TaxTMI 
TaxTMI 
2020 (12) TMI 188
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....t of assessee‟s claim for deduction u/s 80IC of the Income-tax Act, 1961 (hereinafter referred to as "the Act‟) in respect of income earned from sale of scrap. 3. The assessee in the present case is a company which is engaged in manufacture and sale of insulated wires, cables, etc. The return of income for the year under consideration i.e. A.Y. 2012-13 was filed by the assessee on 28.09.2012 declaring a total income of Rs. 15,51,58,240/- after claiming a deduction of Rs. 77,78,90,760/- u/s 80IC of the Act for the entire profit of its LDC Division at Roorkee. During the course of assessment proceedings, the claim of assessee for deduction u/s 80IC of the Act was examined by the Assessing Officer. On such examination, he found that deduction u/s 80IC of the Act was claimed by the assessee even in respect of sale of scrap amounting to Rs. 2,97,84,396/-. In this regard, it was submitted on behalf of the assessee company that the sale of scrap was eligible for deduction u/s 80IC of the Act as the same was derived from the eligible undertaking which was engaged in the business of manufacturing and sale of various types of cables, etc., from which the scrap was generated. Thi....
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....er:- "3. Heard both parties and perused the material available on record. The AO denied the claim of assessee in claiming deduction u/s. 80IC of the Act in respect of income from sale of manufacturing scrap at Roorkee Plant. The CIT(A) by placing reliance on the order dated 06-03-2012 of this Tribunal in assessee‟s own case for A.Y. 2003-04 and also for A.Ys. 2002-03, 2004-05 and allowed the claim of assessee by holding that the income earned from sale of scrap is an eligible business and the assessee is entitled to claim the said income as deduction u/s. 80IC of the Act vide para 5.2 of impugned order. No contrary order was brought on record by the appellant-revenue. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, only ground raised by the Revenue is dismissed." 6. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years including A.Y. 2014-15, we respectfully follow the orders of Tribunal for the said years and uphold the order of ld. CIT(A) directing the Assessing Officer to allow the claim of assessee for deduction u/s 80IC of the Act in respect of sale of....
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....ing Officer u/s 14A of the Act read with rule 8D of the Rules in the assessment completed u/s 143(3) of the Act vide an order dated 04.02.2015. 9. The disallowance made by the Assessing Officer u/s 14A of the Act read with rule 8D of the Rules was challenged by the assessee in the appeal filed before the ld. CIT(A). During the course of appellate proceedings before the ld. CIT(A), it was inter-alia, contended on behalf of the assessee that the Assessing Officer was not justified in invoking rule 8D of the Rules to make disallowance u/s 14A of the Act without first demonstrating as to how the disallowance made by the assessee company suo motu was incorrect. The ld. CIT(A) did not find merit in this contention as well as other contentions raised on behalf of the assessee company and rejecting the same, he proceeded to confirm the disallowance made by the Assessing Officer u/s 14A of the Act read with rule 8D of the Rules. Aggrieved by the same, the assessee has preferred this appeal before the Tribunal. 10. We have heard the arguments of both sides and perused the material available on record. It is observed that a similar issue as involved in the year under consideration i.e. A.Y....
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.... 14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act:" A bare perusal of sub-section (2) to section 14A makes it clear that recording of satisfaction by Assessing Officer to the effect that the claim made by assessee in respect of expenditure in relation to income which does not form part of the total income....
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....1-2015. 10. We find that the Commissioner of Income Tax (Appeals) has erred in coming to conclusion that the Assessing Officer has recorded satisfaction regarding applying Rule 8D. We further observe that reliance placed by the Commissioner of Income Tax (Appeals) on the decision of Co-ordinate Bench of the Tribunal in the case of Lap Finance & Consultancy Pvt. Ltd. (supra) is misplaced, as the facts of aforesaid case are distinguishable. In the said case, the assessee had not made any self disallowance of expenditure against exempt income earned. The assessee was given opportunity to explain the reasons. 11. A perusal of assessment order reveals that the Assessing Officer at the outset asked the assessee to furnish explanation as to why proportionate amount of interest expenditure should not be disallowed under Rule 8D r.w. section 14A of the Act, instead of first examining the suo-moto disallowance made by assessee and seeking explanation from the assessee the manner of computation of such disallowance. The Assessing Officer proceeded on the premise as if disallowance u/s. 14A r.w. Rule 8D is automatic irrespective of the genuineness of claim made by assessee. 12. The Hon'b....