellate proceedings before Ld CIT(A), the Ld AR submitted that in the previous year also, similar addition was made and was deleted by Hon'ble ITAT order for assessment year 1998-99, 1999-00 & 2000-01. The Ld CIT(A) after hearing the submissions of Ld AR deleted the addition of Rs. 8,45,000/-. The relevant portion of Ld CIT(A)'s order is reproduced below:- "I have perused the appellant's order passed by Delhi Bench 'D' in I.T.A. No.1263/Del./2002 for assessment year 1998-99, Delhi Bench 'C', New Delhi in I.T.A. No.3695/Del/.2002 for assessment year 1999-00 and Delhi Bench 'G' New Delhi in I.T.A. No.611/Del/2005 in appellant's own case as per which the Tribunal deci....
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..... 79,80,000/- u/s 14A of the Act. The relevant portion of Assessing Officer's order is reproduced below:- "The contention of the assessee is not acceptable as the fact remain that section 14A clearly prescribed that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to the income which does not form part of total income under this Act. The invocation of section 14A is automatic and comes into operation without any exception as soon as the dividend income is claimed as exempt. Since the entire tax free interest income from bonds have been claimed exempt and are not part of total income under this Act. Hence, section 14A is clearly attracted in this case and any expenditure relatable to earning of exempt income shall have to be disallowed. No evidence has been furnished by the assessee company to establish that no expense has been incurred in earning of interest income from bonds. This is specially required in the light of fact that certain expenses like salary, employees welfare expenses, postage and telegram expenses, traveling and conveyance expenses and rent etc. are common expenses with regard to dividend income/interest free in....
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.... expenditure or no expenditure as the case may be in relation to exempt income, the Assessing Officer would have to indicate cogent reasons for the same. Respectfully following the Hon'ble Delhi High Court judgment, we remit this point back to the office of Assessing Officer with directions to examine and give finding and arrive at the disallowance of interest or other expenses accordingly in the light of such findings. 25. In view of the above, the appeal filed by revenue is decided accordingly. 26. Now we take up the appeal filed by assessee. 27. The first ground of appeal relates to disallowance of excess depreciation being @ 40% on vehicles which had been leased out. The Assessing Officer during assessment proceedings noted that the assessee had claimed depreciation on motor lorries/taxis and motor cars etc, at higher rate of 40% in case of motor lorries/taxies and 25% and in respect of motor cars instead of normal depreciation @ 20%. The Assessing Officer noted that during previous year also addition were made on similar grounds for claiming excess depreciation. Therefore, following earlier year, the Assessing Officer made an addition of Rs. 1,24,01,235/-....
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....as put in the case of CIT v. MGF 285 ITR 142 wherein similar issue was decided in favour of the assessee. 30. On the other hand, the Ld DR contended that onus was on the assessee to prove that motor cars/lorries were actually let out on hire and the assessee did not file required information before Assessing Officer and during appellate proceedings despite various requests. In this respect she invited our attention to page 7-8 of Ld CIT(A)'s order and read out the following:- "In response to a letter written by DCIT, Circle-11 (1), New Delhi you have filed a letter dated 11.1.2007 before the Assessing Officer stating that the company has not entered into any fresh leasing transactions. It has not been mentioned in your communication as to the assessment year in which the information is sought. You further contended that the issue before ld CIT(A) pertains to rate of depreciation of vehicles leased out of which ITAT and CIT(A) in earlier years held the issue in favour appellant being covered issue. The information called for is stated to be of no consequence. Again through letter dated 13.2.2007 you mentioned that since there is no fresh leasing transactions during the y....
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....first ground of appeal succeeds. 32. The second ground relates to addition on account of dividend income. The Assessing Officer had disallowed an amount of Rs. 21,75,000/- which was being claimed by the assessee as dividend u/s 10(33) of the Act. The assessee had claimed that this income is on account of 14 ½ % dividend on preference shares of M/s Chetan Foundry for the period 29.8.1999 to 28.8.2007 and claimed exemption u/s 10(33)of the Act. However, the Assessing Officer did not agree with the contentions of the assessee and made addition of Rs. 21,75,000/- on the basis that dividend income during that year was not exempt. 33. During appellate proceedings before Ld CIT(A) the Ld AR submitted that appellant company had claimed the said dividend to be exempt u/s 10(33) of the Act which was in operation till 31.3.2003 there being an amendment w.e.f. 1.4.2003. The ld AR had further submitted vide letter dated 13.11.2006 that section 10(33) was omitted by Finance Act, 2002 w.e.f. 1.4.2003 i.e. assessment year 2003-04 and the same was introduced in the guise of section 10(34) of the Act w.e.f. 1.4.2004. The Ld AR also submitted that in the meantime section 80M was introduc....
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.... the instant case, I hold that the Assessing Officer has rightly subjected amount of Rs. 21,75,000/- to tax." 34. Aggrieved the assessee filed appeal before this Tribunal. 35. The Ld AR argued that complete details were filed with Assessing Officer regarding receipt of dividend on preference shares which were exempt u/s 10(34) or section 80M of the Act as intercorporate dividend. 36. The Ld DR, on the other hand, argued that the assessee was not eligible for exemption u/s 10(33) or 10(34) or section 80M of the Act as was elaborated by Ld CIT(A) in his order. 37. We have heard the rival submissions of both the parties and have gone through the material available on record. We have observed that in the submissions filed before Ld CIT(A) and placed at page 79 of the paper book, the assessee talked about only section 10(33) of the Act whereas in its further submission of dated 13.11.2006 placed at page 86 of the paper book, the assessee talked about section 80-M also which was introduced w.e.f. 1.4.2003. The deduction u/s 10(33) was denied as according to Assessing Officer the dividend income pertained to the period 28.9.1999 to 28.8.2001 and was not covered by section 115-....