TaxTMI 
TaxTMI 
2019 (7) TMI 1149
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....as earned dividend income of Rs. 12,62,52,672/-. The assessee made suo-moto disallowance of Rs. 5,00,000/- u/s. 14A of the Act. In assessment proceedings the Assessing Officer made disallowance under Rule 8D to the tune of Rs. 2,42,05,448/-. The assessee challenged the assessment order in appeal before the Commissioner of Income Tax (Appeals) inter alia on the ground of disallowance u/s. 14A r.w. Rule 8D. The Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer. The ld. AR submitted that the assessee is only disputing disallowance made by Assessing Officer under Rule 8D(2)(iii). The Assessing Officer while computing average investments has considered all the investments including the investments on which no dividend income is earned by the assessee. The ld. AR submitted that the prayer of the assessee is limited to the extent that only those investments should be considered while computing disallowance under Rule 8D(2)(iii) that have yielded tax free income. In support of his contentions the ld. AR placed reliance on the decision of Delhi Special Bench in the case of Assistant Commissioner of Income Tax & Anr. Vs. Vireet Investment Pvt. Ltd. & Anr. reporte....
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....ssion paid to Directors without justifying the reasonableness of the payment to Directors? 4. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in not appreciating that the assessee company which had huge accumulated losses and promoted by the assessee company, and preference shares were purchased and redeemed by the company as a convenient arrangement for tax avoidance through claim of capital loss for A.Y.2007-08 ? 5. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in allowing deduction u/s. 80IA(iv)(4) by considering the initial assessment year for the purpose of claiming deduction u/s.80IA(iv)(4) of the Act, is the first year in which the assessee claimed deduction u/s. 80IA(iv)(4)? 6. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in treating the initial assessment year i.e. first assessment of any ten consecutive years to claim the deduction u/s. 80IA(iv)(4) without considering that the company was at the position of loss in two prior years? 7. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in allowing the dedu....
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....the period relevant to the assessment year 2007-08. Thus, the assessment year 2009-10 is the third year of assessee's business of windmill power generation. The assessee had incurred loss from eligible business in the prior years which was required to be set off against the income from eligible business only. However, the losses of eligible business were set off by the assessee against the income from other business. The Commissioner of Income Tax (Appeals) allowed the benefit of deduction u/s. 80IA(4)(iv) by following the decision of Pune Bench of the Tribunal in the case of Poonawala Estate Stud & Agro Farm Pvt. Ltd. Vs. ACIT reported as 136 TTJ 236. The Department has filed appeal before the Hon'ble High Court against the aforesaid decision of Tribunal. The ld. DR submitted that the Ahmedabad Bench of the Tribunal in the case of Goldmine Shares and Finance Pvt. Ltd. in ITA Nos. 4044 to 4049/Ahd/2003 has held that the profit from eligible business for the purpose of determination of quantum of deduction u/s. 80IA, has to be computed after deduction of the notional brought forward loss and depreciation of eligible business even though it may have been allowed to set off against ot....
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....cision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax reported as 340 ITR 477, which has been subsequently followed by the Pune Bench of Tribunal in the case of Poonawalla Estate Stud & Agro Farm (P) Ltd. Vs. Assistant Commissioner of Income Tax reported as 136 TTJ 236. 10.5 In respect of ground No. 8 the ld. AR submitted that the Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in allowing benefit of subsidy received under Package Scheme of Incentive, 2001. The assessee has claimed the subsidy as capital receipt, whereas, the Department has held the subsidy as revenue in nature. The Tribunal in the case of Innovative Industries Limited Vs. DCIT in ITA No. 215/PN/2014 for assessment year 2010-11 decided on 24-03-2017 has held subsidy received under Package Scheme of Incentive 2007 as Capital in nature. The subsidy allowed under Package Scheme of Incentive 2001 and Package Scheme of Incentive, 2007 are on same footing. 11. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. We have also considered various decision....
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....paid to the Directors by following the order of earlier assessment year. Since, the disallowance u/s. 40A(2) on the commission paid to the Directors has been consistently decided against the Revenue, and in the assessment year under appeal there is no distinguishing feature, we find no merit in the said ground by the Department. The ground No. 3 of the appeal is rejected for the parity of reasons given in assessment year 2008-09 in assessee's own case by the Tribunal. Accordingly, ground No. 3 of the appeal is dismissed. 15. The ground No. 4 of the appeal is with respect to set off of brought forward capital losses against Long Term Capital Gain of the current assessment year. In assessment year 2007-08 similar disallowance was made by the Assessing Officer. The Commissioner of Income Tax (Appeals) granted relief to the assessee. In appeal before the Tribunal, the Department was unsuccessful in contesting the issue. The relevant extract of the findings of Tribunal on this issue in appeal by the Revenue in ITA No. 963/PUN/2014 for assessment year 2007-08 reads as under : "31. We have heard the rival submissions and perused the material on record. In the present ground, AO had dis....
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....me from eligible business only. The Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax (supra) has held that loss or depreciation in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction u/s. 80-IA. The relevant extract of the judgment of Hon'ble High Court is reproduced here-in-below : "14. In the present cases, there is no dispute that losses incurred by the assessee were already set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under s. 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was 2005-06 and in the Tax Case No. 918 of 2008 the assessment year was 2004-05. During the relevant period, there were no unabsorbed depreciation or loss of the eligible undertakings and the same were already absorbed in the earlier years. There is a positive profit during the year. The unreported judgment of this Court cited supra considered the s....
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....not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under s. 80-I for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view. 15. The standing counsel appearing for the Revenue is unable to bring to our notice any relevant material or any compelling reason or any contra judgment of other Courts to take a different view. He only relied heavily on memorandum explaining the provisions in the Finance (No. 2) Bill, 1980, [(1980) 123 ITR (St) 154] to support this case and the same reads as follows : "Clause 30(iii) : In computing the quantum of 'tax holiday' profits in all cases, taxable income derived from the new industrial units, etc., will be determined as if such units were an independent unit owned by a taxpayer who does not have any other source of income. In the result, the losses, depreciation and investment allowance of earlier years in respect of the new industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduct....