TaxTMI 
TaxTMI 
2015 (3) TMI 533
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.... in terms of Rule 8D. The Appellants submit that the disallowance cannot exceed the income claimed as exempt even under Rule 8D. If disallowance of expenditure exceeds income claimed as exempt. the assessee is at disadvantage & in such a situation, it is better to withdraw the exemption. It is well settled law that claiming exemption is privilege and a privilege cannot be converted into a burden. Accordingly, the Appellants wish to withdraw their claim for exemption under Section 10(34) since the Appellants have claimed exemption under Section 10(34) for a miniscule amount of Rs. 6.36,000 only when compared to the huge expenditure of Rs. 42,16,000 sought to be disallowed. In view of the above, the disallowance of Rs. 42,16,000 is incorrect. C. The Ld. Commissioner of Income Tax (Appeals) erred in making addition to the extent of Rs. 5.33,21,978/- (21,25,43.792 - 9,35,57,915 - 6.56.53.877) in the closing stock. The CIT(A) has correctly granted the deduction of Rs. 9,35.57915 on the ground that the same should be part of opening stock. The appellants have already admitted an amount of Rs. 6,56,53,877/- which is required to be added in the closing stock. Therefore, the net addition....
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....ed by the Appellants in the first place. F. The Ld. Commissioner of Income Tax (Appeals) erred in remanding the matter for consideration of the Assessing Officer with regards to brought forward depreciation worth Rs. 26.36,45,365 while re-computing the Total Income. In fact, the Assessing Officer has considered the issue while passing the assessment order. It was obligatory on the Ld. Commissioner of Income Tax (Appeals) to pass an order on this point instead of remanding this point. G. The Appellants submit that. in law, denying the benefit of carry forward of carry forward of unabsorbed depreciation is incorrect since it is well settled that law applicable on the first day of the assessment year is relevant for the assessment of that ear. On the first day of AY 2008-09, there was no law restricting set-off of unabsorbed depreciation upto eight years. In the present case, on the first day of AY 2008-09. Section 32(2) provided for carry forward of unabsorbed depreciation for unlimited period. Further, by a fiction, unabsorbed depreciation of previous years merges with the depreciation of current year and this fiction has to be given full effect. Once merger happens, the ident....
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....es out of which interest free income has been earned is only a sum of Rs. 9.60 crores. In this regard Ld. AR relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd, 366 ITR 505(Bom). In the said case, it has been held that if assessee's own funds and other non-interest bearing funds are more than investment in the tax free securities, then it would be presumed that the investment made by the assessee would be out of the interest free funds available with the assessee. For holding so their Lordships' have relied upon the earlier decision of Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd., 313 ITR 340(Bom). 3. On the other hand, it was submitted by Ld. DR that Ld. CIT(A) has rightly confirmed the disallowance and his order should be upheld. 4. We have heard both the parties and their contentions have carefully been considered. The factual position regarding own funds of the assessee has not been disputed by the Revenue. Similarly, the factual position regarding investment made by the assessee in tax free securities is also not disputed. If it is so, then the investment of the assessee in the tax fee securities....
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....l as the relevant material placed before us. On hearing both the parties and on perusal of the material on record, we are of the opinion that this issue needs to revisit the file of the AC and the closing stock valuations have to be redone in the light of the provisions of section 145A of the Act. Accordingly, we remand the issue to the file of the AO for adjudicating the issue afresh after granting a reasonable opportunity of being heard to the assessee. Accordingly, ground No.3 raised by the assessee is allowed for statistical purposes. 5.1 It was submitted by Ld. AR that similar order may be passed. 6. On the other hand, Ld. DR relied upon the order passed by Ld. CIT(A). 7. After hearing both the parties, respectfully following the aforementioned decision of the Tribunal in assessee's own case we pass similar order and this ground of the assessee is considered to be allowed for statistical purposes in the manner aforesaid. 8. Apropos Ground "D", it was submitted that it is also covered by the aforementioned decision of Tribunal in assessee's own case and this issue is dealt in para-7. It was submitted that this issue was also restored back to the file of AO with the ....
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....ance is not called for and this fact may be verified by the AO. 11. We have heard both the parties on this issue and we are of the opinion that it will serve the interest of justice if the matter is restored back to the file of AO for the purpose of verification of claim of the assessee that dividend income received from subsidiary based at Sri Lanka has already been offered to tax, if after verification the AO found that the version of the assessee is correct, then disallowance to that extent is not called for. We remit this matter to the file of AO with the above direction and this ground is also treated to be allowed for statistical purposes in the manner aforesaid. 12. Apropos Ground "F & G", the issue has been decided by Ld. CIT(A) as follows: "15. The final ground of appeal is regarding the action of the AO in not giving effect to brought forward losses of Rs. 26,36,45,365/- while recomputing total income. 15.1 I have considered this issue. I find that the AO has passed order u/s. 154 of the IT Act regarding A.Y 2006-07 and 2007-08 dated 25/04/2011 on the issue concerned. As in this year also, the issue being a subject matter of rectification requires action u/s. 154....