TaxTMI 
TaxTMI 
2014 (7) TMI 588
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....afts, axle beams, couplings and general engineering products, etc. It is also engaged in the business of generation of power by installing Wind Generation Towers, etc. For the assessment year under consideration, the total income declared by the assessee included a sum of Rs. 26,05,53,164/- which represented dividend income that was claimed as exempt u/s 10(35) of the Act. In the return of income filed, the assessee company determined a sum of Rs. 30,23,852/- as having been incurred in relation to such exempt income and accordingly the same was added back to the total income on account of section 14A of the Act. Notably, section 14A of the Act prescribes that for the purposes of computing the total income, no deduction shall be allowed in respect of any expenditure incurred by the assessee in relation to an income which does not form part of the total income under the Act. In the course of assessment proceedings, the Assessing Officer, however, computed the amount disallowable on account of section 14A of the Act at Rs. 1,16,40,000/- and accordingly, a further amount of Rs. 86,16,148/- (i.e. Rs. 1,16,40,000/- minus Rs. 30,23,852/-) was added to the returned income. The aforesaid in....
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.... exempt income stands accepted. The learned counsel vehemently pointed out that no error in the working of disallowance made by the assessee has been pointed out by the Assessing Officer in terms of the prescription contained in section 14A(2) of the Act and therefore the mechanical invoking of rule 8D of the Rules to compute the disallowance is erroneous in law and also on facts. 5. On the other hand, the learned Departmental Representative appearing for the Revenue submitted that the Assessing Officer has considered the disallowance computed by the assessee and was not satisfied with the working and therefore he has computed the disallowance in terms of rule 8D of the Rules. 6. We have carefully considered th4e rival submissions. In the case before us, it is not in dispute that the assessee has incurred certain indirect expenditure in relation to an income which does not form part of the total income under the Act. Therefore, a disallowance is quite justified on the strength of section 14A of the Act. The pertinent dispute between the assessee and the Revenue is the manner of determination of such disallowance. The Assessing Officer has invoked rule 8D of the Rules in order to ....
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.... case of Godrej & Boyce Manufacturing Co. Ltd. (supra) as well as the decision of the Pune Bench of the Tribunal in the case of Kalyani Steels Ltd. (supra), we are also conscious that similar view has been expressed by the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd. & Ors. vs. CIT, (2012) 247 CTR 162 (Del) also. 7. In the above background, now we may examine the facts of the present case. The relevant discussion is contained in para 8.4 of the assessment order wherein the Assessing Officer has brought out his reasoning as to why he disagreed with the expenditure of Rs. 30,23,852/- specified by the assessee of having been incurred in relation to the exempt income. We have carefully perused the said discussion and find that the only reasoning advanced is that the expenditure specified by the assessee is "very meagre as compared to the tax free dividend received" by the assessee. In our considered opinion, the Assessing Officer was obligated to record a satisfaction with regard to the incorrectness of assessee's claim, having regard to the accounts of the assessee, a requirement which is quite clear from a perusal of section 14A(2) of the Act. On the contra....
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.... Bombay High Court in the case of CIT vs. Raychem RPG Ltd. (2011) 64 DTR 57 (Bom), which according to him has been applied by the Tribunal in the assessee's own case for preceding assessment year 2007-08 vide ITA No.340/PN/2012 order dated 30.09.2013. In terms of the said judgement where the software acquired by the assessee did not form part of the profit-making apparatus such expenditure was liable to be allowed as revenue expenditure. Applying the aforesaid parity of reasoning, learned counsel for the assessee conceded during the course of hearing that in so far as the expenditures of Rs. 1,44,17,040/- on account of Transvalor SA and Rs. 22,88,000/- on account of UG NX Software are concerned, the same are spent on acquiring softwares which are relatable to the manufacturing process carried out by the assessee and therefore the same are liable to be treated as capital expenditures. So far as the balance expenditure of Rs. 25,53,167/- is concerned it is quite clear that the same relates to facilitation of assessee's trading activity or enabling it to conduct its business more profitability and do not constitute a part of its profitmaking apparatus. Therefore, following the....
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....) has upheld the position that section 40(a)(ia) can be invoked only in cases of non-deduction of tax at source but not in cases where some short deduction tax at source is involved. In this connection, the following discussion in the order of the Tribunal dated 30.09.2013 (supra) has been referred:- "17. We have carefully considered the rival submissions. Ostensibly, the point made out by the assessee, is to the effect that Section 40(a)(ia) of the Act can be invoked only in cases where there is a nondeduction of tax at source and not in cases where there is short-deduction of tax at source. In the present case, the charge made by the Assessing Officer is that assessee has not deducted tax at appropriate rate under Section 194C of the Act. Without going into the merits of the rival claims, for the present, it is sufficient to observe that the assessee has been held to be an assessee in default for the reason that it deducted tax at source on payments made by way of Die Repairs and Motor Rewinding Expenses which was lower than the rate prescribed in law, as per the view of the Assessing Officer. The controversy is as to whether in such a situation, provisions of....