2014 (6) TMI 1006

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....e u/s 14A of the Act in accordance with the decision of Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd vs. DCIT (2010) 234 CTR 1. 1.2. The appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the appellant having suo-moto disallowed a sum of Rs. 2,11,525/- u/s 14A of the Act, no further direct or indirect expenditure having been incurred by it to earn the exempt income and the CIT (A) ought to have held as such. 1.3. The appellant submits that the AO be directed to delete the additional disallowance so made by him and recomputed its total income accordingly. 2.1 The CIT (A) has erred in upholding the action of the AO of addition a sumof Rs. 86,71,763/- to the app....

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....r attention to the above grounds and mentioned that ground no.1 relates to the disallowance u/s 14A r.w.r 8D and ground no.2 relates to the addition made u/s 145A of the Act. Briefly stated relevant facts in this regard are that the assessee filed the return of income declaring the total income of Rs. 51,54,75,956/-. Assessment was completed u/s 143(3) of the Act determining the total income of Rs. 53,58,76,910/-. In the assessment, AO made certain additions i.e, (i) u/s 14A an amount of Rs. 1,00,10,231/- was disallowed and (ii) an addition was made amounting to Rs. 86,71,763/- u/s 145A of the Act qua the service tax receipts / payments. Aggrieved with the decision of the AO, assessee field an appeal before the first appellate authority. 4....

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.... Ld DR dutifully relied on the order of the AO. 7. We have heard both the parties and perused the orders of the Revenue Authorities in general and para 2.3 of the CIT (A)'s order in particular. On perusal of the said para, we find the same is relevant here and the same reads as under: "2.3. I have considered the assessment order and the submissions of the appellant. As I find, the issues arising out of application of section 14A and Rule 8D now stand elucidated by the Hon'ble Bombay High Court in its decision in the case of Godrej & Boyce Mfg. Co. Ltd vs. DCIT. As may be noted, in this decision, the Hon'ble Bombay High Court has specifically held that sub-section 2 & 3 of 14A are constitutionally valid and further that the Rule 8D is not....

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....of the Revenue Authorities. 11. On hearing both the parties and on perusal of the said order of the Tribunal dated 10.7.2013, we find the para 9 to 11 are relevant to the issue under consideration and the same read as under: "9. We have heard the arguments and have perused the orders of the revenue authorities. The fact is that the assessee is a service provider company and patently, provisions of section 145A cannot be made applicable, because the provision was specifically introduced for the purposes of manufacture segment of business because section 145A(a)(ii) submitted before the CIT (A) mentions ".............by the assessee being goods to be place of location & conditions as on the date of valuation are required to be included". ....