TaxTMI 
TaxTMI 
2016 (9) TMI 1457
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....en accepted by the department and appeal u/s.260A has been preferred which is pending before the Hon'ble High Court. 2.3 The learned CIT(A) ought to have appreciated the Board's Circular No.5/2014 dated 11-02-2014 wherein it is stated that disallowance u/s. 14A can be made even in cases where the taxpayer has not earned exempt income in any particular. 3.1 The learned CIT(A) erred in directing the Assessing Officer to allow additional depreciation on plant and machinery to the tune of Rs. 62,63,733/- 3.2 The learned CIT(A) failed to note that the additional depreciation is available for those engaged in the manufacture of production .and the instant assessee company is engaged in the business of civil construction. 3.3 The learned CIT(A) failed to appreciate the Apex Court's decision in the case of N.C. Budharaja & Company reported in 204 ITR 412 (SC) the facts of which is squarely applicable to the facts of the assessee company wherein it was held that production of ready mix concrete does not amount to 'manufacture' as defined ujs.32(1)(iia). 3.4 The learned CIT(A) ought to have appreciated the decision of the Apex ....
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.... filed an appeal before Commissioner of Income Tax (Appeals). 3.1 In the appellate proceedings, the ld. Commissioner of Income Tax (Appeals) considered the grounds, submissions and relied on findings of the ld. Assessing Officer and observed at para 6 & 7of the order as under:- ''6. I have carefully considered the facts in issue, the view taken by the AO, the arguments advanced by the appellant and material on record. The plea made by appellant that disallowance u/s.14A r.w. Rule 80 is not triqqered in view of the investments being made in sister concerns as also, that no dividend was. earned during the year. This proposition finds support in the decisions of the Jurisdictional IT T in the case of EIH Hotels Ltd v. DCIT, ITA No.1503 & 1624/Mds/2012 dated 17. 7.2013 chennai Tribunal), and jurisdictional Tribunal in ACIT vs. M Baskaran in ITA No.1717/Mds/2013 order dt. 31st of July, 2014. In EII-I Hotels (supra) it was he Id by the ITAT that where investments were made by the assessee in the subsidiary company the same are not to earn capital gains or dividend income. They were made to promote the subsidiary company. The assessee not being in the business of investment, s....
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....er/group company shall not be considered for the purpose of calculation of disallowance under Rule 8D(2) and relied on judicial decisions. The assessee company made investments on Business expediency and no income has been generated by sister/group company. The provisions of Sec. 14A r.w.r. 8D are mandatorily applicable from assessment year 2008-09 but while calculating the disallowance u/sec. Rule 8D(2), the ld. Assessing Officer shall consider that the investments in group/ sister company are made in ordinary course of business. Similar issue was considered by the Tribunal in the case of DCIT vs. M/s. Regen Powertech (P) Ltd. in ITA No.766 & 786/Mds /2016, assessment year 2011-12, dated 17.08.2016 at page 24, para 9.4 as under:- 9.4 We heard the rival submissions, perused the material on record and judicial decisions cited. The crux of the issue being the assessee has made investments in subsidiary/sister companies and the contention that own funds are generated out of business and no borrowed funds were utilized for the purpose of investments. Further, investments in subsidiary/sister company shall not be considered for the purpose of calculation of disallowance under R....
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....the case of the assessee that the assessee is not into the business of investment and the investments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore, the investments made by the assessee in its subsidiary are not to be reckoned for disallowance U/s. 14A r.w.r. 8D. The Assessing Officer is directed to re-compute the average value of investment under the provisions of Rule 8D after deleting investments made by the assessee in subsidiary company - Decided in favour of assessee." For the above said reasons, we hereby hold that in the case of the assessee the provisions of Section 14A read with Rule 8D will not be applicable in regard to investments made for acquiring the shares of the assessee's sister concerns. Accordingly we restrain ourselves from interfering with the Order of the Ld.CIT(A) on this regard." It is ordered accordingly''. and we remit the disputed issue to the file of the ld. Assessing Officer to verify and exclude the investments in group companies for the purposes of calculation of disallowance under Sec. 14A r.w.Rule 8D(2) and t....
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....ppellate proceedings, the ld. Commissioner of Income Tax (Appeals) considered the grounds, submissions and findings of the ld. Assessing Officer and on similar issue for assessment year 2009-2010 observed at page 5 at para 11 of order as under:- ''11. I have carefully considered the facts in issue, the view taker by the AO, the arguments advanced by the appellant and material on record. Similar issue was considered by my predecessor in the case of the appellant for the AY. 2009-10 in ITA NO.373/13-14 dated 25.11.2013. Since the facts obtaining in the case of the appellant in the appeal under consideration are same; I do not find any reasons to take different view in the matter as taken in AY 2009-10. Respectfully followinq the same, the AO is directed to modify the order by deleting the addition of Rs. 62,63,733/-. This ground of appeal is allowed''. The ld. Commissioner of Income Tax (Appeals) relying on the earlier year order directed the ld. Assessing Officer to allow the deduction. Aggrieved by the order, the Revenue assailed an appeal before the Tribunal. 4.3 Before us, the ld. Departmental Representative argued that the ld. Commissioner of Income Tax (Appeals) ....
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....ildings, roads, dams etc. and when the end product is not considered as manufacturing activity, then it is difficult to hold that the intermediate product can be classified as manufacture or production of article or thing. 21. The Ld. Judicial Member, while following the decision of the ITAT, Delhi Bench in the case of YFC Projects (P) Ltd. (cited supra), might have taken note of the observations of the said Bench that once it is mixed with cement, water, etc., it cannot be segregated and hence it amounts to manufacturing activity. Even for preparation of food, such as idli etc, once the item is prepared or mixed, it cannot be segregated and brought back to its original shape and merely on that count, it cannot be treated as manufacturing activity. The Hon'ble Kerala High Court in the case of CIT vs. Casino (Pvt) Ltd. 91 ITR 289 observed that while considering the taxing statute, the real test is to ascertain whether the commodity either in common parlance or commercial parlance can be treated as a manufactured product. In the ordinary sense, the production of food materials in a hotel cannot be treated as manufacture. In the same way, the production of ready mix concrete,....