2023 (3) TMI 473

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....ified in allowing the additional ground raised by the assessee in respect of reversal of disallowance u/s 14A of Rs.1,39,71,272/- made by the assessee itself in its return of income while computing its income thereby disregarding the judicial pronouncement of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. ITR 323? 4) Whether on the facts and in the circumstances of the case and in law, the CIT(A) was correct in holding that no disallowance u/s 14A is called for, thereby resulting in a situation where the assessed income of the assessee would now be less than the income returned by the assessee? 5) For the facts and such other reasons an may be urged at the time of hearing, the order of the Ld. Commissioner of Income Tax (Appeals)-9, Pune may be vacated and that of the Assessing Officer be restored" 6) "The appellant craves leave to add, amend or alter any of the above grounds of appeal." 3. Briefly, the facts of the case are as under :- The respondent-assessee is public company registered under the Companies Act, 1956 engaged in the business of real estate development. The Return of Income for the assessment year 2012-13 was filed on 2....

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.... the assessment years 2009-10 and 2010-11 had attained the finality. 4. Subsequently, the sales which were reversed in the financial years relevant to the assessment years 2009-10 and 2010-11 were shown as sales during previous year relevant to the assessment year 2012-13. During the course of assessment proceedings under consideration, the respondent-assessee had submitted that the sales which were shown by the respondent-assessee during the previous year relevant to the assessment year 2012-13 are part of the sales shown in the earlier assessment years 2009-10 and 2010-11, which were assessed to tax as per the original returns of income and, therefore, the amount which were taxed in the assessment years 2009-10 and 2010-11 cannot be taxed again in the assessment year 2012-13 (assessment year under consideration), as it amounts double additions. The said submissions were recorded by the Assessing Officer in para 3.14 of the assessment year. The Assessing Officer while accepting the contentions of the respondent-assessee had chosen to make protective addition for the year under consideration for the reason that the appeal filed against the assessment order was pending disposal b....

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....urt in the case of Goetze (India) Ltd. vs. CIT, 284 ITR 323 (SC), the ld. CIT(A) ought not to have held that no disallowance u/s 14A is warranted, inasmuch, as result of deletion suo motu of disallowance offered by the respondent-assessee u/s 14A it resulted in assessed income is lower than the returned income.. 8. On the other hand, ld. AR taking us through the assessment orders for the assessment years 2009-10 and 2010-11 and the impugned orders submits that the protective addition of Rs.12,79,75,157/- u/s 80IB(4)(iii) is nothing but a double addition as the assessment orders passed in the assessment years 2009-10 and 2010-11 attained the finality. He further submits that once the double addition is deleted, the question of examining the eligibility for deduction u/s 80IA(4)(iii) does not arise. As regards to the disallowance u/s 14A, he submits that during the year under consideration, the respondent-assessee had not made any fresh investments, which yielded the exempt income. He further submits that in the earlier assessment years 2010-11 and 2011-12 in which the investments were made as it think today, no disallowance u/s 14A r.w. Rule 8D(2)(ii) was made, consequently qu....

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....ales reversed during the financial year relevant to the assessment years 2009-10 and 2010- 12. The submission of the ld. CIT-DR cannot be accepted for another reason that it is settled position of law that the Department Representatives cannot argue the matter beyond the scope of the assessment order. We do not find any merits in the ground of appeal no.2 filed by the Revenue, hence the same is dismissed. 13. Ground of appeal nos.3 and 4 challenges the decision of the ld. CIT(A) reversing the disallowance offered by the respondent-assessee u/s 14A of Rs.1,39,71,272/-. The respondent-assessee in the return of income offered suo motu disallowance of Rs.88,56,524/- being disallowance of interest under Rule 8D(2)(ii) and Rs.51,14,748/- being the amount of disallowance under Rule 8D(2)(iii). However, during the course of proceeding before the ld. CIT(A), the respondent-assessee raised the additional ground of appeal contending that the respondent-assessee made investments which yielded the exempt income out of the interest free funds, therefore, no disallowance under Rule 8D(2)(ii) is warranted. Further, it was contended that the disallowance of expenditure under Rule 8D(2)(iii) w....