TaxTMI 
TaxTMI 
2020 (9) TMI 610
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....s inter alia that :- "1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding addition of Rs. 21,23,629 made by the assessing officer under section 14A of the Income tax Act, 1961 ('the Act") read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 ("the Rules") not appreciating that expenses incurred for earning the tax free income were already disallowed by the appellant. 1.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not holding that no disallowance could be made by the Assessing Officer under section 14A of the Act without recording satisfaction/recalling finding as to nexus of any expenditure incurred during the year with investments made or exempt income earned. 1.2 ....
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....er section 14A of the Income-tax Act, 1961 (for short 'the Act') read with Rule 8D of the Income-tax Rules, 1962 ( for short 'the Rules') and by relying upon the circular No.5 of 2014 dated 11.02.2014 issued by Central Board of Direct Taxes (CBDT) proceeded to make disallowance under section 14A read with Rule 8D (3) to the tune of Rs. 24,70,095/-. 3. AO also made addition of Rs. 2,48,71,145/- on account of credit of tax deducted at source on deferred revenue on the ground that the same will be allowed in the relevant assessment year in which underlying revenue has been offered to tax. 4. Assessee carried the matter before the ld. CIT (A) by filing the appeal who has partly allowed the appeal. Feeling aggrieved, the assessee has come up b....
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....he working for making suo moto disallowances proceeded to invoke the provisions contained under section 14A read with Rule 8D. There is no valid satisfaction recorded by the AO that working for making suo moto disallowance made by the assessee company is faulty rather proceeded to make disallowance under Rule 8D 3 @ 0.5% of average value of investment. 8. Hon'ble Delhi High Court in the identical situation in the case of HT Media Ltd. vs. Pr. CIT 199 ITR 576 (Del.) held that recording of satisfaction by the AO before invoking provisions contained under section 14A read with Rule 8D is a sine qua non. Operative part of the aforesaid judgment is extracted for ready proposal as under :- "30. Rule 8 D (1) states more or less what Section 14....
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....ng the investment in shares is to be examined by the AO." 10. Following the aforesaid decisions rendered by the Hon'ble Supreme Court and Hon'ble High Court of Delhi, we are of the considered view that when the assessee company, with its audited accounts, have come up with specific computation that in order to earn the dividend income of Rs. 6,07,08,212/- they have incurred amount of Rs. 3,46,466/- and suo moto disallowed the same, AO was not empowered to invoke the provisions contained under section 14A read with Rule 8D in a mechanical manner without recording his satisfaction that working given by assessee company is not correct. 11. AO has merely recorded that, "I am not satisfied with the correctness of the claim of the assessee". No....
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....t apart from sales of equipment also provides after sales services to the customers. The usual period for which payment is made up front by the customer spans 3 to 4 years and therefore the revenue from such services is recognized by the appellant on year to year basis. The appellant company recognizes the revenue on percentage completion method and thus the revenue is recognized over the tenure of the concerned AMC contract. For example, if the contract is of four years, the appellant recognizes 25% of the payment for each year. b) But the TDS by the customer is made on the whole of the upfront payment as per the provisions of the Act, being statutorily bound to deduct the tax at the time of credit or payment, whichever is earlier. c....
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.... held that once TDS is deducted on the mobilization advance, distributed and which are to be adjusted against the work bills to be raised by the assessee and paid to Central Government, credit of the same should be given to the assessee in order to avoid all sorts of complications in the year of deduction of TDS. The AR has also relied on the decisions of Sadhav Engg Ltd. 45 taxmann.com 333 (Ahd); Zelan Projects Private Limited (ITA 1361/Hyd/2013); Chandershekhar Agarwal vs ACIT (ITAT Delhi) in this regard." Ld. AR for the assessee also relied upon the orders passed by the coordinate Bench of the Tribunal in the case of HCL Comnet Systems and Services Ltd. vs. DCIT in ITA No.3221/Del/2017 order dated 31.12.2019. 14. Ld. DR for the Revenue....