TaxTMI 
TaxTMI 
2019 (3) TMI 274
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....f brought forward loss of Assessment Year 2009-10. In this order, the Assessing Officer (AO) made the following additions / disallowances: (i) Disallowance under section 14A r.w.r. 8D - Rs. 18,52,774/- (ii) Professional fees disallowed - Rs. 16,54,500/- (iii) Addition on account of carbon credits - Rs.1,35,45,905/- 2.2 On appeal, the CIT(A) - 6, Bangalore, disallowed the assessee's appeal vide the impugned order dated 29.03.2017. 3. Aggrieved by the order of CIT(A)-6, Bangalore dated 29.03.2017 for Assessment Year 2012-13, the assessee has preferred this appeal before the Tribunal, wherein it has raised the following grounds: 1. The order of the Learned Commissioner of Income Tax Appeals is opposed to law, fact and circumstance of the case. 2. The learned Commissioner of Income Tax (Appeals) has without appreciating the facts pertaining to the cases mentioned in detail, in the statement of facts has routinely confirmed disallowance u/s 14A. 3. The learned Commissioner of Income Tax (Appeals) ought to have appreciated the fact that courts have consistently held that before resorting to section 14A disallowance, it must be clearly established by the Assessing Offic....
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....t the court must look into the objects and purpose of the expenditure from the point of view of the businessman. 8. The learned Commissioner of Income Tax (Appeals) has failed to considered that the company has not received any Carbon credit during the Assessment year 2012-13 nor any Carbon credit accrued to the company. CIT(A) has simply repeated the opinion of the Assessing Officer while confirming the additions. 9. It is basic tenant that before taxing income it is duty of the authorities to give a finding of fact whether any income has really accrued to the assessee. In this case it is borne on facts and also the available financial statement clearly indicate that no carbon credit had been received by the company and no carbon credit accrued to the company during the relevant previous year. Hence, taxing a nonexistent income which neither accrued not received would be, against all cannons of taxation. 4. Ground No. 1 (supra), is general in nature and therefore no adjudication is called for thereon. 5. Ground Nos. 2 to 4 - Disallowance u/s 14A r.w.r. 8D 5.1 In these grounds (supra), the assessee assailed the action of the CIT(A) in upholding the disallowance made by t....
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....e details and without determining whether there is any nexus between the borrowed funds and the earning of exempt income. We further observe that the assessee has also not produced any details to support its claim that the borrowed funds were not utilised to make the investments that earned the exempt income. The assessee has only provided the year end balances of the borrowed funds and not the details of investments made in order to establish that borrowed funds were not used for investments in instruments which earned the assessee exempt income. It is the primary responsibility of the assessee to submit evidence to support its claim; which onus, in our view, has not been not discharged by the assessee. 5.5.2 In the factual matrix, on the issue of disallowance u/s 14A of the Act r.w.r. 8D(2)(ii) and 8D(2)(iii), as laid out above, we are of the view that in the interest of substantial justice, the orders of the authorities below on this issue be set aside and this issue be remanded to the file of the AO for fresh determination of the disallowance after considering the facts of the case and also the legal propositions in the matter; including the propositions that the disallowance ....
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....In support of its contentions, the assessee placed reliance on the following judicial pronouncements: (i) ACIT Vs. R. R. Industries Ltd., (1256/Mad/2011) (ii) Nimbus Communication Ltd., (132 TTJ 351) (Mumbai, ITAT) (iii) CIT Vs. Crompton Engg. Co. Ltd., (242 ITR 317) (Mad.) 6.4.1 We have considered the rival contentions / submissions and perused the material on record. From an appraisal of the record before us, we find that the Annual General Meeting (AGM) of the assessee company on 13.09.2010 had approved the proposal of increasing the assessee's authorized share capital. Even before the approval of the AGM, the assessee vide letter dated 08.09.2010 seems to have made an offer to the party concerned to act as 'Book Running Lead Manager'. The payment is made vide letter dated 25.11.2010 (copy placed at page 2 of Paper Book); whereas the invoice for the same is raised by the party on 08.12.2010 (copy on page 3 of Paper Book); much after the payment was made. 6.4.2 In view of the above factual contradictions in the chronological sequence of dates in the documents submitted (supra), we are of the considered opinion that the AO should have first examined the genuineness of t....
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....rding to the AO, carbon credits receipts are only ancillary to the business profit and are, therefore, to be treated as revenue income and were accordingly exigible to tax. After making the above observations, the AO assumed that the carbon credit receipts for the year under consideration to be at the same level as the earlier year and added an amount of Rs. 1,35,45,905/- to the income of the assessee. 7.2.2 On appeal, the CIT(A), after reproducing the facts of the case, as appearing in the order of assessment, the grounds raised and the statement of facts appended to the Form 35, upheld the action of the AO by stating that no documentary evidence was produced by the assessee and in the absence of documentary evidence to support its contentions, the additions made by the AO are confirmed. 7.3 Before us, it has been submitted that the assessee has not received any carbon credit during the year under consideration; i.e., in the period relevant to Assessment Year 2012-13. It was contended that the AO has to first render a finding of fact as to whether any income was actually received or accrued to the assessee on account of carbon credit in the year under consideration and that taxi....