TaxTMI 
TaxTMI 
2021 (11) TMI 237
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....for the assessment year under consideration declaring nil income under the normal provisions of the Act, declaring loss of Rs. 40,32,77,160 (to be carried forward). However, the tax was computed and paid under the provisions of section 115JB of the Act. The return was processed u/s. 143(1) of the Act. Later on, the case was selected for scrutiny and the AO passed assessment order u/s. 143(3) of the Act and inter alia made addition of Rs. 38,42,911/- on account of disallowance u/s. 14A read with Rule 8D of the Act, addition of Rs. 12,94,605/- on account of disallowance u/s. 36(1)(iii) of the Act and addition of Rs. 2,01,282/- being proportionate interest @3% less charged on loan advanced to its sister concern. Further AO determined the net book profit u/s. 155JB at Rs. 1,14,10,990/- as against the profit offered by the assessee amounting to Rs. 73,17,985. In the first appeal the Ld. CIT(A) held that disallowance u/s. 14A read with rule 8D is applicable in this case, however, directed the AO to recompute the disallowance under rule 8D by considering only those investments from where the exempt income has been received. The Ld. CIT(A) further confirmed the addition made u/s. 36(1)(iii....
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....before us that this issue is covered in favour of the assessee by the decision of the jurisdictional Tribunal in Group company case Oswal Woolen Mills Ltd. vs. ACIT, ITA No. 37/Chd/2015 pertaining to the assessment year 2010-11. The Ld. counsel further submitted that no new investment was made in the previous year rather investments were reduced to Rs. 95.14 Cr. from 105.64 Cr. in the preceding year. The Ld. counsel further contended that since the facts and the issue involved in the present case are similar to the facts of the case and issue involved in its group company case, this issue may be decided accordingly. 5. On the other hand, the Ld. departmental representative supporting the findings of the Ld. CIT(A) submitted that the Ld. CIT(A) has rightly directed the AO to recompute the disallowance u/s. 14A of the Act read with Rule 8D of the Income Tax Rules. Since the findings of the Ld. CIT(A) are as per the provisions of the Act and in accordance with the settled law, there is no merit in the contention of the assessee. The Ld. DR however, admitted that the Tribunal has dealt with the identical issue in the group company case aforesaid. 6. We have heard the rival submis....
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....ed with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Sub-section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect of such expenditure is correct. The satisfaction of the Assessing Officer must be arrived at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee. We may further observe that the Hon'ble Delhi High Court in a recent decision has further given a similar view in the case of "CIT vs. Taikisha e....
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....fter affording a reasonable opportunity of being heard to the appellant/assessee. 8. Vide ground No. 3 the assessee has challenged the action of the Ld. CIT(A) in confirming the disallowance of Rs. 12,94,605/- made by the AO out of the interest paid on working capital limit on CC Account, ignoring the fact that the company had its own sufficient funds. The Ld. counsel submitted before us that this issue is covered in favour of the assessee by the decision of the Chandigarh Bench of the Tribunal in the case of group company M/s. Monte Carlo Fashion Ltd. ITA No. 1341/Chd/2016. The Ld. counsel further relied on the following cases to substantiate his contention:- 1. ACIT vs. Janak Global Resources Pvt. Ltd. 175 ITD 365 (Chd) 2. Bright Enterprises (P) Ltd. vs. CIT 381 ITR 107 (Pb.) 3. CIT vs. Kapson Associates 381 ITR 204 (Pb) 4. CIT vs. Max India 398 ITR 209 (Pb) 5. CIT vs. Reliance India Ltd. 410 ITR 466 (SC) 6. Godrej & Boyce Manufacturing Co Ltd. vs. DCIT 394 ITR 449 (SC) 9. On the other hand, the Ld. DR vehemently supported the order passed by the Ld. CIT(A) and submitted that there is no legal or factual infirmity in the....
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....f Rs. 2,01,282/- made by the AO on proportionate basis on loan given to its sister concern. The Ld. counsel submitted before us that this issue is covered in favour of the assessee in assessee's own case ITA No. 1340/Chd/2016 for the assessment year 2010-11. The ld. counsel accordingly submitted that since the findings of the Ld. CIT(A) are contrary to the decision of the Tribunal, the same may be set aside. 13. On the other hand, the Ld. DR fairly admitted that the Tribunal has already decided this issue in favour of the assessee in assessee's own case referred by the Ld. counsel however, the Ld. DR supported the decision of the Ld. CIT(A). 14. As pointed out by the Ld. counsel, the Tribunal has already dealt with this issue and has decided the same in favour of the assessee in assessee's own case for the assessment year 2010-11. The relevant para of the order dated 15.05.2018 passed by the coordinate Bench reads as under:- "7. We have gone through the balance sheet produced by the assessee which shows a reserve and surplus of Rs. 142.47 crores. The advance amount against the said reserves and surpluses was Rs. 3 crore only, that too, was advanced by the....
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.... Ld. CIT(A) on the following grounds:- 1. That the Worthy CIT(A)-3, Ludhiana, erred in law and on facts in not directing the Ld. Assessing Officer, not to apply rule 8D, in view of the fact that no dis-satisfaction with cogent reasons was recorded in the order regarding the correctness of the claim of expenditure in relation to income which does not form part of total income. Directions be given not to apply Rule 8D as the provisions of Section 14A (2) are not applicable in the case herein. 2. That the Worthy CIT(A)-3, Ludhiana, erred in law and on facts in not deleting the additional disallowance u/s. 14A read with rule 8D of the Income Tax Act of Rs. 41,58,517/-. Directions may be given to make the disallowance u/s. 14A as computed on proportion basis by the Appellant Company in the return, in view of the decision of various Appellate Courts wherein the method of proportion has been held to be a recognized method for disallowance u/s. 14A of the Act. 3. That the Worthy CIT(A)-3, Ludhiana erred in law and on facts in not deleting the disallowance of Rs. 3,66,039/-, out of interest paid on working capital limit, on account of addition to....