TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 743
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....nce of office automation equipment. The return of income was filed declaring an income of Rs. 16,41,93,722/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee had debited an amount of Rs. 4,69,39,754/- on account of 'post sales customers support and warranties' in the Profit and Loss account. The Assessing Officer observed that these expenses were debited on provisional and estimated basis and, therefore, the assessee was required to explain the basis for creating these provisions with the help of supporting documents. Thereafter, considering the submissions of the assessee, the Assessing Officer came to the conclusion that the estimates made by the ass....
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.... to year pointed out in detail in the Assessment order in para 8 of the order. 2. On the facts and in the circumstances of the case the Ld CIT(A) erred in law in restricting the disallowance from Rs. 2,73,665/- to Rs. 1,01,352/- made by the Assessing officer u/s 14A in accordance with the Rule 8D of Income Tax Rules, 1962. 3. On the facts and in the circumstances of the case, the Ld CIT(A) erred in law as Ld CIT(A) has not given any basis for deleting the disallowance of interest expenses and changing the computation of disallowance of interest u/s 14A r.w.r 8 D(2)(iii) of Income Tax Rules, 1962. 4. Whether for Application of Section 14A(1) of the Income Tax Act, 1961 the purpose for making investment and earning tax exempt income the....
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....rred to the observations of the Assessing Officer that during the Financial Year 2012-13, there had been a reversal of provision for warranty amounting to Rs. 3,60,03,317/- indicating that the estimates made by the assessee were not reliable. The Ld. Sr. DR argued that the estimates made by the assessee for making the impugned provision were neither on a scientific basis nor reliable and, therefore, the Assessing Officer had rightly made the disallowance. 3.1 With reference to the disallowance U/s 14A of the Act, she supported the order of the Assessing Officer. 4.0 Per contra, the Ld. Authorized Representative (AR) placed reliance on the findings of the Ld. CIT(A) and while vehemently supporting them submitted that the Ld. CIT(A) had rig....
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....e provision is made. It was also submitted before the Lower Authorities that the assessee company provided free replacement of parts against the manufacturing defects and also provided preventive maintenance checks for the equipment sold during the period ranging from 1 to 3 years and, accordingly, provision was made for the costs likely to be incurred during the warranty period on a consistent basis that is material cost being estimated at 1 to 3% of sale value for each year and labour cost at 75% of the standard labour cost. It was also the assessee submissions before the Lower Authorities that the provision is estimated on past trends and experience and is worked out every year. It was also submitted before the Lower Authorities that if ....
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....ions of the assessee without returning a finding on fact. In such a situation, we deem it appropriate to restore this issue to the file of the Ld. CIT(A) for considering the issue afresh and, thereafter, adjudicate on the issue by passing a speaking order after giving proper opportunity to the assessee. Accordingly, the Department succeeds on ground No.1 and the same stands allowed for statistical purpose. 5.3 As far as the issue of deletion of deletion u/s 14A of the Act is concerned, it is seen that during the year under consideration, the assessee had earned dividend income amounting to Rs. 20,21,500/- from equity shares and mutual funds. The assessee had claimed exemption of this income u/s 10(34) & 10(35) of the Act and had suo moto m....
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....ciating that in the present case, no part of interest could have been said to have been incurred in relation to exempt income. In the assessment order, the Assessing Officer has not pointed out even a single expenditure having been incurred by the assessee during the year which was having proximate nexus with the exempt dividend income earned during the year. It is very much apparent that the Assessing Officer, while computing the disallowance u/s 14A, considered the entire investments whereas the disallowance u/s 14A read with Rule 8D is in relation to the income which does not form part of the total income and this can only be done by taking into consideration the investment which has given rise to the income which does not form part of t....