TaxTMI 
TaxTMI 
2021 (5) TMI 237
X X X X Extracts X X X X
X X X X Extracts X X X X
....e same on the facts and law applicable, the disallowance as made being erroneous is to be deleted. 3. On the facts and circumstances of the case, the Assessing Officer had erred in making a disallowance of Rs. 7,11,040/- U/s. 14A read with rule 8D(2)(iii) of the I.T. Act, 1961 and the learned Commissioner of Income tax (Appeals) has erred in partially confirming the same. The disallowance as made and confirmed being against the principles of law and on facts totally erroneous and is liable to be deleted. 4.1 The learned Assessing Officer had erred in disallowing a sum of Rs. 28,99,40,548/- debited to Profit and Loss Account by holding that the appellant already claimed benefit of Section 80IB(10) in earlier year and the learned Commissioner of Income tax (Appeals) has erred in confirming the same on the grounds that the entries were only book adjustments. The facts and circumstances of the case have not been appreciated by the lower authorities. On proper appreciation of the facts, it will be clear that the amounts debited to Profit and Loss Account were with respect to non 80IB projects and trading loss written off and are to be allowed as claimed. 4.2 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r exceed exempted income earned by assessee during particular Assessment Year and further without recording satisfaction by AO that apportionment of such disallowable expenditure made by AO with respect to exempted income is not acceptable for reasons to be assigned by AO, he cannot resort to computation method under Rule 8D. It is also submitted by AR that at best disallowance should be restricted to exempted income to the tune of Rs. 4,180/-. We have heard both the parties and perused the material on record. Learned DR relied on the order of lower authority. 6. We find force in the argument of learned AR that disallowance under section 14A r.w.r. 8D cannot go beyond the extent of exempted income itself. This view is fortified by the judgment of Madras High Court in the case of CIT Vs. Chettinad Logistics (P.) Ltd., 80 taxmann.com 221 and also by judgment of Delhi High Court in the case of Joint Investments (P) Ltd vs. CIT 372 ITR 694. Following the aforesaid decision of the Madras High Court in the case of Envestor Ventures Ltd., (supra), deleted the disallowance made under section 14A r.w.r. 8D. Same view was taken by Co-ordinate Bench in the case of Global Teck Park Pv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the addition at best be restricted to Rs. 27.80 Crores on account of claim of reduction in closing stock of work in progress. On the other hand, learned DR on the order of the lower authorities. 9. We have heard both the parties and perused the material on record. The assessee furnished the details of claim of deduction under section 80IB(10) in earlier years which was to the tune of Rs. 27,80,57,341/-. However, the AO considered the deduction claimed by assessee in earlier years to the tune of Rs. 28,99,548/-. Thus, the disallowance is in excess of Rs. 1,18,83,207/-. The learned AR submitted that the disallowance on account of reduction in value of closing stock of work in progress in the Assessment Year under consideration due to change of applicability of accounting standing from AS 7 to AS 9 to be restricted to only to the extent of Rs. 27,80,57,341/- on which the assessee has claimed deduction under section 80IB(10) of the Act in earlier years and the balance of Rs. 1,18,83,207/- on which the assessee has not claimed deduction under section 80IB(10) in earlier years. Hence, the disallowance in this Assessment Year shall be restricted to Rs. 27,80,57,341/- only account of ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment order 4. Adjustment loss shown in general reserve (26,54,25,171) This has not been claimed as deduction in the return of 5. Loss from Project income Mahaveer (8,20,29,838) Already disallowed under para 16 of the Asst. Order Unexplained reconciliation Nil 12. Thus, he submitted that there was a difference of Rs. 8,20,29,838/- on account of change in following of accounting standard from AS 7 to AS 9 in the valuation of closing work in progress and that was already disallowed by AO in his order in para 16 by observing as follows and once again disallowing this difference of Rs. 8,20,29,838/- amounting to double disallowance, which should be disallowed: "15. As above, it is seen that the total revenue is taken at Rs. 168.78 crores and the cost is taken at Rs. 117.07 crores. The profit arrived at thereon at Rs. 51,70,81,586/- has already been claimed as deduction u/s. 801B(10) in earlier years from Asst. year 06-07 to Asst. Year : 09-10. Nonetheless, the assessee company has now claimed the same receipt and expenses as below u/s. AS-9. Receipt/ expenses in Asst. Year : Cost 23,41,57,594 , Revenue 15,21,27,756 Tota....