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2018 (5) TMI 1639
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....eal: "Ground No.1: On the facts and in the circumstances of the case Ld. CIT(A) has erred in annulling the reassessment order without appreciating the fact there was actually an under assessment of income of Rs. 3,83,41,573/-. Ground No.2: That the appellant craves for leave to add, delete or modify any of the grounds of the appeal before or at the time of hearing." 4. At the outset itself, the ld. Counsel for the assessee submitted that during the course of reassessment proceedings, the Assessing Officer has passed the order u/s 147/251/143(3) of the Act without recording reasons. In fact, the Assessing officer has reviewed his own order, which is not permitted under the Income Tax Act. While completing the reassessment under section 147/251/143(3) of the Act, the assessing officer noted the reason recorded as follows: "The assessment was completed U/s 143 (3) of the Income Tax Act, 1961 on 27.12.2011. In respect of the assessment order dated 27.12.2011, I had reasons to believe that the disallowance made on account of Section 14A of the Income Tax Act, 1961 in respect of proportionate interest and the average value of inves....
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....Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, the ld Counsel for the assessee has defended the order passed by the ld CIT(A). 7. Having heard the rival submissions and perused the materials available on record, we note that Assessing Officerhas completed assessment U/s 143 (3) of the Income Tax Act, 1961 on 27.12.2011, where he disallowed the amount under section 14A read with Rule 8D to the tune of Rs. 1,23,30,872/-, hence, the issue relating to disallowance under section 14A read with Rule 8D, was on record of the assessing officer. We note that in the reassessment proceedings U/s 147/148, the AO has reviewed his shortcomings, which he committed during the original assessment U/s143(3) of the Act, which is tantamount to review of the original order passed by him U/s 143(3) of the Act, which is not allowed under the Income Tax Act. Order passed by the assessing officer U/s 143(3) can be reviewed by the superior authorities, that is, by CIT(Appeals) or by CIT under section 263 of the Act. We note that assessing officer has not brought on record any new tangible material to show that income has escape....
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....e nexus between material and belief; and - Reasons recorded must show application of mind by the AO. 10.We note that in CIT vs. Kelvinator of India Ltd. 256 ITR 1 the Full Bench of the Hon`ble Delhi High Court was considering a case of reopening u/s 147 within 4 years from the end of the assessment year. The Court held that when a regular order of assessment is passed in terms of section 143 (3) of the Act, a presumption can be raised that such an order has been passed on application of mind. It was held that if it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong. It was held that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. On appeal by the department to the Supreme Court,(reported in 320 ITR 561(SC)) it was held that though the power to reopen under the amended section 147 of the Act, is much ....
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....e assessee was following mercantile method of accounting. Ground No.3: On the facts and in the circumstances of the case whether Ld. CIT(A) has erred in law as well as on facts in holding that amount of depreciation of Rs. 16,40,567/- on plant and machinery purchased out of amount withdrawn from credit available with NABARD was not warranted ignoring the clear provisions of section 33AB(4)(c) of the Act. Ground No.4: On the facts and in the circumstances of the case whether Ld. CIT(A) has erred in deleting the addition of Rs. 1,87,73,760/- made by the Assessing Officer at the time of computation of book profit ignoring the clear provision of clause (f) of Explanation I to section 115JB of the Act. Ground No.5: That the appellant craves for leave to add, delete or modify any of the grounds of the appeal before or at the time of hearing." 14. Ground No.1 raised by the Revenue relates to disallowance u/s 14A r.w.r 8D(2)(ii) of the I.T. Rules. At the outset itself, the ld. counsel for the assessee has pointed out that this issue is squarely covered by the assessee's own case by the judgment of Hon'ble ITAT, Kolkata in ITA No.2....
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.....D. MetsteelPvt. Ltd. -vs.- ACIT reported in 142 TTJ 641 (Mumbai Tribunal) Held that the investments are made by the assessee's own funds and have been made in the earlier years, no disallowance u/s 14A is required to be made. The Head Note reads as under:- "Business expenditure-Disallowance under section 14A-Apportionment of expenditure- When investments are made from own funds, merely because the assessee had to subsequently borrow the funds for business use, it cannot be said that the borrowed funds have been used for the purposes of investments". CIT -vs.- HDFC Bank Ltd reported in 366 ITR 505 (Bom.) Held, dismissing the appeal, (i) that the finding of fact given by the Tribunal was that the assessee's own funds and other noninterest bearing funds were more than the investment in the tax-free securities. This factual position was not one that was disputed. Undisputedly, the assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in the tax free securities. In view of this factual position, it would have to be presumed that the investment made by the assessee would be out of the interest free funds a....
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.... hereby upheld and the ground raised by the Revenue is dismissed. 16. Ground No.2 raised by the Revenue relates to addition of notional interest of Rs. 37,50,000/- on sticky loan. At the outset itself, the ld. counsel for the assessee has pointed out that this issue is squarely covered by the assessee's own case by the judgment of Hon'ble ITAT, Kolkata in ITA No.2009-2010/Kol/2014, dated 02-06-2017 wherein it was held as follows: "11. At the outset, we find that similar issue is decided by this co-ordinate Bench of this Tribunal in assessee's own case in ITA No.684/Kol/2012 for A.Y. 2008-09 dated 08.02.2013 wherein the necessary observation in respect of the issue involved as under:- "5. The second issue in this appeal of revenue is as regards to the order of CIT(A) deleting the disallowance on account of notional interest on sticky loans. For this, revenue has raised following ground no.2: '2. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in deleting the disallowance of Rs. 36,25,000/- on account of notional interest on sticky loan not accounted for though the AO has added it back on the basis of note on account o....
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.... withdrawals from NABARD, which stands disallowed at Rs. 48,30,249/-. The same stands allowed by the ld. CIT(A), following a similar deletion by the tribunal in the assessee's own case for A.Y. 2001-02 (in ITA No.1338/Kol/2009 dated 23-09-2009). 11. Before us, the ld. DR would submit that no depreciation on the relevant assets could be allowed; their cost being nil in terms of u/s. 43(1) of the Act, which defines 'actual cost' to mean the cost of an asset to the assessee, as reduced by that portion thereof as met directly or indirectly by any person/s or authority. Actual cost of the relevant plant and machinery would thus only be nil, warranting no claim toward depreciation. The ld. AR, on the other hand, placed reliance on the decision by the Tribunal in the assessee's own case for A.Y. 2004-05 (in ITA No.1573/Kol/2008 date 24-10-2008 / copy on record). 12. We have heard the parties and perused the material on record. The tribunal's decision in the assessee's case for A.Y. 2004-05 is on record. The tribunal decided the same by following its earlier decision in the case of CIT v. Goodrick Group Ltd. (ITA No. 255/Kol/2004 dated 10-06-2005).....
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....ppeal of revenue is against the order of CIT(A) deleting the addition on account of expenses u/s. 14A of the Act to ascertain book profit u/s. 115JB of the Act disregarding explanation 1(f) to section 115JB of the Act. For this, revenue has raised following ground no. 4: "4. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in deleting the addition of Rs. 45,28,096/- on account of the expenses u/s. 14A to ascertain book profit u/s. 115JB disregarding Explanation 1(f) to section 115JB." 10. We have heard Ld. CIT(DR) and gone through the written submission filed by assessee. Ld. CIT(DR) stated that this issue is covered by Tribunal's decision in assessee's own case for AY 2006-07 in ITA No.2248/K/2010 but he placed reliance on assessment order. We find that the assessee in its written submission has relied on sub-section (1) of section 14A of the Act, which reads as under: "From the language of sub-section (1) of section 14A, it is crystal clear that the disallowance u/s. 14A is required to be made while computing the total income under chapter IV of the Income Tax Act, 1961 whereas the computation of book profit is under chap....