TaxTMI 
TaxTMI 
2016 (1) TMI 125
X X X X Extracts X X X X
X X X X Extracts X X X X
....Assessing Officer and the issues in the appeal of assessee are against confirmation of various additions/disallowance by ld. CIT(A). 3. Following grounds are raised in this appeal by assessee:- 1) The Hon'ble CIT(A)-I, Baroda has erred in not accepting your appellant's contention, holding that the order passed by the ld. Dy.CIT is bad in law & contrary to legal pronouncement. It is therefore submitted that the order passed by AO be quashed and additions/disallowances made by AO and confirmed by CIT(A) Baroda be directed to be deleted. 2) The Hon'ble CIT(A)-I, Baroda has erred in confirming the disallowance of Rs. 14,01,000/- on account of amortization of lease rent treating the same as of capital nature. Your appellant submits that the disallowance made by AO and confirmed by Hon'ble CIT(A) is unwarranted. Same be directed to be deleted now. 3) The Hon'ble CIT(A)-I, Baroda has erred in confirming the addition of Rs. 2,26,90,000/- being made by invoking the provisions of section 14A r.w.s. 8D of the Act. Your appellant submits that the said provisions are not applicable and ad-hoc disallowance of Rs. 59.45 lacs @ 0.5% of average investment and interest of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of lease rent. 6. Aggrieved, the assessee went in appeal before the CIT(A) who confirmed the disallowance by observing as under :- "3.2 I have considered the matter, which is covered by my decision dated 3.11.2011 in appellant's case in CAB-I/25/10-11 for AY 2008-09. Facts of the case and appellant's submissions being identical, disallowance of Rs. 14,01,000/- is confirmed." 7. Being aggrieved, the assessee is in further appeal before the Tribunal. The ld. AR of the assessee submitted that the Assessing Officer has wrongly made the disallowance and the CIT(A) has also not properly appreciated the facts of the case while confirming the disallowance. The issue is covered in favour of assessee by the judgment of Hon'ble Gujarat High Court in assessee's own case in Tax Appeal Nos. 778,779 & 780 of 2013 vide order dated 21/10/2013 (copy of judgment placed on record). 8. The ld. DR supported the orders of lower authorities and opposed the submissions of ld. AR. 9. We have considered the rival submissions and perused the material on record. Similar issue in assessee's own case has been decided by Hon'ble Gujarat High Court in Tax Appeal Nos. 778,779 & 7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3,79,09,618/- claimed exempt u/s 28(va(ii). In response to AO's proposal to make disallowance u/s 14A, appellant made submissions identical to submissions made in this regard during assessment for Asst. Year 2008-09. Assessing Officer noted that appellant had incurred interest on funds borrowed and had not maintained separate accounts for sources of funds utilized for investment activities. Assessing Officer did not accept that funds deployed for earning tax free income were entirely out of interest free funds. Assessing Officer held that it was a case of falling u/s 14A(2). The assessment year involved being subsequent to Asst. Year 2008- 09, Assessing Officer invoked Rule 8D to compute disallowance u/s 14A at Rs. 2,26,90,000/-. 12. Aggrieved, assessee carried the matter in appeal before the CIT(A) who after considering the assessment order and the submissions made by assessee confirmed the disallowance. Aggrieved, assessee is now in further appeal before the Tribunal. 13. The ld. AR of the assessee submitted that similar issue came up before the Tribunal in Asstt. Year 2004-05 in ITA No.4556/Ahd/2007 (copy placed on record) and the Tribunal has decided the issue by reducing....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income which does not form part of total income; (ii) in a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely A x B C Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year ; B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year ; C = the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year ; (iii) an amount equal to one-half per cent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. 3) For the purposes of this rule, the "total assets" shall mean, total assets as appearing in the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders fund comprising of share capital and reserves and surplus totaling at Rs. 1244.92 crores which shows that assessee was having sufficient source of interestfree funds which might have been invested in the tax-free income bearing investments. Further out of the total exempt income shown by the assessee Rs. 37,09,618/- is exempted under the proviso to section 28(va)(ii) in relation to sum received as compensation from the Multilateral fund of the Montreal Protocol on substories that deplete the Ozone Layer under the U.N.E.P. and this income is related to the business activities carried on by the assessee and not from any tax-free investments. As the assessee seems to be having sufficient interest free funds out of which investments in funds giving tax free income would have been made and also there is no specific observations by the Assessing Officer that during the previous year any such funds bearing interest have been diverted/applied to investments, income of which is not forming part of total income and, therefore, there seems to be no possibility of application of Rule 8D in relation to interest expenditure. 19. As regards apportionment of administrative and establishment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-06 to 2007-08 has decided similar issue by observing as under :- "5.4.1 We have considered the rival submissions and we find that this issue was decided by ld. CIT(A) as per the Tribunal decision in the case of Alembic Ltd. (supra) and also in the case of Jindal Steels & Power Ltd. (supra) and worked out deduction allowable to the assessee u/s 80IA in respect of captive consumption of power, the rates fixed by Electricity Board i.e. GEB in the present case, has to be applied and not the price fixed by the legislative mandate. He has also noted that in the present case, the assessee is prevented by legislative mandate from selling power to any person other than GEB and the rates fixed by GEB was Rs. 1.86 per unit only but the GEB is asking the assessee to pay at Rs. 4.55 per unit and hence, he has directed the AO to allow deduction u/s 80IA as claimed, being the market rate of Rs. 4.55 per unit of power. No contrary decision was brought to our notice by the ld. DR and hence, we do not find any reason to interfere in the order of ld. CIT(A) on this issue which is in line with various Tribunal decisions. This issue is decided in favour of the assessee and these grounds of the reven....