TaxTMI 
TaxTMI 
2015 (7) TMI 1202
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....carrying out the business of developing power and other infrastructure projects directly or indirectly through special purpose vehicle. The AO has completed the assessment at an income of Rs. 56,91,500/- against the returned loss of Rs. 12,16,883/- after making various additions/disallowances. Being aggrieved with the above additions, this appeal has been filed in which it has been contended that (i) The AO has not followed the principles of natural justice and the order passed by him u/s 143(3) is arbitrary. (ii) Disallowance of expenses at Rs. 30,377,148/- claimed by the appellant as business expenditure is not in order. (iii) Initiation of proceedings u/s 271(1)(c ) is against law and facts. 2.1. Durin....
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....oring the fact that provisions of s.14A are attracted on the exempt income if the existence of business is accepted. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of hearing of the appeal." 4. We have heard Ms.Y.Kakkar, Ld.D.R. on behalf of the Revenue and Dr.Rakesh Gupta, Ld. Advocate on behalf of the assessee. 5. The Ld.D.R. relied on page 2 last para of the assessment order and submitted that 91% of the total funds available were invested by the company in equity shares of the Associated Companies/SVPs. She submitted that the First Appellate Authority has not examined the papers and has unjustly reversed the order of the Assessing Officer. On S.14A she sub....
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....r the A.Y. 2010-11 which is at assessee's paper book page 72, and pointed out that the A.O. has assessed the income in question under the head 'income from business'. He pleaded that Rule of Consistency should be followed as was done by the Ld.CIT, D.R. For this purpose he relied on the judgement of Hon'ble Supreme Court in the case of Excel Industries Ltd. reported in 358 ITR 295(SC). On the issue of disallowance u/s 14A, he submitted that the A.O. had intended to make a disallowance u/s 14A but the assessee had made detailed submissions as to why the disallowance should not be made u/s 14A. He drew the attention of the Bench to the letter dt. 18th October,2011 para 11 and submitted that, the A.O. on getting convinced with these submission....
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....cepts the assessee's stand that business has commenced. The purpose for which the assessee company was set up, is to develop power and other infrastructure projects, either directly or indirectly, through special purpose vehicles (SVPs) by participating in the equity share holding and management of the project companies. The First Appellate Authority has on the ground of consistency allowed the claim of the assessee. We find no infirmity in this order of the Ld.CIT(A). Hence we uphold the same and dismiss this ground of Revenue. 9. This brings us to the ground of disallowance u/s 14A. The A.O. has not made disallowance u/s 14A. The case of the Revenue is that the Ld.CIT(A) ignored the provisions of S.14A of the Act in the appellate proce....
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....the appellant in the PSVs can be disallowed u/s 14A r.w. Rule 8D because it cannot be termed as expense/interest incurred for earning exempted income. Under the circumstances, Ld.CIT(A) is correct in holding that disallowance of a further sum of Rs. 40,556/- calculated @ 2% of the dividend earned is sufficient. Under the circumstances, Ld.CIT(A) is correct in holding that disallowance of a further sum of Rs. 40,556/- calculated @ 2% of the dividend earned is sufficient. Under the circumstances we do not find any infirmity in the order of the Ld.CIT(A), hence we uphold the same. On going through the above observations we are of the view that this is merely a question of fact and does not involve any question of law much less a subst....