TaxTMI 
TaxTMI 
2017 (2) TMI 744
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....as erred in not accepting ground number one of the grounds of appeal filed before him regarding enhancement of deduction allowable u/s. 10A of the Act by Rs. 3,10,869/- being the amount disallowed under Rule 8D of the Income Tax Rules. b) That the appellant company has business income from only one source i.e. software unit located in Software Technology Park and the income from the same is exempt u/s. 10A of the Act as mentioned in para 4 of the assessment order and in para 3.1 of the order passed by the C.I.T.-(A) but the assessing officer and the C.I.T.(A)have erred in not enhancing the deduction allowable u/s. 10A of the Act by the amount of disallowance made under Rule 8D of the Income Tax Rules. c) That the ground number one of the grounds of appeal filed before the C.I.T.-(A) specifically pertains to enhancement of deduction allowable u/s. 10A of the Act and the appellant company had never disputed the disallowance made under Rule 8D of the Income Tax Rules. However, the C.I.T.-(A) in the order passed by him had not dealt with specific ground of appeal of the appellant company and has referred to various caselaws etc. for upholding the disallowance made under Rule 8D w....
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....amount is not to be added. e) That the C.I.T.-(A) has erred in upholding the addition of disallowance made u/s. 14A of Rs. 3,10,868/- for computing the book profit. f) That the C.I.T.-(A) has erred in not following the express provisions of Section 14A(1) which provides that the disallowance referred to therein should be made only in computing total income under this chapter and for not other provisions. In view of the same, the addition of disallowance u/s. 14A to the book profit is bad in law and may be cancelled. 4.a) That the C.I.T.-(A) has erred in not accepting the ground number 4 of the grounds of appeal filed before him regarding giving directions for carry forward of long term capital loss of Rs. 34,39,282/-. b) That the said carry forward loss was duly explained in para 3 of the appellant company‟s letter dated 28.11.2012 filed with the assessing officer during the course of assessment proceedings and the assessing officer had erred in not discussing at all the said carry forward loss claimed by the assessee company and copy of the said letter was filed before the C.I.T.-(A). The said carry forward may be allowed. c) That the C.I.T.-(A) has erred in n....
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....income of the assessee as per the normal provisions at Rs. 2,01,67,890/-, as well as recasted the income as per the MAT provisions, i.e. u/s 115JB at an amount of Rs. 3,37,20,864/-. 4. The assessee being aggrieved with the assessment therein carried the matter in appeal before the CIT(A), who though accepted the contention of the assessee that the addition under the head 'Income from House Property' made by the A.O under the normal provisions of the 'Act' would not effect the computation of 'Book profit' of the assessee company u/s 115JB of the 'Act', and as a result thereof allowed part relief to the extent mentioned hereinabove, but however upheld all the disallowances/additions made by the A.O under the normal provisions, as well as partly sustained the recasting of the 'Book profit' (supra) so carried out by the A.O. 5. That the assessee assailing the aforesaid additions/disallowances made by the A.O under the normal provisions of the 'Act', along with the recasting of the 'Book profit' u/s 115JB of the 'Act', to the extent the same has been upheld by the CIT(A), had therein filed the present appeal before us. The facts pertaining to the aforesaid additions/disallowances ....
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....understanding of the A.O was applicable in a case where the property was let out during the year, but however because of certain circumstances the same had remained vacant for part or whole of the previous year. Thus the A.O discarding the contention of the assessee therein computed the notional income from the aforesaid house property on the basis of a market enquiry carried out through his Inspector of Income Tax as regards the rent prevailing in the locality where the aforesaid property was situated, took the 'ALV' of the property at Rs. 12 lac, and after allowing statutory deduction of 30% of the 'ALV' u/s 24 of the 'Act', computed the income of the assessee under the head 'Income from house property' at an amount of Rs. 8,40,000/-, and added the same to the income of the assessee. That on further appeal the CIT(A) confirmed the addition of Rs. 8,40,000/- (supra) so made by the A.O (iii) Recasting by the A.O of the 'Book profit' u/s 115JB of the 'Act' : That during the course of the assessment proceedings the A.O recomputed the income of the assessee as per MAT provisions, i.e. u/s 115JB of the 'Act' at Rs. 3,37,20,864/-, as against the same reflected by the assessee at R....
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....r side and perused the relevant material on record, including the orders of the authorities below. The core issue before us is as to whether pursuant to disallowance of expenses u/s 14A, a consequential enhancement of deduction allowable u/s 10A is liable to be made, or not. We find that the assessee company which had made an investment of Rs. 6,12,64,076/-, on which it had received income of Rs. 11,36,128/- which was exempt u/s 10 of the 'Act', had however not worked out the expenditure incurred in relation to such exempt income which would be inadmissible as per the provisions of Sec. 14A of the 'Act', in its 'Return of income'. That during the course of the assessment proceedings the assessee on being confronted by the A.O as to why the disallowance u/s 14A may not be carried out, therein vide its letter dated 01.10.2012 agreed to the disallowance of Rs. 3,10,868/-, but therein submitted that consequent to carrying out of such disallowance, the quantum of deduction u/s 10A would stand enhanced, as a result whereof the net business income would remain at Rs. Nil only. The A.O pursuant to the aforesaid contention raised by the assessee, therein dealt with the same, but however not....
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....erein reduced the taxable income to Rs. Nil. It was thus submitted by the Ld. A.R that now when any part of the expenditure claimed by the assessee was disallowed u/s 14A, then as a consequence thereto the profits of the assessee eligible for deduction u/s 10A would witness a corresponding increase, leading to a consequent increase in the claim of deduction of the assessee u/s 10A of the 'Act', pursuant whereto the net effect would remain at Rs. Nil. We find substantial force in the contention of the Ld. A.R and are persuaded to be in agreement with him that pursuant to disallowance u/s 14A, the business profits eligible for deduction u/s 10A, to the said extent would stand enhanced. We find that the issue involved is covered by the judgment of the Hon'ble High Court of Bombay in the case of : Commissioner of Income-tax Vs. Gem Plus Jewellery India Ltd. (2011) 330 ITR 175 (Bom) , wherein the Hon'ble High Court held as under:- "The disallowance of the PF/ESIC payments has been made because of the statutory provisions - s. 43B in the case of the employer‟s contribution and s. 36(v) r/w s. 2(24)(x) in the case of the employees contribution which has been deemed to be th....
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....er to fortify his aforesaid contention that the actual letting out of the property during the year under consideration was not essential, therein relied on the order of the coordinate bench of the Tribunal in the case of : Premsudha Exports (P) Ltd. Vs. ACIT (2008) 110 ITD 158 (Mum), and submitted that the issue involved was squarely covered by the aforesaid order of the Tribunal, which fact was though brought to the notice of the CIT(A), but had not been considered by him. The Ld. D.R. further adverting to the judgment of the Hon'ble High Court of Andhra Pradesh in the case of : Vivek Jain Vs. ACIT (2011) 337 ITR 74 (AP), as had been relied upon by the CIT(A), therein averred that the latter had misconceived the judgment of the Hon'ble High Court, and to fortify his aforesaid contention drew our attention to the note furnished by him before us. The Ld. A.R taking us through the observations of the Hon'ble High Court in the concluding Para 14 & 15 of the said judgment, therein submitted that the Hon'ble High Court had though concluded that the benefit of computing the 'ALV' u/s 23(1)(c) could not be extended to a case where the property was not let out at all, however the same woul....
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....case of the department that after the property was vacated as on 04.12.2008, the same thereafter remained under the self occupation of the assessee. That in light of the aforesaid factual position in the case of the present assessee, we find ourselves to be in agreement with the submissions of the Ld. A.R. that the issue raised before us for adjudication is squarely covered by the order of the coordinate bench of the Tribunal in the case of : Premsudha Exports (P) Ltd. Vs. ACIT (2008) 110 ITD 158 (Mum), wherein the Tribunal had therein held : "If the property is held by the owner for letting out and efforts were made to let it out , that property is covered by this clause and this requirement has to be satisfied in each year that the property was being held to let out but remained vacant for whole or part of the year. We feel that the words „property is let‟ are used in this clause to take out those properties from the ambit of the clause in which properties are held by the owner for self-occupation i.e self occupied property (i.e SOP) because even income on account of SOP, excluding one such SOP of which annual value is to be adopted at nil, is also to be computed u....
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....' of one self occupied property so chosen by the assessee is taken at Nil, however the 'ALV' of all the remaining self occupied properties are to be determined in terms of Sec. 23(1)(a) of the 'Act'. Thus to our understanding the term 'Property is let' used in Sec. 23(1)(c) is solely with the intent to avoid misuse of determination of the 'ALV' of self occupied properties by the assesses by taking recourse to Sec. 23(1)(c), however the same cannot be stretched beyond that and the 'ALV' of a property which is let, but thereafter remains vacant for the whole year under consideration, though subject to the condition that the same is not put under self occupation of the assessee and is held for the purpose of letting out of the same, would continue to be determined u/s 23(1)(c) of the 'Act'. Thus in light of the aforesaid order of the coordinate bench of the Tribunal and the reasonings flowing there from, we are of the considered view that the assessee in the present case had rightly determined the 'ALV' of the property at Rs. Nil by taking recourse to Sec. 23(1)(c) of the 'Act'. In this regard we are further of the view that the CIT(A) had misconceived the judgment of the Hon'ble High....
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....'Book profit' had rightly been carried out by the A.O by adopting the 'Net profit' as shown in the 'Profit & Loss A/c' of the assessee company prepared in accordance with the provisions of Part II of Schedule VI of the Companies Act, 1956, therefore no infirmity as regards such computation did emerge from the orders of the lower authorities. It was further averred by the Ld. A.R. that the A.O while recasting the 'Book profit' u/s 115JB of the 'Act', had erred in making an addition of the disallowance of Rs. 3,10,868/- made by him during the course of the assessment proceedings under Sec. 14A, which thereafter had wrongly been sustained by the CIT(A). That on the other hand the Ld. D.R. relied on the orders of the lower authorities and submitted that the aforesaid addition of Rs. 3,10,868/- (supra) had rightly been made by the A.O and sustained as such by the CIT(A). 8.1 We have considered the rival submissions of either side and perused the relevant material on record, including the orders of the authorities below. The issue under consideration for adjudication before us is as to whether the computation of the 'Book profit' for MAT purposes u/s 115JB had rightly been carried out....
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....e to the dividend income of Rs. 11,36,128/- (supra), which being exempt u/s 10(34) of the 'Act', had duly been excluded by the assessee while computing the 'Book profit', and accepted as such by the A.O. We thus finding no infirmity in the making of the addition of Rs. 3,10,868/- (supra) by the A.O, which thereafter had rightly been sustained by the CIT(A), therein uphold the order of the CIT(A) to the said extent. (ii) Bearing of 'Dividend paid or proposed' on computation of 'Book profit' :- The contention of the assessee is that as the net profit of Rs. 2,95,37,027/- adopted by the A.O as the starting point for computing the 'Book profit' u/s 115JB, is the profit before provision for dividend in the 'Profit & loss a/c', therefore the A.O while computing the 'Book profit' u/s 115JB, had erred in making a separate addition of the provision for dividend of Rs. 41,69,100/-. We have given a thoughtful consideration to the issue under consideration before us, and at the threshold find substantial force in the contention of the Ld. A.R that once the 'Profit' adopted by the A.O as the starting point for computing the 'Book profit' u/s 115JB of the 'Act', is the amount before provis....
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....ame stood worked out at Rs. 3,18,94,569/-, working of which was furnished with the A.O during the course of the assessment proceedings along with supporting documents, for which the assessee had drawn our attention to Page 1-5 of its 'Paper book' (for short 'APB'), which is a letter dated 28.11.2012 alngwith enclosures, i.e statement of account of the assessee received from SBI Mutual fund, along with statement of computation of 'LTCL' on redemption of the aforesaid units. It is averred by the Ld. A.R. that despite the fact the aforesaid computation of 'LTCL' along with the supporting documents were furnished during the course of the assessment proceedings, but the A.O failed in not making a mention of the C/forward of the said 'LTCL' in the body of the assessment order. It was further submitted by the Ld. A.R. that aggrieved with the aforesaid omission on the part of the A.O, the assessee carried the matter in appeal before the CIT(A). It was further submitted that prior to filing of the appeal as on 17.01.2013, the assessee had moved a rectification application u/s 154 of the 'Act' on 04.01.2013, which fact was brought to the notice of the CIT(A) during the course of the appellat....
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....e of jurisdiction u/s 154 or for any other reason, then the assesssee would be left without any remedy as regards adjudication of the issue under consideration on merits, and that too for no fault on his part. 9.3 We have given a thoughtful consideration to the issue before us, and being of the view that as per the material placed on our record by the assessee vide Page 1-5 of the 'APB', which is stated to have also been filed with the A.O, the latter is entitled towards the claim of 'Long term Capital Loss', though subject to verification of the facts and figures furnished by the assessee. We thus in all fairness restore this matter to the file of the A.O, who after making necessary verifications shall determine the entitlement of the assessee towards C/forward of the 'LTCL' so claimed by it, as per law. That needless to say, the A.O while adjudicating the aforesaid issue shall afford sufficient opportunity of being heard to the assessee. Thus the Ground of Appeal No. 4 of the assessee is allowed for statistical purposes. 10. We now advert to the 'Ground of Appeal No. 5' raised by the assessee, therein challenging the levy of interest of Rs. 99,190/- for alleged late payment....
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....ear under consideration, as well as copy of challan for payment of 'DDT' of Rs. 7,08,538/- on 06.10.2009. That on the other hand the Ld. D.R had failed to place on record any material which could go to rebut the aforesaid factual position so averred by the Ld. A.R. 10.2 We have considered the rival submissions of either side and perused the relevant material on record, including the orders of the authorities below. We find that as per Sec.115-O(3) a statutory obligation is cast upon the principal officer of the domestic company to pay the tax on distributed profits to the credit of the Central Government within 14 days from the date of : (a) declaration of any dividend; or (b) distribution of any dividend; or (c) payment of any dividend, whichever is earliest. That failing such compliance within the stipulated time period, the assessee as per Sec. 115P is liable to be saddled with interest @ 1% for every month or part thereof, on the amount of such tax, for the period beginning on the date immediately after the last date on which tax was payable and ending with the date on which the tax is actually paid. We find that to the extent the facts had been brought to our notice by the ....
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....s mentioned above, the premises were let upto 4.12.2008 and evidence was filed by the assessee company before C.I.T.-(A) that the appellant company had tried to let out the said premises, the said decision goes in favor of the assessee and the assessing officer had erred in not accepting the said ground of appeal. 2.a) That the C.I.T.-(A) has erred in not accepting the contention of the appellant company that the disallowance of Rs. 4,03,483/- u/s. 14A is not to be added in computing the book profits u/s. 115JB. b) That the C.I.T.-(A) has erred in not following the express provisions of Section 14A(1) which provides that the disallowance referred to therein should be made only in computing total income under this chapter and for not other provisions. In view of the same, the addition of disallowance u/s. 14A to the book profit is bad in law and may be cancelled 13. The Ld. A.R. adverting to the addition of Rs. 9,24,000/- made by the A.O under the head 'Income from House Property', therein submitted that the issue involved in the present appeal is identical as that involved in the appeal of the assessee for A.Y. 2010-11, marked as ITA No. 6466/Mum/2014, except for the diffe....