TaxTMI 
TaxTMI 
2018 (5) TMI 752
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....of the case and in law the learned CIT(A) erred in sustaining depreciation disallowance of Rs. 17,76,230/-. The learned CIT(A) ignored the documentary evidences and the upholding of the disallowance is thus imaginary and subjective in nature and thus needs to be deleted. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) under a mistaken impression that the claim of depreciation was made against the House Property income. The upholding of the disallowance is on a mistaken fact needs to be deleted. 3. On the facts and in the circumstances of the case and in law the learned CIT(A) was duty bound to apply the provisions of section 38 to the depreciation claimed. The upholding of the disallowance of the depreciation claim is thus illegal and contrary to the provisions of law. 4. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in upholding the disallowance u/s 14A of Rs. 48492/-. The sustaining of the disallowance is contrary to the facts and law thus illegal in nature. 5. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in upholding the disallow....
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....de by the AO is not warranted as the said depreciation relates to new building which is in occupation of the assessee. The learned CIT(A) rejected the appeal of the assessee on the grounds that assessee has not filed any evidences to support its claim of disallowance of 27.455% of depreciation on the existing building which the assessee is claiming to be an area which was stated to be let-out to the tune of 701 Sq mtrs out of total constructed area of 2528.05 Sq mtrs of the existing building and the appeal of the assessee stood dismissed by learned CIT(A) vide appellate orders dated 28-07-2016 passed by learned CIT(A). 5. Aggrieved by the appellate order dated 28-07-2016 passed by learned CIT(A), the assessee has come in an appeal before the tribunal. The Ld. Counsel for the assessee stated before the tribunal supported by a certificate dated 07.05.2018 filed before the tribunal (placed in file), wherein it is stated that document at Sr. No. 1 to 5 were filed before the AO and also learned CIT(A), which comprises of the ITR acknowledgement along with computation of income, form no. 29B, audited financial statement, tax audit report and leave & licence agreement which are placed ....
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....ved that the assessee is engaged in the business of manufacturing of Auto Ancillary parts. The assessee has two factories one located at Bhandup and second at Daman. We have observed from the audited accounts filed in paper book with the tribunal that assessee has reflected two set of building at Bhandup factory (paper book page 18) wherein there are two sets of building one classified as existing building and second is classified as new building and their values are specified separately in the audited financial statements. The assessee also filed leave & licence agreement dated 07.10.2010 wherein the assessee is stated to have given on lease 701 Sq meters of constructed area on leave & licence basis, out of the following area of which the assessee is stated to be in possession and occupation in the said leave and license agreement, as under:- "1. Gold Seal Engg. Products Pvt. Ltd. Is in possession and occupation of title land bearing CST No. 387, admeasuring about 3745 Sq.Mts. and Survey No. 75, Hissa No. 3/8 of Bhandup Division and bearing city Survey No. 389, admeasuring 1254 Sq, Mtrs. Out of Survey No. 75 Hissa No.1, situated at Agra Road, Bhandup, Mumbai 400 078(Annex....
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....nal and we also could not correlate the identification of property let out with identification of property called by the assessee as an existing structure out of which this area of 701 square meter was claimed to be carved out and let-out. These are findings of fact which require proper co-relation and merely filing of documents are not sufficient. Thus, we are principally in agreement with the assessee's proposition that the depreciation in proportion of let out constructed area to the total constructed area of the building called as an existing building is to be disallowed but we are remitting the matter back to the file of the AO for limited purposes of verification and correlation by identification of the property consisting of an area of 701 Sq mtrs of area being let-out by the assessee with the land identification of the building and total constructed area of the said building. This ground is allowed for statistical purposes as indicated above. 8. The second issue in this appeal is with respect to the disallowance u/s. 14A r.w.r. 8D of the Income-tax Rules, 1962. The assessee received dividend income of Rs. 2,800/- which was claimed as an exempt income u/s. 10(34). The ass....
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....t investments in securities which are capable of yielding exempt income were made out of own funds. It was submitted that owned funds being share capital and reserves as at 31-03-2012 were Rs. 13.06 crores while investments were only to the tune of Rs. 1.97 crores. The learned CIT(A) dismissed the appeal of the assessee on this ground also as no evidence were filed before the learned CIT(A) and only bald statements were made by the assessee before learned CIT(A), vide appellate order dated 28-07-2016. 10. Aggrieved by the appellate order dated 28-07-2016 passed by learned CIT(A), the assessee has filed an appeal with the tribunal. The assessee is aggrieved by the disallowance made by the AO which was later sustained by learned CIT(A) w.r.t. disallowance of expenditure incurred in relation to earning of an exempt income. The assessee has also submitted that disallowance u/s 14A cannot exceed an amount of exempt income which was to the tune of Rs. 2,800/-. The assessee has filed additional ground of appeal and prayed for its admission on the grounds that this is legal ground which does not require investigation of new facts as all the facts are emerging from records. The said addi....
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.... The Ld. Counsel for the assessee relied upon following decisions to contend that disallowance u/s. 14A cannot exceed an exempt income : a. Maxopp Investment Limited v. CIT(2018) 402 ITR 640(SC) b. Cheminvest Limited v. CIT. (2015) 378 ITR 33 (Delhi HC ) c. Joint Investments Private Ltd. v. CIT (2015) 373 ITR 694(Delhi HC ) d. M/s. Anjaneya Cold Storage Limited v. ACIT ITA no. 6079/Del/2014 order dated 25.10.2017 e. Daga Global Chemicals P. Ltd. v. ACIT (2017) 82 taxmann.com 254 (Mumbai Trib.) The Ld. DR on the other hand fairly submitted that proposition that disallowance u/s 14A cannot exceed an exempt income is a covered issue by several judgments of the Courts. 11. we have considered rival contentions and perused material on record. We have observed that the assessee received dividend income of Rs. 2,800/- which was claimed as an exempt income u/s 10(34) during the relevant previous year. The assessee suo moto disallowed Rs. 3,94,886/- u/s 14A by invoking Rule 8D of the 1962 Rules. The assessee however claimed consistently that no expenditure was incurred by the assessee in relation to earning of an exempt income. The working o....
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.... not identify expenses directly incurred by the assessee for earning an exempt income. The disallowance of interest expenses by invoking Rule 8D(2)(ii) r.w.s 14A has been made on the proposition that mixed pool of funds were used by the assessee but no co-relation of the interest bearing loans raised with the investments made in the securities capable of yielding exempt income was brought on record. We have also observed from the Balance sheet which is filed by the assessee and which is placed in paper book at page no. 14 that the assessee's own funds(interest-free) of share capital and reserves were to the tune Rs. 13.06 crores while the investments in securities which are capable of yielding exempt income are to the tune of 1.97 crores, thus own funds available with the assessee are higher than the investments in securities and presumption will apply that the assessee invested its own interest free funds for making investment in securities and hence no disallowance can be made towards interest expenses u/r 8D(2)(ii) of the 1962 Rules unless the presumption is rebutted by Revenue which has not been done in this case. Reliance is placed on the decision of Hon'ble Bombay High Court ....