TaxTMI 
TaxTMI 
2017 (10) TMI 593
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....o. 4982/Mum/2015, re spe ctive ly AND the order passed by the Commissioner of Income-tax (Appeals)-5, Mumbai for A.Y 2010-11, dated. 25.03.2014, which in itself arises from the assessment order passed by the Assessing Officer under Sec. 143(3) of the Income-tax Act, 1961 (for short 'Act'), dated 10.12.2012 in the case of Tata Steel Limited (successor in interest to the erstwhile Kalimati Investment Company Limited) which had been assailed before us as I. T. A. No. 4361/Mum/2014. That as certain common issues are involved in the aforesaid appeals, therefore, they are taken up and being disposed of by way of a consolidate order. We first take up the appeal for A.Y. 2010-11 in I. T. A.No. 4015/Mum/201 4. The revenue assailing the order passed by the Commissioner of Income tax (Appeals)-5, Mumbai, had raised before us the following grounds of appeal:- " On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below:- 1. i). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred following the earlier years order directed the AO to compute ....
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....me under the head 'Income from house property'. Rs. 2,80,000/- The A.O thereafter proceeded with and assessed the income of the assessee at Rs. 123,13,79,142/- under the normal provisions. The A.O further while framing the assessment had increased the 'book profit' under Sec. 115JB by the amount of disallowance of Rs. 1,38,37,713/- and worked out the adjusted 'book profit' at an amount of Rs. 268,14,28,982/-. 3. Aggrieved, the assessee assailed the assessment order in appeal before the CIT(A). The CIT(A) after deliberating on the contentions of the assessee in the backdrop of the facts of the case, therein partly allowed the appeal. 4. The revenue being aggrieved with the order of the CIT(A), to the extent the latter had set aside the disallowances and allowed relief to the assessee, had therein carried the matter in appeal before us. 5. The ld. Departmental representative (for short 'D.R') at the very outset submitted that the CIT(A) had erred in following the earlier years orders and directing the A.O to compute the income from house property on the basis of 'Municipal Valuation', failing to appreciate that the revenue being aggrieved with the orders passed by his p....
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....Officer to determine the Annual Letting Value by disregarding the municipal valuation. He could not have assumed any other value at which property would be let from year to year. In such circumstances and his assumption being contrary to law, the Tribunal was justified in allowing the assesses appeal." The aforesaid view was thereafter again followed by the Hon'ble High Court while disposing of the appeal of the revenue for A.Y. 2006-07 & A.Y. 2007-08, viz. ITA No. 1238 of 2012 and ITA No. 1239 of 2012, dated. 09.10.2014. We further find that the coordinate bench of the Tribunal, viz. ITAT 'A' bench, Mumbai while disposing of the appeal of the revenue in the assesses own case, viz. DCIT-2(3), Mumbai Vs. M/s Tata Steel (successor to M/s Kalimati Investment Co. Ltd.), marked as ITA No. 6854/Mum/2012, had observed as under: "3. The issue raised in this ground no. 1 of appeal is that the annual value of the property was determined by the A.O on the basis of rent received and notional interest on the interest free security received from the tenant. The ld. A.O determined the ALV of the said property at Rs. 1,50,000/- per month. The municipal rateable value of the said flat was Rs. 12....
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....on directed the A.O to keep in mind that though the market rateable value of the property was Rs. 12,60,000/- in the earlier year, however, the same pursuant to efflux of time might had changed. We have given a thoughtful consideration to the issue before us and are of the considered view that as the CIT(A) had merely followed the order of the Tribunal passed in the assesses own case for A.Y. 2006-07 and A.Y. 2007-08, which as on date had been affirmed by the Hon'ble High Court, therefore, no infirmity arises from his order in respect of the issue under consideration. We thus, in light of the aforesaid facts uphold the order of the CIT(A) in respect of the issue under consideration. The Ground of appeal No. 1 raised by the revenue before us is dismissed. 8. The ld. D.R adverted to the disallowance made by the A.O under Sec. 14A r.w Rule 8D, which on appeal had however been set aside by the CIT(A). It was submitted by the ld. D.R that the assessee who had earned dividend (exempt income) of Rs. 21,55,64,945/-, had suo motto offered a disallowance of Rs. 21,69,240/- under Sec. 14A in its return of income. The A.O observing that the disallowance was not properly computed by the assess....
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....ble to be limited to Rs. 21,69,420/-, as against the amount of Rs. 1,44,65,347/- computed by the A.O as per Rule 8D(2)(iii). However, the CIT(A) being of the view that the assessee had failed to substantiate that the demat charges (Rs. 15,41,788/-) were included in the General Office Expense (Rs. 15,93,333/-), therefore, declined to accept the said contention of the assessee and made a separate disallowance in respect of the demat charges (Rs. 15,41,788/-) in the hands of the assessee. Thus, the CIT(A) on the basis of his aforesaid observations worked out the disallowance under Sec. 14A at Rs. 37,11,208/- (i.e Rs. 15,41.788/- + Rs. 21,69,420/-) as against the disallowance of Rs. 1,60,07,133/- made by the A.O. The revenue being aggrieved with the reducing of the further disallowance of Rs. 1,38,37,713/- made by the A.O u/s 14A to an amount of Rs. 15,41,788/- by the CIT(A), with a consequential relief of Rs. 1,22,95,925/- [i.e Rs. 1,38,37,713 (-) Rs. 15,41,788/-] to the assessee, had thus carried the matter in appeal before us. 9. The ld. D.R submitted that the CIT(A) had erred in restricting the disallowance made by the A.O on the basis of Rule 8D, overlooking the fact that the met....
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.... the case of Gillette Group India (P) Ltd. Vs. ACIT (2012) 22 Taxmann.co.61 (Delhi-Trib) that disallowance u/s 14A cannot exceed the expenditure actually claimed by the assessee.‟ 6. The revenue relied upon the order of the A.O whereas the assessee vehemently argued that the case is covered by the decision of the Delhi bench of the Tribunal in the case of "Gillette Group India (P) Ltd. Vs. ACIT "(2012) 22 Taxmann.co.61 (Del- Trib). We have considered the rival arguments and found that the CIT(A) has rightly restricted the disallowance to Rs. 4,77,399/- as the disallowance can not exceed the total expenses claimed in the Profit & loss Account by the assessee and thus we find no infirmity in the order of CIT(A) and therefore the ground no. 2 is dismissed." 11. We have given a thoughtful consideration the issue before us, and find substantial force in the contention of the ld. A.R that the scope of disallowance of expenses incurred for earning of exempt incomes was required to be read and applied in context of Sec. 14A, which requires that the expenditure actually incurred in earning of such exempt income, and nothing more than such expenditure could be disallowed. We find ou....
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....A. We find that as the assessee in its appeal, viz. ITA No. 4361/Mum/2014 for A.Y. 2010-11 had assailed the direction of the CIT(A) that the 'book profit' be enhanced by an amount of Rs. 37,11,208/-(supra), therefore, the adjudication of the present issue, emerging from Ground of appeal No. 2(iii) of the revenues appeal will be taken up while adjudicating the same in the course of disposing of the appeal of the assessee. 13. The appeal of the revenue is dismissed in terms of our aforesaid observations. ITA No. 4361/Mum/2014 A.Y. 2010-11 14. We shall now take up the appeal of the assessee for A.Y. 2010-11. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal : " The Learned Commissioner of Income-tax (Appeals) ["Ld. CIT(A)"] erred in adopting the Municipal Rateable Value of Rs. 12,26,300 as the Annual Value of the Appellants property at New Delhi and thereby , in increasing by an amount of Rs. 1,96,000/- , the amount of Rs. 6,86,000/- returned under the head "Income from house property" by the Appellant. 2. The Ld. CIT(A) erred in finding that "........nothing has been placed on record to show that the general office expenses of ....
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....of the property for the year under consideration. We have given a thoughtful consideration to the issue before us, and in the backdrop of the aforesaid concession of the ld. A.R and after perusing the aforesaid orders of the Hon'ble High Court and the Tribunal in the assesses own case, are of the considered view that the issue stands squarely covered against the assessee. We thus find no infirmity in the order of the CIT(A) to the extent the same had been assailed by the assessee before us, and thus uphold the same to the said extent. The Ground of appeal No. 1 is dismissed. 16. The assessee had further assailed before us the order of the CIT(A), on the ground that he had failed to appreciate that as the 'demat charges' of Rs. 15,41,788/- were already included in the amount of 'General office expenses' of Rs. 15,93,333/- (which had already been offered by the assessee for disallowance under Sec. 14A in its return of income), therefore, no separate addition of the same was called for while computing of the disallowance under Sec. 14A by the CIT(A). The ld. A.R submitted that the CIT(A) while recasting the amount liable for disallowance under Sec.14A, thus, wrongly made a separate a....
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....d view that now when the 'demat charges' of Rs. 15,41,788/- were already included in the 'General office expenses' of Rs. 15,93,333/-(supra), which all the more was a fact borne from the records, therefore, the CIT(A) had erred in making a separate disallowance of the 'demat charges' of Rs. 15,41,788/- in the hands of the assessee while computing the disallowance under Sec. 14A. We thus, are of the considered view that the separate disallowance of Rs. 15,41,788/- made by the CIT(A) while computing the disallowance under Sec. 14A cannot be sustained and is liable to be deleted. We thus direct the A.O to delete the disallowance of Rs. 15,41,788/-. The Ground of appeal No. 2 raised by the assessee before us is allowed. 18. The assessee had further assailed the order of the CIT(A), on the ground that the latter had erred in directing the A.O to enhance the 'book profit' under Sec. 115JB to the extent actual expenditure of Rs. 37,11,208/-(supra) was incurred by the assessee in earning of the dividend income. We find that the A.O while framing the assessment had made a further disallowance of Rs. 1,38,37,713/- under Sec. 14A. The A.O while passing the assessment order had enhanced the '....
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...., in the backdrop of the aforesaid order of the 'Special bench' of the tribunal, direct the A.O to modify the computing of the 'book profit' under Sec. 115JB and delete the adjustment of Rs. 37,11,208/- as was directed by the CIT(A) to be made in respect of the disallowance made under Sec. 14A in the hands of the assessee. We thus set aside the order of the CIT(A), to the extent he had directed the A.O to increase the 'book profit' by the amount of the disallowance of Rs. 37,11,208/- made by him under Sec. 14A. The Ground of appeal No. 3 raised by the assessee is allowed. 20. The appeal of the assessee is partly allowed in terms of our aforesaid observations. ITA NO. 4982/Mum/2015 A.Y. 2011-12 21. We shall now take up the appeal of the revenue for A.Y. 2011-12. The revenue assailing the order of the CIT(A) had raised before us the following grounds of appeal: "On the facts and in circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. The order of the CIT(A) is opposed to the law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the....
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....s suo motto offered by the assessee in its return of income, to an amount of Rs. 1,56,91,134/-, leading to a consequential adding up of the disallowance by an amount of Rs. 1,52,31,938/-. The assessee assailed the raising of the disallowance under Sec. 14A by the A.O before the CIT(A). It was submitted by the assessee that the disallowance under Sec. 14A was liable to be restricted to the amount of actual expenditure of Rs. 4,59,196/- as was debited in the Profit & loss account of the assessee. The CIT(A) following the order passed in the case of the assessee for the immediately preceding year, viz. A.Y. 2009-10, therein accepted the contention of the assessee and directed the A.O to restrict the disallowance under Sc. 14A r.w Rule 8D(2)(iii) upto the amount of Rs. 4,59,196/-(supra). 25. The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. A.R submitted that the 'Grounds of appeal No. 1 to 3' raised by the assessee in the present appeal, viz. ITA No. 4982/Mum/2015 were identical to those as were there before the Tribunal in the 'Grounds of appeal No. 2(i) & 2(ii)' in the appeal of the revenue for the immediate preceding year,....