TaxTMI 
TaxTMI 
2019 (3) TMI 799
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....n of new fact and hence taken on record in terms of judgment of Hon'ble Apex Court rendered in National Thermal Power Co. Ltd. Vs. CIT [229 ITR 383]. The final grounds, for ease of reference, may be regrouped in the following manner: - 1) Deduction U/S.14A r.w.r. 8D: a) The CIT(A) erred in not considering the Appellant's argument that no valid reasoning was recorded by the Assessing Officer for not considering the disallowance offered by the Appellant under section 14A of the Act and further confirming the action of the Assessing Officer of computing the disallowance under section 14A of the Act by applying Rule 8D of the Income-tax Rule. 1962 ('the Rules"). b) The Appellant submits that the Assessing Officer has mechanically applied Rule 8D of the Rules for computing the disallowance under section 14A of the Act and has at no time established with valid reasons that the disallowance offered by the Appellant is erroneous. The Appellant therefore prays that the disallowance of the Assessing Officer under section 14A of the Act by applying Rule 80 of the Rules, which action has been confirmed by the CIT(A), be deleted and the disallowance offered by the Appellant under se....
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....cs as against returned income of Rs. 6826.90 Lacs e-filed by the assessee on 21/09/2010. Similar disallowance has been made while computing Book Profits u/s 115JB. The assessee being resident corporate entity was stated to be engaged in the business of prospection, exploration of mineral oil and natural gas during impugned AY. 2.3 Facts qua the same are that during assessment proceedings, its transpired that the assessee earned exempt dividend income of Rs. 523.36 Lacs and offered suo-moto disallowance against the same u/s 14A @5% which worked out to Rs. 26.16 Lacs. However, not convinced, Ld. AO opined that investments could not be managed without inherent expenses and the disallowance was to be worked out as per Rule 8D. Applying the same, administrative expense disallowance u/r 8D(2)(iii) @0.5% of average investments of Rs. 334.83 Crores, was worked out to be Rs. 167.41 Lacs. After adjusting the suo-moto disallowance of Rs. 26.16 Lacs, the net disallowance i.e. Rs. 141.24 Lacs was added to the income of the assessee. The same upon confirmation by first appellate authority vide impugned order dated 30/09/2013 is under appeal before us. 3. The Ld. Sr. Counsel appearing for Asses....
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....r rule 8D(2)(iii). Finally, the learned Authorised Representative submitted disallowance under section 14A r/w rule 8D cannot be added to the book profit under section 115JB of the Act. As regards the contention of the learned Authorised Representative that the strategic investment should be excluded for the purpose of computing disallowance under rule 8D(2), the same is unacceptable in view of the decision of the Hon'ble Supreme Court in case of Maxopp Investment Ltd. v/s CIT, [2018] 91 taxmann.com 154. As regards the contention of the assessee that the investment in Nagarjun Oil Corporation has not earned any dividend income during the year, hence, should be excluded, we find merit in the same. It has been held by the Special Bench of the Tribunal in case of Vireet Investment Pvt. Ltd. (supra) that investments which have not yielded any exempt income in the relevant previous year should be excluded while computing disallowance under rule 8D(2). In view of the aforesaid, we direct the Assessing Officer to verify the claim of the assessee and exclude the investment made in Nagarjun Oil Corporation from the average value of investment if it has not yielded any exempt income duri....
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....he activities undertaken by the assessee qualifies for deduction under section 80IB(9) of the Act. Thus, assessee's eligibility to claim deduction under section 80IB(9) of the Act is no more justiciable. However, the larger issue before us is, whether assessee's claim of deduction under section 80IB(9) of the Act in respect of each well by treating them as independent undertaking is allowable qua the provision of section 80IB(9) r/w the Explanation therein. Undisputedly, the assessee all along had claimed deduction under section 80IB(9) of the Act by treating each oil well as an independent undertaking. However, the provision of section 80IB(9) of the Act was amended by Finance Act, 2009 with retrospective effect from 1st April 2000 by inserting an Explanation which provided that for the purpose of computing deduction under the said provision all blocks licensed under a single contract shall be treated as a single undertaking. Thus, by virtue of Explanation to section 80IB(9) of the Act, claiming deduction by treating each oil well as a single undertaking was done away with. The aforesaid factual and legal position has not been disputed by the assessee which is evident from the sub....
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.... High Court in Niko Resources Ltd. (supra), the assessee at this stage has filed additional grounds claiming deduction under section 80IB(10) of the Act. Since, the issue was neither raised by the assessee before the Departmental Authorities nor the judgment of the Hon'ble Gujarat High Court (supra) was available before them, in all fairness, the issue has to be examined by the Assessing Officer. Secondly, though, it may be a fact that the Hon'ble Gujarat High Court in Niko Resources Ltd. (supra) has struck down Explanation to section 80IB(9) of the Act by declaring it as ultra-virus of Article-14 of the Constitution of India, however, it cannot be ignored that no decision of the Hon'ble Supreme Court or the Hon'ble Jurisdictional High Court on the issue is available. Moreover, the Tribunal being a creature of the statute is not competent to examine or decide the constitutional validity/vires of a provision contained in the statute. Had it been a decision of the Hon'ble Supreme Court or the Hon'ble Jurisdictional High Court, the Tribunal would have been bound by the law declared therein. However, the legal position is different when the decision declaring a pro....
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....stical purposes. ITA No. 1856/Mum/2015, AY 2011-12 7.1 The assessee has similarly been saddled with net disallowance u/r 8D(2)(iii) for Rs. 121.83 Lacs, which is under challenge before us. The grounds of appeal raised before us as well as arguments in support of the same are identical. Therefore, facts & circumstances being parimateria the same, the issue stands remitted back to Ld. AO on similar lines. The grounds stand partly allowed for statistical purposes. 7.2 The assessee has raised a new claim for deduction u/s 80IB(9) before us for the first time on similar lines. The same also stands remitted back to the file of Ld.AO for adjudication in terms of the observations of Tribunal for AYs 2008-09 & 2009-10. The ground stands allowed for statistical purposes. 8.1 The last ground of assessee's appeal concerns with disallowance of obsolete store and spares amounting to Rs. 54.18 Lacs. Facts qua the same are that during assessment proceedings, it transpired that the assessee debited an amount of Rs. 54.18 Lacs in the Profit & Loss Account as provision towards stores & spares of drilling equipment. The Ld. AO, treating the same as capital expenditure and also in view of the fact ....
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....luing the stores and spares at lower of cost or net realizable value and therefore, the impugned expenditure was allowable to the assessee. 9.2 So far as the quantification is concerned, Ld. Sr. Counsel further submitted that the loss of Rs. 54.18 Lacs arises on account of stores and spares under two blocks i.e. CY-OS-90/1 & CB-OS-2 as computed in the following manner: - Sr. No. Block Amount (Rs.) Remarks 1. CY-OS-90/1 14,40,558/- INR 68,59,802 (USD 1,74,334) *21% (Share in Block) 2. CB-OS-2 39,77,656/- USD 855409.19*46.50 (exchange rate) *10% (share in block) Total 54,18,214/- Our attention is drawn to Note No.6 of audited accounts of unincorporated joint venture Block CY-OS-90/1 to submit that it has clearly been indicated therein that the drilling inventory available with the operator (Hardy Exploration & Production (India) Inc.) includes obsolete stores & spares of USD 1,74,334 purchased before 31/03/2004. The obsolete stock is derived after carrying out technical valuation of inventories by the operator and accordingly the assessee's shares towards obsolete stock i.e. 21%, in Indian Rupees works out to Rs. 14.40 Lacs, which has....