TaxTMI 
TaxTMI 
2020 (9) TMI 905
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....ricting the disallowance u/s 14A r. w. Rule 8D(2)(iii) to 5% of the dividend income without appreciating that the assessee could not justify the disallowance made by it suo moto in computation of income and therefore the assessing officer correctly made the disallowance u/s 14A r. w. Rule 8D (2)(iii) of the I.T Act 1961" 3. "On the facts and in the circumstances of the case and in law, the CIT('A) was erred in deleting the disallowance u/s 14A r.w. Rule 8D (2)(ii) without appreciating that as per clause 9 to Explain I to section 2 15J8, the assessing officer was required to disallow the expenses related to earning of exempt income and therefore the assessing officer correctly made the disallowance u/s 14A r.w. Rule 8D(2)(iii) of the I T Act 1961" 4. The appellant prays that the order of the Ld. CIT (A) he set aside and the order of the AO be restored. 5. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary." 3. The brief facts of the case are that the assessee filed its return of income on 27.11.2013 declaring total income to the tune of Rs. 17,19,57,570/- for the A.Y.2013-14. The case was selected....
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....is regard is very clear that the expenditure incurred in relation to an income which is otherwise exempt should not be allowed to be claimed against taxable income. Therefore, the expenditure incurred in relation to an income which is otherwise exempt, are required to be deducted while computing the dividend income and the total income. The appellant has not provided any justification for allocating 1% of the expenses involving the main heads of expenses stated to be treated as incurred for the purposes of maintaining the said investments and disallowed in the computation of total income. No details were furnished before me in this respect. Hence, under the circumstances, the amount disallowed by the appellant on account of administrative expenses towards earning of exempt income cannot be accepted as correct. Further, it is AR's own admission that the Hon'ble Tribunal while determining the 14A disallowance for the AY 09-10 and AY 10-11 in appellant's own case has found that administrative expenses disallowed by the appellant at the rate of 1% of total administrative expenditure are towards lower side. Apparently, the appellant has failed to offer any justification for ....
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....n vis-à-vis investments in the AY 11-12 and it has stood at Rs. 151,70,22,619/- since 31.03.2010. No fresh investments were made by the appellant during these years and all investments outstanding in the current year were investments made in earlier years. 6.3.5 It is also observed that similar disallowance was made in earlier years as well and the same was decided by the Hon'ble ITAT for AY 09-10 to AY 11-12. While deciding this issue in AY 11-12, the Hon'ble ITAT has given a finding vide it's order dated 15.12.2017 that all the investments made were made out of own funds and therefore no disallowance was required to be made under Rule 80(2)(ii) of the Act. The relevant part of the Order is as follows: However, it is relevant to note, in assessee's own case for AY 2009-10 and 2010-11 in ITA no.964/Mum/2013 dated 15/01/2015 and ITA no.5506/Mum/2014 dated 29/0312016 respectively, the Tribunal has restricted the disallowance of administrative expenses to 5% of the dividend income earned. While doing so. the Tribunal has observed that the assessee had sufficient interest free fund to make the investment. Facts are more or less identical in the impu....
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....d, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:- "8.1.1 I have carefully considered the assessment order and the written submissions of the appellant. The appellant has relied on the ratio laid down by the Hon'ble High Court of Bombay in the case of CIT vs. Bengal Finance & Investments Pvt. Ltd in ITA Nol337 of 201 3wherein it was held as under:- "So far as Question (b) is concerned, the impugned order of the Tribunal followed its decision in MIs. Essar Teleholdings Ltd. v/s. DCIT in ITA No. 3850/Mum/2010 to held that an amount disallowed under Section 14A of the Act cannot be added to arrive at book profit for purposes of Section 1I5JB of the Act. The Revenues Appeal against the order of the Tribunal in M/s. Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No.438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law." 3.1.2 Further the appellant has also relied on the decision of the Special Bench of the Delhi T....
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....onclusion of hearing. However, where it is not practicable to do so on the ground of exceptional and extraordinary circumstances, the bench could fix a future date of pronouncement of the order which shall not ordinarily be a day beyond a further period of 30 days. Thus, a period of 60 days has been provided under the extant rule for pronouncement of the order. This period could be extended by the bench on the ground of exceptional and extraordinary circumstances. However, the extended period shall not ordinarily exceed a period of 30 days. 6.2 Although the order was well drafted as well as approved before the expiry of 90 days, however, unfortunately, on 24/03/2020, a nationwide lockdown was imposed by the Government of India in view of adverse circumstances created by pandemic covid-19 in the country. The lockdown was extended from time to time which crippled the functioning of most of the government departments including Income Tax Appellate Tribunal (ITAT). The situation led to unprecedented disruption of judicial work all over the country and the order could not be pronounced despite lapse of considerable period of time. The situation created by pandemic covid-19 could be t....
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....staurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 9. Let us in this light revert to t....
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.... in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit ....