2015 (10) TMI 182

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.... 2.1 The ld. CIT (A) erred in confirming the disallowance u/s. 14A of the Act at Rs. 4,27,180/-. 2.2 While doing so, the CIT (A) erred in: (i) Holding that the disallowance had to be on the basis of the principles as spelt out in the rule 8D of the Income - tax Rules; (ii) Computing the disallowance by applying half percent to the total investments; and (iii) Summarily disregarding and ignoring completely the detailed factual submissions made by the Appellant. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such disallowance was called for. 2.4 Without prejudice to the above, assuming - but not admitting - that some disallowance u/s. 14A was called for, it is submitted that in the facts and the circumstances of the case, and in law, the computation of disallowance made by the ld. CIT (A) is arbitrary, excessive and not in accordance with the law. 3.1 The ld. CIT (A) erred in confirming the action of the A.O. in computing the interest income under the head "Income from Other Sources" instead of under the head "Profits and Gains of Business or Profession". 3.2 It is submitted that in the facts and the circumstances of the ....

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.... disallowance u/s. 14A was called for, it is submitted that in the facts and the circumstances of the case, and in law, the computation of disallowance made by the ld. CIT (A) is arbitrary, excessive and not in accordance with the law. 3. CHANGE IN HEAD OF INCOME FOR INTEREST INCOME 3.1 The ld. CIT (A) erred in confirming the action of the assessing officer ("the AO.") whereby the AO. treated the interest income received by the Appellant, amounting to Rs. 1,52,24,114/-, as assessable under the head "Income from Other Sources" as against under the head "Business Income", declared by the Appellant in its return of income. 3.2 While doing so, the CIT (A) failed to appreciate that the Appellant had earned interest income in the course of its regular business activities. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. 3.4 Without prejudice to the above, the ld. CIT (A) erred in summarily dismissing the alternative claim of the Appellant that assuming - but not admitting - that the interest income was liable to be taxed under the head "Income from Other Sources", the necessary and appropriate deductions, as ava....

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....ying half percent to the total investments; and (iii) Summarily disregarding and ignoring completely the detailed factual submissions made by the Appellant. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such disallowance was called for. 3.4 Without prejudice to the above, assuming - but not admitting - that some disallowance u/s. 14A was called for, it is submitted that in the facts and the circumstances of the case, and in law, the computation of disallowance made by the ld. CIT (A) is arbitrary, excessive and not in accordance with the law." 5. Common grounds have been taken in all the years under consideration, therefore, all the appeals were heard together and are now decided by this consolidated order. 6. First grievance of the assessee in all the years pertains to disallowance of expenses under Rule 8D of the IT Act. 6.1 In the assessment year 2005-06, the assessee received dividend income of Rs. 10.94 lakhs. The AO disallowed Rs. 9.43 lakhs under Rule 8D by relying on the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd., 328 ITR 81. 6.2 By the impugned order, the CIT(A) confirmed the dis....

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....ged from assessee on account of expenses. Assessee received a net amount of Rs. 41,75,980/- and the account of assessee was squared up. In the original return of income this amount was offered to tax. In the course of assessment proceedings, a fresh computation of income was filed which was based upon Form No.64 issued by the Venture Capital Company wherein this amount under consideration was shown as unrealized capital gain. Accordingly, before the Assessing Officer the claim was put up that the amount under consideration was not chargeable to tax. It was contended that Section 155 U of the Income. tax Act was applicable and the calculation is contained in Form 64 depicted the correct income chargeable to tax and accordingly, the amount under consideration should' not be charged to tax Assessing Officer has not concurred with the contention. According to him, at the time of squaring up the account of assessee, the Venture Capital Company has transferred the surplus/profit in kind, that is, 10594 equity shares of Biocon Ltd, for the value of Rs. 53,25,061/-, which is in lieu of payment due to assessee. According to Assessing Officer this is nothing but profit earned on behalf o....