TaxTMI 
TaxTMI 
2021 (6) TMI 668
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....estricting the claim of deduction under section 80IA of the Act only to the extent of income from business and profession and thereby not allowing deduction to the extent of Rs. 15,07,380/- from the gross total income. The Appellant therefore prays that the Ld. AO be directed to allow the claim of deduction under section 80IA of the Act against the gross total income. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance of expenditure of Rs. 3,02,91,857/- made be the Ld. AO under section 14A of the Act ~ read with Rule 8D of the Income tax Rules, 1962 (" the Rules"). The Appellant therefore prays that the Ld. AO be directed to delete the disallowance of expenditure made under section 14A of the Act. 3. Without prejudice to Ground no. 2, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in making disallowance of Rs. 2,66,66,650/~ under section 14A of the expenditure incurred in relation to investment in its subsidiaries without appreciating the fact that investment in subsidiaries was for the purpose of acquiring ....
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....unable to give reply which means the ld. AR unable to substantiate his claim. After hearing of the case, the assessee filed a letter dated 22/04/2021 vide inward receipt No. 2094, dated 22/04/2021, stating that it does not want to press this ground, the contents of which are as under for ready reference: " NSL Renewable Power Private Limited 22 April, 2021 Registered Office: NSL ICON PO WE R 4th Floor, 8-2-684/2/A , Road No.12, Banjara Hills Hyderabad _ 500 034, Telangana www.nslpower.com ClN: U40 I09TG I 985PTC I 14078 Hon'ble Income Tax Appellate Tribunal- Hyderabad Dear Sir, Re: NSL Renewable Power Private Limited ('NSL' or 'We') AY 2011-12 - ITA No. 1024/Hyd/2017 (Assessee Appeal) Sub: Note on Ground No. 1 We refer to the captioned appeal which was heard before the Hon'ble 'A' Bench of the Income-tax Appellate Tribunal, Hyderabad on 22 April, 2021 for AY 2011-12. During the course of hearing, the authorized representative CAR') argued that Ground NO.1 raised by NSL in the captioned case is covered on merits by the ITAT....
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....: "10.2. As regards the principles of interpretation, the learned senior counsel for revenue has strongly relied upon the Constitution Bench decision in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co. and Ors: (2018) 9 SCC 1 to submit that it is now settled beyond doubt that taxing statutes are subject to the rule of strict interpretation, leaving no room for any intendment; and the benefit of ambiguity in case of an exemption notification or an exemption clause must go in favour of the revenue, as exemptions from taxation have a tendency to increase the burden on the unexempted class of tax payers. The same principles, according to the learned counsel, shall apply to Section 80-O of the Act and, for the law declared by the Constitution Bench, the decision relied upon by the learned counsel for the appellant in Baby Marine Exports (supra), which even otherwise dealt with Section 80HHC of the Act and not Section 80-O, is of no help to the appellant." 2.2 Accordingly, the assessee is not eligible to claim deduction u/s 80IA from the income from house property as claimed. Thus, we dismiss the ground no. 1 raised by the assessee on this issue. 3. Ground Nos....
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....). The assessee earned exempt income of Rs. 42,35,977/- as per computation of income. Therefore, we direct the AO to restrict the disallowance u/s 14A rwr 8D to Rs. 42,35,977/-. Thus, ground Nos. 2 to 4 raised in main appeal 1024/Hyd/2017 by the assessee are partly allowed. ITA No. 2031/Hyd/2018 - appeal by the revenue: 8. This appeal filed by the revenue for AY 2012-13 is directed against the CIT(A) - 4, Hyderabad's order, dated 20/07/2018 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short "the Act" on the following grounds of appeal: 1. The Ld. CIT(A) erred in restricting the disallowance u/s 14A from Rs. 12,73,86,991/- to Rs. 57/60/120/- i.e to the dividend income earned by the assessee which is in contravention to the CBDT Circular No. 5/2014 in this regard. 2. The Ld. CIT(A) erred in holding that the disallowance u/s 14A shall be restricted to the exempt income earned by the assessee. 3. The Ld. CIT(A) erred in deleting the addition made by the AO under the head "Income from Other Sources" to the tune of Rs. 57,60,121/-. 4. The Ld. CIT(A) erred in not remanding additional evidence, if any, with regard to claim of e....
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....r on the disallowance of expenditure u] s 14A read with rule 8D(2)(ii) made by the Ld. AO in respect of investments made in its subsidiaries, even though the Cross-objector has not earned any exempt income from such investments during the year. The Cross-objector prays that Ld. AO be directed to delete the disallowance of expenditure made under section 14A read with rule 8D(2)(ii) of the Act in respect of investments made in its subsidiaries, since it has not earned any exempt income from such investments during the year. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not giving relief to the Cross-objector while calculating the disallowance under section 14A read with rule 8D(2)(iii) made by the Ld. AO, by taking into consideration even those investments which have not yielded any exempt income during the year. The Cross-objector therefore prays that the investments made in subsidiaries which has not yielded any exempt income during the year should not be taken into consideration for calculating average investments for the purpose of disallowance under section 14A read with rule 8D(2)(iii). The Cross-obj....
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.... by the AO, the AO has taken the value of average investments of Rs. 174.87 crores, but, the contention of the assessee in the cross objections, the assessee has not received any exempt income from its subsidiaries. As per our thoughtful consideration, the disallowance u/s 14A rwr 8D(2)(ii) and (iii) the value of investments should be considered only on the investments from which the assessee has earned exempt income. In this connection, we rely on the decision of the coordinate bench of this Tribunal in the case of Transport Corporation of India Ltd. in ITA No. 117/Hyd/2016, order dated 21/09/2016, wherein the coordinate bench has held as under: "11. Considered the submissions of both the counsels and perused the material facts on record. The AR submitted that the assessee has sufficient own funds which are interest free to make investment. He also relied on various decisions, in particular, Reliance Utilities & Power Ltd. (supra). We cannot take this argument further because there exist interest bearing funds and it is difficult to identify the utilization of the funds in the business unless the assessee brings proper records to show that the specific interest free funds....
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....the above guidance. Accordingly, ground raised by assessee is allowed." 13.2 We direct the AO to recalculate the disallowance as per rule 8D as per the above guidance. We further direct the AO if the disallowance u/s 14A is higher in the recalculation made by the AO, the same shall be restricted to the extent of exempt income earned by the assessee as per the case law Joint Investment Pvt. Ltd. Vs. CIT 372 ITR 694 (Del.). 13.3. Further, the revenue has raised a ground regarding the dividend income of Rs. 57,60,120/- should be treated as income from other sources is also not correct. On the one hand, the Assessing Officer himself has treated it as a dividend income which is exempt and on other hand, he has treated as daily dividend income and taxed under the income from other sources. While recalculating disallowance u/s 14A, we have restricted the disallowance to the extent of exempt earned by the assessee or less than the exempt income, whichever is lower and the same amount cannot be taxed as income from other source, which amounts double taxation in the hands of the assessee. The dividend amount received by the assessee is exempt as per section 10(35) of the IT Act. The as....