AI Drafter 
TaxTMI 
TaxTMI 
2019 (1) TMI 599
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....15 as well as ITA.Nos.1076 to 1078 and 1272/Chny/2016 and 967 and 1883/Chny/2017 for the assessment years 2010-11 and 2012-13 to 2014- 15. 2. The twelve appeals filed by the Revenue are numbered as TCA.Nos.785, 787, 788, 790, 793 to 797 and 812 to 814 of 2018 by raising the following substantial questions of law : "i. Whether the Income Tax Appellate Tribunal was right in holding that the expenditure relating to setting up of new unit at Sriperumbudur as revenue expenditure when the same is capital expenditure ? (assessment year 2008-09) ii. Whether the Income Tax Appellate Tribunal is correct in allowing the unabsorbed depreciation of previous year even if it relates to beyond eight assessment years ? (assessment years 2008-09 to 2010-11) iii. Whether the Income Tax Appellate Tribunal is correct in holding that the disallowance under Section 14A should be restricted to the dividend income earned for the relevant assessment year ? (all assessment years) and iv. Whether the Income Tax Appellate Tribunal is correct in law in directing the Assessing Officer not to include the disallowance made under Section 14A while calculating the book profit u....
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....y, the finding rendered by the Tribunal is confirmed and substantial question of law No.1 raised by the Revenue is answered against the Revenue. 6. The second substantial question of law raised by the Revenue is regarding unabsorbed depreciation for the previous years. 7. The Revenue contends before us that the eight years limitation in respect of carry forward of the depreciation had expired and therefore, the assessee was not permitted to carry forward. This order was reversed by the CIT(A) on an erroneous ground, which was confirmed by the Tribunal without considering the fact that Section 32(2) of the Act is a substantive provision and not a procedural one. 8. It is further contended by the Revenue that the finding rendered by the Tribunal is not acceptable, as, in the case of Peerless General Finance and Investment Company Limited Vs. CIT [reported in (2016) 380 ITR 165], the Hon'ble Supreme Court held that the unabsorbed depreciation can be set off only against business income for a period of eight years only. 9. Per contra, the learned counsel for the assessee contends that the provision pertaining to the relevant assessment year should be taken into consideratio....
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....ce under Section 14A of the Act. On this issue, the assessee is also on appeal before us not being satisfied with the relief granted by the Tribunal. The Tribunal, in paragraph 12 of the impugned order, recorded that it was fairly agreed by both sides that the issue was settled by the decision of the High Court of Delhi in the case of M/s.Joint Investments Private Limited Vs. CIT [reported in (2015) 372 ITR 694]. This is seriously disputed by the learned counsel on either side and the Departmental Representative was not authorized to give any such concession nor the Authorized Representative of the assessee. 15. It is the submission of the Revenue before us that the Tribunal erred in directing the Assessing Officer to restrict the disallowance under Section 14A of the Act by applying Rule 8D of the Income Tax Rules, 1962 (for brevity, the Rules) to the extent of exempt income even without considering the fact that the assessee had not discharged the onus cast upon it and in the absence of accounts maintained by the assessee in regard to its investments, the Tribunal was not right in interfering with such order. 16. On the other hand, the assessee is also aggrieved by the find....
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....rt of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." 21. The learned counsel for the assessee submits that in terms of Rule 8D(2)(ii) of the Rules, if to be applied, there must be an expenditure by way of interest, which is not directly attributable to any particular income or receipt. Therefore, it is submitted that the interest expenditure incurred for earning taxable income cannot be reckoned for disallowance under Rule 8D(2)(ii) of the Rules. Reliance is placed on the decision of the High Court of Delhi i....