TaxTMI 
TaxTMI 
2016 (2) TMI 1084
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal no. 1166/Del/2012 for assessment year 2005-06 as the lead case. ITA No. 1166/Del/2012 for AY 2005-06 3. The grounds of appeal raised in the instant appeal are as under: 1) The learned Commissioner of Income Tax(Appeals) has erred in fact and in law by not deleting the addition made by learned Assessing Officer an amount of Rs. 15,75,000/- being administrative charges on Andrews Ganj Project. 2) The learned Commissioner of Income Tax(A) has erred in fact and in law by not deleting the addition made by learned Assessing Officer an amount of Rs. 65,00,000/- being prior period expenditure. 3) The learned Commissioner of Income Tax(Appeals) has erred in fact and in law by not deleting the addition made by Learned Assessing Officer an amount of Rs. 30,20,512/- being depreciation on estimated increase in cost of properties. 4) The learned Commissioner of Income Tax(Appeals) has erred in fact and in law by not deleting the addition made by learned Assessing Officer an amount of Rs. 3,07,77,527/- being financial charges written off. 5) The learned Commissioner of Income Tax(Appeals) has erred in fact and in law by not deleting the add....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ministry of Urban Development, Government of India. The ld. Assessing Officer noticed from Schedule J of the balance-sheet that in the year under consideration, work of Rs. 10.5 crores was executed by the assessee in respect of the 'Andrew Ganj Project' and as per the terms of the allotment of project, the assessee was to be reimbursed the cost of the project, interest on the funds utilized on the project and 1.5% of the project cost as administrative charges but no income from administrative charges was shown by the assessee, in the year under consideration . The ld. Assessing Officer further noticed that in assessment year 2001-02, the assessee reversed the administrative charges stating that after completion of the commercial portion of the complex, no further administrative charges were payable to the assessee by the Ministry of Urban Development. According to the ld. Assessing Officer, the administrative charges were intended to cover overhead expenses in relation to the entire project done and not restricted to the commercial projects only. Following the stand taken by the ld. Assessing Officer in assessment year 2002-03 and 2003-04, he added administrative charges at the rat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he factual position and inform the Court whether the assessee had at any time received administrative expenses @ 1.5% in relation to the residential quarters from the Government of India. We had also recorded the submission of the assessee that the assessee never received 1.5% as administrative expenses for construction of the residential quarters. 9. During the hearing today, learned counsel for the respondent-Revenue has filed before us a letter dated 25th September, 2014 of the Assessing Officer, accepting and admitting that on verification it has been ascertained that overhead charges were leviable by the assessee only in respect of Andrews Ganj community centre and not on the development of residential flats at the Andrews Ganj Project. The said letter has been kept on record. 10. Normally, we would have remanded the case to the Tribunal for fresh decision in the light of the minutes of meeting held on 7th September, 1995, but in view of the facts now elucidated and accepted by the Revenue, we are not inclined to pass an order or remit. It would be a formality. It is an accepted position that the appellant-assesee had never received 1.5% administrative expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kh), interest on drawings (Rs.42.0 lakhs), Reset charges (Rs. 1.0 lakh) and other expenses (Rs. 5.0 lakhs). Further, the assessee submitted that it had also accounted for prior period income of Rs. 712 lakhs, and thus, the assessee has offered net prior period income of Rs. 647 lakhs. However, the ld CIT(A) following the finding of the ld. CIT(A) in assessment year 2004-05, sustained the disallowance. 6.1 Before us, the ld. AR submitted that on the identical issue in the case of assessee for assessment year 2002-03, the Tribunal has restored the matter to the file of Assessing Officer for verification whether those expenses crystallized in the year under consideration. 6.2 The ld. CIT (DR), on the other hand, relying on the order of the ld CIT(A) submitted that the assessee failed to establish whether those expenses actually accrued or crystallized in the year under consideration. 6.3 We have heard the rival submissions and perused the material on record. This issue is squarely covered by the decision of the Tribunal in the case of the assessee itself in ITA No. 686/Del/2006 for assessment year 2002-03, wherein the Tribunal has held as under: "10. We have carefull....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee submitted that the said claim was made in accordance with the advice of the C & AG Auditors and the practice was started from FY 2001-02 when a provision of Rs. 510.12 lacs was made for 32 properties valuing Rs. 5101.21 lacs for which lease deeds were yet to be executed. Further, the assessee submitted before the ld. CIT(A) that the company was making payment of such liability in subsequent years. The ld. CIT(A) following the decision of the ld. CIT(A) in assessment year 2004-05, sustained the disallowance. 7.1 Before us, the ld. AR submitted that the liability of the stamp duty being an ascertained liability, it was duly allowable in the year under consideration. He further relied on the judgment of the decision of Hon'ble Supreme Court in the case of Rotork Controls India (P.) Ltd. Vs. Commissioner of Income Tax (2009) 314 ITR 62 (SC) and submitted that all the three elements mentioned in the said judgement, which constitute recognition of a provisional liability, were present in the case of the assessee. 7.2 On the other hand, ld. CIT (DR) relying on the findings of the ld. CIT(A) submitted that the charges on which the depreciation has been claimed are in the natur....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... In the facts of the case, the immovable properties owned by the assessee constitute a block of asset and the assessee is entitled to claim depreciation on written down of the block of asset at the rate prescribed in Income-tax Rules. Thus to compute the depreciation three things should be identified. The first is the Block of Asset, second, the written down value of Block of Asset and third the rate of depreciation. In the present case, there is no dispute as to the rate of depreciation. Further, the block of assets has been defined in section 2(11) of the Act as group of assets falling within a class of assets in respect of which same percentage of depreciation is prescribed, and thus there is no dispute as what is block of assets in case of Immovable properties, because any property purchased during the year will get added to the block and property sold will be eliminated from the block. Now, the only issue of dispute left in the case of the assessee is what should be the written down value of the block of asset of immovable properties and whether the stamp duty and registration charges estimated at the rate of ten percent. is part of written down value of the block of asset. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the completion of transfer of property, whether it is for stamp duty or registration charges, it will be an addition to the asset when actually incurred. The stamp duty and registration charges are levied according to the rates prevalent at time of registration, and when that event will happen is not certain in the case of the assessee and thus claiming depreciation on the basis of prior estimate of cost to the asset is not justified. 7.7 Further, ld. CIT(DR) stated that identical disallowances were made by the ld. AO in AY 2002-03 and 2003-04 and same were confirmed by the ld CIT(A) but the issue was not challenged by the assessee before the Tribunal in those years, and thus the rule of consistency requires that the assessee should not have challenged the issue in current year, once it has accepted the position in earlier years. 7.8 In view of above discussion, we uphold the disallowance of claim of the depreciation on estimated stamp duty or registration. Accordingly, the ground of the appeal is dismissed. 8. In ground no. 4, the assessee has challenged the disallowance of financial charges written off of Rs. 3,07,77,527/-, claimed in the computation of income. Accord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....15,67,86,815/- is allowed to the assessee. The excess deduction claimed by the assessee amounting to Rs. 4,57,19,602/- is hereby disallowed and added to the income of the assessee." In view of the order of the CIT(A) for assessment year 2004-05 and findings of the Assessing Officer, I sustain the disallowance of Rs. 3,07,77,527/-. Appeal on this ground is dismissed. 8.1 The ld. AR submitted that the issue in dispute was restored back to the ld Assessing Officer by the Tribunal for assessment years 2002-03 and 2003-04. The learned CIT(DR), on the other hand, relied on the order of the lower authorities. 8.2 We have heard the rival submissions and perused the material available on record. Consistent with the view taken in paragraph 16 the order of the Tribunal for assessment year 2002-03 in ITA No. 686/Del/2006 and paragraph 10 of the order for assessment year 2003-04 in ITA No. 687/Del/2006 in the assessee's own case, we restore the matter to the file of Assessing Officer for fresh adjudication in accordance with law. In the result, this ground of appeal is allowed for statistical purposes. 9. Ground no. 5 is regarding the issue of disallowance of Rs. 3,27,500/- under Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot part of total income i.e. tax free income. To attract the provisions to section 14A, the only condition that needs to be fulfilled is that the income should be exempt. So long as the income thereon is tax-free, the expenditure cannot be allowed as a deduction in the computation of income of the assessee. Therefore, any expenditure for earning exempt income is not allowable under Section 14A. In view of the above, the assessee was asked to give details of expenses incurred by it for earning the dividend income. The assessee has submitted that no expenditure has been incurred by it for earning the same. The submission of the assessee is not acceptable. There are always some expenses related to earning an income. Even the decision of keeping an investment for long period is taken after due deliberation and opinion of the management at the higher level. Further, the assessee is raising borrowed funds for its business and maintaining the investment portfolio on which the dividend is earned has its own cost. Therefore, the expenses on earning exempt income would include interest and administrative expense. Since, there is no segregation of expenses related to investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Rules and not as per the amended guidelines of the National Housing Banks, which were made effective from 31.03.2005. Further in the absence of any detailed working given by the assessee, he allowed 50% of the revenue de-recognition of Rs. 54,13,48,468/- and balance amount of Rs. 27,06,74,234/- was disallowed and added back to the income of the assessee. The ld. Commissioner of Income Tax (Appeals) agreed with the findings of the ld. Assessing Officer, therefore, he sustained the addition. 10.1 The ld. AR submitted that the interest on non-performing assets was recognized by the assessee following the recent guidelines of the National Housing Banks made effective from 31.03.2005. Though, the Rule 6EB of the Rules has been made on the basis of guidelines of the National Housing Banks only, but the Rule 6EB was not amended, despite the renewed guidelines issued by the National Housing Banks with effect from 31.03.2005. He further submitted that in assessment year in consideration i.e.2005-06, the Assessing Officer has disallowed 50% of deduction claimed by the assessee against such interest de-recognized, which was confirmed by the ld. Commissioner of Income Tax(Appeals). He fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n record. In this regard, it is important to reproduce the relevant part of the section 43D of the Act as under: "43D. Notwithstanding anything to the contrary contained in any other provision of this Act,- (a) in the case of a public financial institution or a scheduled bank or a State financial corporation or a State industrial investment corporation, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the Reserve Bank of India in relation to such debts; (b) in the case of a public company, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the National Housing Bank in relation to such debts, shall be chargeable to tax in the previous year in which it is credited by the public financial institution or the scheduled bank or the State financial corporation or the State industrial investment corporation or the public company to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le system of accounting. In doing so, the rule making authority has been directed to have regard to the guidelines issued by the NHB in relation to such debts. Section 43D of the Act, does not mandate the rule making authority to follow the guidelines issued by the NBH in relation to bad and doubtful debts. In exercise of such power the rule making authority has enacted Rule 6EB of the Rules. The rule so enacted originally was in conformity with the guidelines issued by NHB. The guidelines were revised by NHB in the year 2004 but the rule making authority did not think it fit to revise the rules to be in conformity with the revised guidelines. In our view it cannot be said that the guidelines of the NHB as and when they are revised have to be treated by implication incorporated in Rule 6EB of the Rules. NHB is not the rule making authority for the purposes of Sec.43D of the Act. The discretion is left to the rule making authority to follow or not follow the guidelines of NHB as and when they are revised. The purpose of classification of debts as bad and doubtful by the NHB and the purpose of not recognising interest income for the purposes of the Act, are different. The considerati....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the State Bank of India maintained accounts on mercantile system making entries on accrual basis. It adopted the calendar year as its previous year and the calendar years 1964, 1965 and 1966 for which assessment years 1965-66, 1966-67 and 1967-68 were the relevant A.Y. In the course of its banking business, the assessee charged interest on advances considered doubtful of recovery, otherwise called sticky advances, by debiting the concerned parties but instead of carrying it to its profit and loss account credited the same to a separate account styled "Interest Suspense Account" as the principal amounts of these sticky advances themselves had become, not bad or irrecoverable but extremely doubtful of recovery. However, in its returns, the assessee disclosed such interest separately and claimed that the same was not taxable in its hands as income for the concerned years. The Hon'ble supreme Court on the taxability of interest income on accrual basis held as follows: "1) It is the income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t year 1981-82. The Central Board of Direct Taxes had issued Circular No. 41 (V-6) D of 1952, dated October 6, 1952. The circular, inter alia, stated that "interest accruing to a money-lender on loans entered in the suspense account because of the extreme unlikelihood of their being recovered need not be included in the assessee's taxable income if the Income-tax Officer is satisfied that there is really little probability of the loans being repaid. It was considered desirable to extend this principle to banks which, instead of transferring the doubtful debts to a suspense account, credit the interest on such debts to that account provided the Income-tax Officer is satisfied that recovery is practically improbable." This circular was in force till June 20, 1978, when the Central Board of Direct Taxes issued a circular dated June 20, 1978, withdrawing with immediate effect the earlier circular of October 6, 1952. The reason for the withdrawal of the circular of 1952 was the decision of the Kerala High Court in State Bank of Travancore v. CIT [1977] 110 ITR 336 wherein a view was expressed that in such cases income would accrue under mercantile system of accounting. The Central B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sees, as to the guidelines, principles or procedures to be followed in the work relating to assessment. Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act which are binding on the authorities in the administration of the Act. Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on the basis that by the second circular of June 20, 1978, the Central Board had directed that interest in the suspense account on "sticky" advances should be includible in the taxable income of the assessee and all pending cases should be disposed of keeping these instructions in view. The subsequent circular of October 9, 1984, by which, from the assessment year 1979-80 the banking companies were given the benefit of the circular of October 9, 1984, does not appear to have been pointed out to the court. What was submitted before the court was, that since such interest had been allowed to be exempted for more than half a century, the practice had transformed itself into law and this position should not have been deviated from. Negativing this contention, the court said that the question of how far the concept of real income enters into the question of taxability in the facts and circumstances of the case, and how far and to what extent the concept of real income should intermingle with the accrual of income, will have to be judged "in the light of the provisions of the Act, the principles of accountancy recognised and followed, and feasibility". The court said that the earlier ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(C.) Javeri v. K.K. Sen [1965] 56 ITR 198 (SC)." 20. We agree with the submissions of the learned D.R. that the decision of the Hon'ble Supreme Court in the case of UCO Bank (supra) does not obliterate the ratio of the very same Hon'ble Court in the case of State of Bank of Travancore (supra) but only modifies the same in so far as a later circular which is benevolent had not been brought to the Hon'ble Courts notice. In that view of the matter, we agree with the submission of the learned D.R. that real income theory would be relevant but would have no application so as to defeat the provisions of the Act. In our view provisions of Sec.43D lay down the limits upto which interest income of bad and doubtful debts in the case of public companies need not be recognised as income, in a case where Assessee follows mercantile system of accounting. By implication it also lays down that any claim that interest income as not having accrued over and above the limits laid down by the Rules, should not be accepted. The claim of the Assessee in our view is therefore contrary to the provisions of Sec.43D and the claim of the Assessee based on real income theory and there being no real ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofits arrived at on commercial principles subject to the provisions of the Act. Real profits can be arrived at only by making the permissible deductions. Since the provision for bad debt was not a permissible deduction under the Act, the same was held to be not allowable. The "real income" referred to by the Hon'ble Supreme Court in its judgment in para-35 to 39 is in the context of profits arrived at on commercial principles subject to the provisions of the Act. The provisions of Sec.43D lay down the limits upto which interest income of bad and doubtful debts in the case of public companies need not be recognised as income, in a case where Assessee follows mercantile system of accounting. By implication it also lays down that any claim that interest income as not having accrued over and above the limits laid down by the Rules, should not be accepted. The claim of the Assessee in our view is therefore contrary to the provisions of Sec.43D and cannot therefore the claim of the Assessee based on real income theory and there being no real accrual of income cannot be accepted. Thus the decision of the Hon'ble Delhi High Court and the Madras High Court will not be applicable to the fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ld. Assessing Officer further held that had the proper appropriation policy been followed, the average annual income by way of interest, which would have been offered for taxation before the write off, would have been Rs. 4,30,19,888/- and accordingly he made the addition of this amount. The learned Commissioner of Income Tax (Appeals) following the reasoning of the Assessing Officer, did not interfere in the addition made by the Assessing Officer. 11.1 Before us, the learned Authorized Representative submitted that the loan in question were made to the Government Institution and were restructured from time to time. Further, he submitted that it was a commercial decision of the assessee whether the receipt from the customer has to be adjusted first against the principal or the interest and the Revenue cannot sit on the judgment. He further submitted that this was otherwise revenue neutral exercise that provisions for bad debt in respect of the principal amount is also allowable to the assessee under Section 36(1)(viia) of the Act. He further relied on the judgment in the case of S.A. Builders Ltd. Vs. Commissioner of Income Tax, (2007) AIR 482; Commissioner of Income Tax Vs. EK....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exercise. In view of above discussion, we uphold that in the case of the assessee no addition can be sustained towards appropriation of recovery from defaulting accounts. Accordingly, the ground of the assessee is allowed. 12 The ground no. 8 is in respect of addition of Rs. 1.25 crores on account of change in the method of accounting in booking of expenditure related to forward contract. The Assessing Officer observed that the assessee was spreading the expenses related to forward contact of foreign exchange over the period of the transaction but in the year under consideration the assessee charged entire expenses of the forward contract transaction . It was explained by the assessee that this change on accounting policy was done in compliance of the guidance note of the Institute of Chartered Accountants of India (ICAI). However, in subsequent year, the assessee again reverted to the old accounting policy and it was explained that it was done due a clarification issued by the ICAI in an article in the Economics Times of India. The ld Assessing officer was of the view that expenses was to be allowed as per regular accounting followed by the assessee and accrual and matching con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct. The income has to be accrued as per the provisions of the Income-tax Act and there was no change of provisions in this regard for the year under consideration, and thus the action of the assessee in reducing the income by Rs. 1.25 crores was not justified. In our opinion, the ld CIT(A) has rightly sustained the disallowance and no further interference is required on this issue, Hence we uphold the findings of the ld CIT(A). The ground of the appeal is dismissed accordingly. 13. Ground no. 9 is in respect of not considering the mistakes or omissions in the revised return of income filed by the assessee. The assessee filed the revised return of income on account of mistakes in item mentioned in para 14 of the assessment order. The Assessing Officer was of the view that those items were not in the nature of mistakes and omissions and therefore, the conditions of Section 139(5) were not applicable and therefore he did not give any cognizance to the revised return of income. The Commissioner of Income Tax (Appeals) also confirmed the action of the Assessing Officer. 13.1 Learned Authorized Representative submitted that the original return was in time and therefore, the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (5) If any person, having furnished a return under sub-s. (1), or in pursuance of a notice issued under sub-s. (1) of s. 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." 10. A bare reading of the aforesaid section makes it clear that the assessee may file a revised return if it discovers any omission or any wrong statement therein. Insofar as the present case is concerned, there is no omission or wrong statement which required the assessee to file a revised return. The reason for filing the revised return was only that the company had passed a resolution to change its method of valuation of the closing stock because it did not correctly show the profit or loss for each accou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irmative, in favour of the Revenue and against the assessee. 13.4 Further, in the case of Deepnarayan Nagu & CO. Vs CIT reported in 157 ITR 037,the Hon'ble High Court of Madhya Pradesh has held that a Revised return filed merely to rewrite the accounts on the basis of a method other than one which was actually followed during the relevant accounting year not valid. We have noticed that in the case of the assessee the facts whether the change in income or expenditure was on account of change in method of accounting or otherwise is not clear from the facts brought on record by the lower authorities, and thus, we feel it appropriate to restore the matter back to the file of the ld Assessing Officer and decide the issue in accordance to the law. The ground of the appeal is accordingly allowed for statistical purpose. 14. In the result, the appeal of the assessee is allowed for statistical purposes. ITA No. 4303/Del/2009, AY 2004-05 14.1 Ground no. 1 is in respect of disallowance of interest payable to the Government by treating the same as notional expenses. Learned Authorized Representative submitted that the issue was covered in the assessee's own case by the order of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a portion of the purchase price and undertook to pay the balance amount in installment. In the relevant accounting year, the assessee received cash of Rs. 29,392/- as sale price, but in accordance with mercantile system of accounting, a sum of Rs. 43,692/- was credited to the books as sale price. At the same time, a debit was made of Rs. 24,809/- towards expenditure for development to be undertaken although no expenditure was incurred in that year. The Hon'ble Court pointed out that the liability to incur expenditure on development of land has been incurred by the assessee as it formed part and parcel of the sale agreement. Therefore, the difficulty in estimating the expenditure would not convert this liability into a contingent liability. If the revenue was not satisfied with the estimate of liability entered by the assessee in the books, it could have estimated the liability on a reasonable basis. However, the whole of the amount could not have been disallowed simply because the liability was to be discharged at a future date and its exact amount was not known. We find that the correspondence between the assessee and the Government of India does lead to fastening of interest lia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12 are identical to grounds no. 1 to 4, 6 and 7 raised by the assessee in ITA No.1166/Del/2012 for assessment year 2005-06 except change of amount, and thus following our findings in forgoing paragraphs of ITA No.1166/Del/2012, we decide the grounds No. 1 to 4, 6 and 7 of the appeal of the assessee accordingly. 18. In grounds No. 5 of appeal, the assessee has raised disallowance of expenses under section 14A of the Act. The ld. AR in his submission raised that the expenses disallowed were not reasonable and thus requested to restore the matter to the ld. AO relying on the judgement of the Hon'ble Jurisdictional High Court in the case of Maxopp Investment Ltd. (supra). The ld. CIT(DR), on the other hand, relying on the order of lower authorities submitted that the disallowance made by the AO was most reasonable. 18.1 We have heard the rival submissions and perused the material on record. The issue in dispute in the year under consideration is identical to AY 2005-06 in ITA No. 1166/Del/2012 except that in the year under consideration the assessee has not raised the issue of non recording of dissatisfaction by the ld AO under section 14A(2) of the Act. Thus the issue in dispute....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hon'ble Jurisdictional High Court in the case of Joint Investments Pvt. Ltd Vs CIT in ITA No. 117/2015 wherein the Hon'ble Court has held that the portion of expenditure disallowed cannot swallow the entire tax exempt income. Alternatively, the learned AR pleaded that the assessee invested its own funds in investments earning exempted income and thus question of interest disallowance corresponding to borrowed capital did not arise in the case of the assessee. Further, the relying on the judgement of Hon'ble Bombay High Court in the case Godrej Agrovet in ITA No. 934 of 2011 and other decisions of the Tribunal, the ld AR submitted that the disallowance if at all is to be made under section 14A of the Act, then same may be restricted to 2percent. of the exempted income. The Ld CIT DR on the other hand relied on the orders of the lower authorities. We have heard the rival submissions and perused the material on record. We are of considered opinion that the application of Rule 8D of the IT Rules from AY 2008-09 has been upheld by the Hon'ble jurisdictional High Court in the case of Maxopp Investment Ltd. (supra) subject to recording of dissatisfaction by the AO regarding correctness of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....agraphs of ITA No.1166/Del/2012, we decide the grounds No. 1 to 3 of the appeal of the assessee accordingly. Similarly, grounds no. 5 & 6 raised by the assessee in ITA No. 3366/Del/2013 are identical to grounds no. 6 & 7 raised by the assessee in ITA No.1166/Del/2012 except change of amount, and thus following our findings in forgoing paragraphs of ITA No.1166/Del/2012, we decide the grounds No. 5 & 6 of the appeal of the assessee accordingly. 26. The ground no. 4 raised is in respect of disallowance under Section 14A of the Act. The facts and circumstances in the year under consideration are identical to the facts and circumstances in the assessment year 2008-09 and thus following the findings in ITA No. 3365/Del/2013 for assessment year 2008-09, we decide the issue accordingly. 27. The ground no. 7 raised by the assessee is in respect of the mismatch in tax deducted at source (TDS) claimed by the assessee and the credit for the same allowed by the Assessing Officer. The Commissioner of Income Tax(Appeals) has not given any finding in his order on this issue. The learned Authorized Representative submitted for allowing the credit claimed by the assessee, whereas the learned ....