TaxTMI 
TaxTMI 
2019 (6) TMI 700
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....at no administrative expenses were incurred in connection with the investments made. 3. (i) On the facts and in the circumstances of the case, the Ld.CIT(A) has erred, both on facts and in law, in confirming the proportionate disallowance of interest of Rs. 5,17,566/- in respect of security deposit of Rs. 47,00,872/-. (ii) That the Ld.CIT(A) as erred, both the facts and in law, in ignoring the fact that the assessee being a Public Sector Company, the entire security deposit held by it is of the customers, and the interest thereon cannot be disallowed merely on the surmise that the security deposit is an unexplained deposit. 4. (i) On the facts and in the circumstances of the case, the Ld.CIT(A) has erred, both on facts and in law in confirming the addition of Rs. 3,36,80,000/- made by the A.O on account of prior period income. (ii) That the Ld.CIT(A) has erred in confirming the addition despite the fact that ]the said amount pertains to income or expenditure of earlier years which has been crystallized during the year under consideration." ITA No. 3299/DEL/2016 "1. On the facts and in the circumstances of the case and in law, the Ld. ....
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....addition in regard to prior period income amounting to Rs. 3,36,80,000/-, short deduction and payment of tax amounting to 15,12,06,000/-. Thereby making total loss assessed at Rs. (1448,28,78,030/-) by the Assessing Officer. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A)partly allowed the appeal of the assessee. 5. As regards Ground No. 1 of Department's appeal, relating to addition u/s 14A read with Rule 8D amounting to Rs. 9,69,57,875/- made by the Assessing Officer, the Ld. DR submitted that the CIT(A) erred in restricting the disallowance to only 0.5% of average investment income of Rs. 1,33,74,000/- as against Rs. 9,69,57,875/-. 6. The Ld. AR submitted that during the year under consideration, assessee company has earned dividend income of Rs. 3,41,50,000/- on its investment made in LIC Mutual Funds. This fact is evident from Schedule - O in respect of Other Income mentioned in the Balance Sheet. The details of investments held by the assessee company are in Schedule - F of the Balance Sheet. The Ld. AR submitted that the own funds available with the assessee are much more than the investments made during the year. ....
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....subsidiary companies which were Rs. 1245.77 million INR. As regards LIC Mutual fund, the opening investment was Rs. 349.6 million INR which reduced to nil at the end of the year. The Total investments (closing balance) of Rs. 4946.58 million INR constitute 3.5% of the closing balance of share capital, reserves & surplus and loans totaling Rs. 1,41,021.56 million INR. In view of this factual position and also considering the fact that the assessee has interest free funds in the form of share capital and reserves & surplus of Rs. 66,464.81 million INR (being the closing balance), there is no reason why the appellant's claim that the interest bearing funds have not been used for making investment should not be accepted. Therefore, the disallowance of interest under rule 14 A r.w. rule 8D (2)(ii) of Rs. 71.853 million INR is deleted. However, as regards the disallowance under rule 8D(2)(iii), being 0.5% of the average investments (income from which is exempt), the undersigned does not agree with the order of my predecessor that no administrative expenses were incurred in connection with such investments. In a large organisation like appellant, the investments needs to be regularly moni....
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....se investments which actually have resulted in exempt dividend income, rather than 0.5% of the average of total investments. This issue is squarely covered by the judgment of Hon'ble Jurisdictional High Court in the case of ACB India Ltd. v. ACIT in ITA No. 615/2014 dated 24.03.2015. Further reliance in this regard is placed on the judgment of this Hon'ble Tribunal in the case of SIL Investments Ltd. v. DCIT in ITA No. 5656/Del/2013 and 6046/Del/2013 dated 05.09.2016. The Ld. AR also relied upon the following judgments:- (a) ITAT Hyderabad in the case of Transport Corporation of India Ltd. v. ACIT in ITA No. 117/Hyd/2016 dated 21.09.2016 (b) ITAT Kolkata in the case of DCIT v. The Diamond Co. Ltd. in ITA No. 326/Kol/2014 dated 24.08.2016 (c) ITAT Mumbai in the case of Amrit Diamond Trade Centre Pvt. Ltd. v. ACIT in ITA No. 2642/Mum/2013 dated 15.01.2016 A perusal of Schedule - F of the Balance Sheet shows that the opening amount of Investment in LIC Mutual Funds was Rs. 34,96,00,000/-, while the closing amount of Investment was Nil, as the said mutual funds were sold off by the assessee company during the year under consideration. Therefore, the averag....
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.... linked to the ground No. 6 and 7 of the appeal of the assessee. While deciding the ground Nos. 6 and 7 of the appeal of the assessee we have held that that there is no infirmity in the order of the Id CIT(A) with respect to subscriber's deposit held to be payable by the assessee to the subscriber on termination of services to the extent of reconciled amount and therefore, it cannot be added to the income of the assessee specially in view of the assessee furnishing substantial details and reconciliation of the amount outstanding. Further the amount of interest related to that deposit is also deleted by the Id CIT(A) as the interest was payable with respect to subscriber deposit which is completely reconciled. In view of this we dismiss ground No. 1 to 4 of the appeal of the revenue." Since this issue is already decided in favour of the assessee for A.Y. 2006-07 and facts in the present Assessment Year is identical, hence Ground No. 2 of Revenue's appeal is dismissed. As regards Ground No. 3 of assessee's appeal is concerned, Tribunal in assessee's own case for A.Y. 2006-07 in ITA No. 4587/Del/2013 dated 05.09.2016, whereby the Hon'ble Tribunal while deciding assessee's appeal on....
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.... addition to the extent of Rs. 127.69 crores and deleted the addition of Rs. 1031.62 crores. The reason given by him for confirming the amount is that these could not be reconciled with the respect to the live connection as per statement in annexure 3 submitted. We do not agree with the finding of the Id CIT(A) to the extent of confirmation of the addition partly merely because reconciliation in these accounts with respect to the live connections are pending. The observation of the Id CIT(A) is also not correct that assessee submitted that this amount is under reconciliation and to that extent such credits are not fully explained. Before him assessee submitted that it is under reconciliation. Further when the character of deposit is determined, looking to the nature of operation geographically as well as large subscriber's base , it is not correct to hold that pending reconciliation the deposit become income of the assesse. In view of this we set aside this issue back to the file of the Assessing Officer to give proper opportunity to the assessee to provide reconciliation of the same and then if the amounts are not at all identifiable with respect to the customers then to ....
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....f the prior period income against the prior period expenditure. The Ld. AR relied upon the judgment of Hon'ble Jurisdictional High Court in the case of CIT v. Exxon Mobil Lubricants P. Ltd. [2010] 328 ITR 17. Further, the Ld. AR also relied upon the following judgments: i) ITAT Delhi in the case of MTNL v. DCIT in ITA No. 3404/Del/2013 ii) ITAT Mumbai in the case of Mazagaon Dock Ltd. v. ITO in ITA No. 5034/Mum/2011 dated 01.02.2016 iii) ITAT Ahmedabad in the case of Shah Alloys Ltd. v. JCIT in ITA No. 2315/Ahd/2010 dated 27.03.2015 Therefore, in view of above judicial pronouncements, the addition made by the Assessing Officer and further sustained by the CIT(A) may be restricted to Rs. 1,56,70,000/-, i.e. after allowing the assessee the adjustment of prior period expenditure incurred. 16. The Ld. DR relied upon the Assessment Order and the order of the CIT(A) 17. We have heard both the parties and perused the material available on record. During the year under consideration, assessee has shown -prior period income of Rs. 3,36,80,000/- and has further shown prior period expenses amounting to Rs. 1,80,10,000/-. A perusal of the Profit and Loss acc....