TaxTMI 
TaxTMI 
2021 (6) TMI 539
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.... (Appeals) is contrary to the law and facts of the case. 2) The Learned A.R CIT(A) erred in directing the AO to verify the assessee submission with the respect to assessment record and to restrict the disallowance of excess deduction claimed u/s 35(2AB). 2.1) The Ld CIT(A) ought to have appreciated that the DSIR is the central agency which assessee the R&D work done by the assessee and quantified the eligible amount The assessee is not eligible to claim more than that is certified by the DSIR itself. 2.2) The Ld CIT(A) failed to note that the assessee claimed the excess deduction u/s35(2AB). 3)The CIT(A) erred in restricting the disallowance u/s 14A to the amount of dividend income. 3.1)The CIT(A) ought to have appreciated that as per section 251(1)(a) of the Act, the "power to set aside" are " examining the issue afresh" has been omitted with effect from 01.06.2001 as per Finance Act 2001. 3.2) The order of the Hon'ble ITAT on the similar issue in the case of M/s.EIH Associated Hotels Limited (2013-TOIL-796--ITAT-MAD, dt. 17.07.2013) has not been accepted by the Department and further appeal in TCVA No.227 of 2014 is pending before the Hon'ble High Court. 3.3 The Ld ....
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....ppeals) erred in upholding the disallowance of interest expenditure u/s 14A of the Income tax Act read with Rule 8D(2)(ii) amounting to Rs. 2,41,82,017/-. The learned CIT (A) ought to have appreciated that the appellant has sufficient internal accruals to cover the entire amount of the investments made and that no part of the borrowed funds were used by the appellant to make the investments. The learned CIT (A) ought to have appreciated that no part of the borrowed funds could be attributed for making the investments and consequently no part of interest expenditure could be disallowed by invoking section 14A r.w. Rule 8D(2)(ii). Ground No 2: The learned CIT (A) erred in not providing a specific direction in his order allowing our claim of deduction u/s 35(1)(iv) of the capital expenditure in respect of the R&D building. The learned CIT (A) ought to have appreciated that the clause (2) of section 35(2AB) restricts that the expenditure claimed u/s 35(2AB) should not be again claimed under any other provisions of the Act. But since this amount is claimed only u/s 35(1)(iv) and not under section 35(2AB), the said clause is not applicable to the case. The learned CIT(A) ough....
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....f balance 50% additional depreciation claimed on new plant &machinery acquired and put to use during the relevant previous year. 5. The assessee carried matter in appeal before the first appellate authority and challenged various additions made by the Assessing Officer. The learned CIT(A) vide its appellate order dated 27.12.2017 has partly allowed appeal filed by the assessee, where he has allowed partial relief in respect of additions made towards disallowance of expenditure u/s.14A of the Act, deleted additions made towards disallowance of balance 50% of additional depreciation and further deleted additions made by the Assessing Officer towards disallowance of capital expenditure incurred on R&D u/s.35((1)(iv) of the Act. However, he confirmed additions made by the Assessing Officer towards disallowance of various payments made to nonresidents u/s.40(a)(i) of the Act for non-deduction of TDS u/s.195 of the Act. Aggrieved by the order of the learned CIT(A), the Revenue as well as assessee are in appeal before us. 6. The first issue that came up for consideration for both assessment years from the appeal of Revenue as well as the assessee is disallowance of expenditure incurred....
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....rders of the authorities below. As regards direct expenses relatable to exempt income, as required to be computed under Rule 8D(2)(i), the assessee itself has computed total disallowance of Rs. 42.49 lakhs and hence, question of reduction of disallowance computed by the assessee in its original return of income does not arise. Therefore, disallowance computed by the assessee under Rule 8D(2)(i), is restricted to suo motu disallowance as computed by the assessee for both assessment years. 10. As regards disallowance of interest under Rule 8D(2)(ii), it was claim of the assessee that it has sufficient own funds in the form of share capital and reserve, which is over and above total investments made in dividend bearing investments. We find that co-ordinate Bench of ITAT., Chennai in assessee's own case has considered identical issue and after considering relevant facts and has also by following decision of Hon'ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd. (366 ITR 505) held that no disallowance could be made towards interest expenditure, when assessee has sufficient own funds, which is over and above the amount of investments in exempt bearing investments. We further n....
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..../s.35(2AB) of the Act amounting to Rs. 13,92,00,166/-. In support of its claim, the assessee has produced certificate from the Department of Scientific and Industrial Research in form 3CL, in which DSIR has certified a sum of Rs. 85,81,000/- for capital expenditure other than building and a sum of Rs. 5,89,43,000/- for revenue expenditure and thus, out of total expenditure claimed by the assessee of Rs. 6,09,24,237/-, the DSIR has certified and quantified a sum of Rs. 6,75,24,000/-. The Assessing Officer has allowed weighted deduction of 200% under section 35(2AB) on the basis of certificate issued by DSIR in form 3CL and accordingly, disallowed a sum of Rs. 41,52,000/- out of total deduction claimed by the assessee u/s.35(2AB) of the Act. Further, the assessee has also claimed 100% deduction of R&D expenditure incurred towards building construction amounting to Rs. 1,02,85,856/-. Since the capital expenditure is not entitled for weighted deduction u/s.35(2AB) of the Act, the Assessing Officer has disallowed capital expenditure on R&D on building amounting to Rs. 1,02,85,856/-. 13. The learned AR for the assessee submitted that learned CIT(A) has erred in confirming disallowance o....
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....1) of the Act. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards disallowance of uncertified portion of R&D expenditure. Hence, we are inclined to uphold the findings of learned CIT(A) and reject ground taken by the Revenue. 16. As regards disallowance of capital expenditure incurred on R & D building u/s.35(1)(iv), it was claim of the assessee that capital expenditure on R&D building has not been claimed u/s.35(2AB) of the Act and hence, same is very much allowable u/s.35(1)(iv) of the Act. We find that the Hon'ble Jurisdictional High Court of Madras in the case of M/s. Tubes Investments Ltd vs. CIT(supra), has considered an identical issue and held that in order to claim deduction u/s.35(1)(iv), approval of the authority prescribed u/s.35(2AB) is not an essential pre-requisite, if it is found that a part of the claim falls within ambit of section 35(1)(iv) of the Act. Further, mere fact of a claim not having been found admissible u/s.35(2AB) will not constitute a bar to allow an expenditure u/s.35(1)(iv), if that expenditure is capital expenditure and falls squarely within ambit of section 35(1)(iv) of t....
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....ng preceding previous year, then balance 50% of additional depreciation should be allowed in subsequent years, because there is no bar under the Act to claim full additional depreciation, if other conditions prescribed for claiming additional depreciation are fulfilled. 20. We have heard both the parties, perused material available on record and gone through orders of the authorities below. There is no dispute with regard to fact that the assessee has acquired additional plant and machinery over and above prescribed limit, which is eligible for 20% additional depreciation as per section 32(1(iia) of the Act. The only dispute is with regard to period of acquisition of said asset and claiming depreciation as per proviso (iia) to section 32(1) of the Act. The Assessing Officer has disallowed balance 50% of additional depreciation on the ground that there is no provision under the Act to carry forward balance additional depreciation to subsequent years. It was claim of the assessee that additional depreciation should be allowed, if conditions prescribed for claiming additional depreciation are fulfilled. We find that the Hon'ble Karnataka High Court in the case of CIT Vs. Rittal India....
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.... the consultant in India is more than 183 days and hence, same is taxable in India, as per section 9(1)(i) of the Act, since he becomesa resident in India u/s. 6(1)(a) of the Act. Similarly, for assessment year 2014-15, the Assessing Officer has disallowed rework charges and subscription charges paid to non-residents on the ground that payment is in the nature of fees for technical services, which falls under definition as per section 9(1)(vii)(b) of the Act . The Assessing Officer has also made disallowance towards fees paid to Michigan University and Centre for creative leadership towards tuition fee for course conducted by them to the employees of the assessee on the ground that same was covered by definition of royalty in Explanation 2 to section 9(1)(vi) of the Act. It was claim of the assessee before the Assessing Officer that payments to warehousing and logistic service charges and export commission is covered by Article 7 of DTAA and hence, which is in the nature of business profits and not liable to tax in India, consequently, requirement of deduction of TDS u/s.195 does not arise. The assessee further claimed that professional fees paid to Tileke & Gibbins International L....