TaxTMI 
TaxTMI 
2018 (7) TMI 1916
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....ng to Rs. 4,29,835/- was not pressed by the Ld. Counsel for the assessee. Accordingly, the said ground No.1 is dismissed as 'not pressed'. Ground No.3 being general in nature is dismissed. 4. The ground raised by the assessee with regard to disallowance of expenditure of Rs. 1,33,82,121/- u/s.14A of the Act reads as under : "2. Disallowance u/s.14A of the Act. (a) The Ld.CIT(A) erred in disallowing the expenditure of Rs. 1,33,82,121/- u/s.14A by applying rule 8D, without establishing any nexus between the exempt income and expenditure in relation to such income. (b) The Ld.CIT(A) ought to have appreciated that only such investment which have resulted in earning of exempt income should be considered for calculation of disallowance under Rule 8D. Therefore, it is prayed that the Ld. AO be directed to exclude the following investments for the purpose of computing "average value of investments" as required in Rule 8D(ii) of the Rules. -Investments on which no dividend has been earned during the year under consideration or capable of giving any dividend income. -Investment on which taxable income has been earned. -Strategic invest....
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....follows : "32. Now we proceed on to decide the remaining grounds raised in appeal by the Revenue. In ground No. 2 of the appeal, the Revenue has assailed the deletion of disallowance Rs. 6,21,87,028/- made u/s. 14A r.w.Rule 8D of the Act. As per the contention of the assessee, the assessee had invested Rs. 1,00,44,15,900/- over a period of time in its group companies. The assessee has not received any dividend from the said companies in the period relevant to the assessment years under appeal. This fact has not been re-butted by the Revenue. The Special Bench of the Tribunal in the case of ACIT Vs. Vireet Investment (P) Ltd.(supra) has held that no disallowance u/s.14A r.w. Rule 8D(2)(iii) can be made where no exempt income from investment is received during the year. In other words, only those investments are to be considered for computing average value of investments under Rule 8D(2)(iii) which yield exempt income during the year. Similar view has been taken by Pune Bench of the Tribunal in the case of Shri Goyal Ishwarchand Kishorilal Vs. JCIT in ITA No. 422/PN/2013 decided on 26.06.2014. The Tribunal after placing reliance on the decisions in the case of CIT V....
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....d No.1 relates to claim of expenditure amounting to Rs. 55,97,541/- for the year under consideration but accounted for in the subsequent years. Relevant facts include that assessee claimed expenses of Rs. 49,24,466/- and Rs. 11,20,980/- pertaining to the year under consideration but accounted in F.Yrs. 2010-11 and 2011-12 in the year of receipt. Assessee claimed that these bills were received subsequently after the year end of the relevant preceding year and hence, the same could not be accounted in the relevant accounting year. He also stated that the same is not even reflected through the revised returns. These expenditures have not been debited to the profit and loss account of the year under consideration but booked as prior period expenses in the subsequent accounting years. AO denied the said claim of the assessee relying on the judgment of Hon'ble Supreme Court in the case of Goetz India Ltd. Vs. CIT 284 ITR 323 (SC). 13. In the First Appellate proceedings, the CIT(A) allowed the claim of the assessee by holding as under : "5.9.2 In the present case, the expenditure pertaining to the current year has been accounted in the subsequent years but not claimed as a exp....
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....book regarding the genuineness of expenditure and the reasons for not receiving the bills in time, and not including the expenses in the returns of income for the A.Yrs. 2010-11 and 2011-12, as the case may be. Needless to say, the AO shall grant reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, Ground No.1 raised by the Revenue is allowed for statistical purposes. 18. Ground No.2 raised by the Revenue relates deletion of addition made by the AO on account of sale of scrap. Relevant facts include that the assessee during the year under consideration sold scrap of 6157.48 MT valuing Rs. 8,13,56,983/-. The scrap includes ferrous and non ferrous items and the average realization of Rs. 13,212/- per MT. AO worked out the scrap which led to an average price of Rs. 12,389/- as against Rs. 13,212/- claimed by the assessee. ventually, the AO considering the market value of the scrap, profit margin, transport charges, burning loss etc. concluded that the assessee understated the sale of scrap by Rs. 4/- per kg which works out to Rs. 2,22,45,680/-. 19. In the First Appellate proceedings, the CIT(A) found fault w....
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....undreds of reasons as to why the assessee had to sell the goods at the price which he feels appropriate. The AO can only interfere in the transaction entered by the assessee, if he finds it to be collusive transaction. In the present case the AO has not established it to be collusive transaction between the appellate company and the scrap purchasers, so as to alter the transactions saying that the company should have sold it for a higher price. The AO has also not established that the appellant company or its directors/employees have received money more than what is mentioned in the books of accounts. So the addition made by the AO on conjectures and surmises cannot be sustained. The addition made on this ground is deleted." 23. We find the reasoning given by the CIT(A) is based on proper appreciation of facts. We also perused the ledger extract furnished by the assessee which are placed at pages 8 to 24 as well as pages 59 to 84 of the paper book. We have also perused the Metallurgical Guidelines issues by the Ministry of Mines in the Indian Minerals Yearbook, 2011 where the melting scrap for the year 2009-10 is indicated as 19133 per tonne. Considering the same, the rates of s....