TaxTMI 
TaxTMI 
2023 (2) TMI 1215
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....2 grounds. The gist of the grounds raised in appeal assailing the assessment order is as under: I. General ground II. Disallowance u/s 14A of the Act r.w.r. 8D III. Disallowance of claim for Education Cess IV. Disallowance of interest paid of Perpetual Non-Convertible Debentures ("PNCDs") V. Disallowance of expenditure incurred on Compensatory Afforestation VI. Deduction u/s 80G VII. Details of Capital Gains not considered properly VIII. Income from business as per Schedule BP not considered properly and arithmetical error in summation. IX. Disallowance u/s vis-à-vis computation of Book Profit u/s 115JB X. Non-grant of deduction of interest on PNCD in computation of Book Profit u/s 115JB XI. Short grant of TDS/TCS Credit XII. Non-Granting of Relief u/s 90/91 of the Act. SUBMISSIONS OF THE ASSESSEE 4. Shri Nitish Thakkar appearing on behalf of the assessee submits at the outset that he would not be pressing ground No. 3, 6, 7, 8 and 12 of the appeal. 4.1 In respect of ground No. 2, the learned Authorised Representative (AR) submits that during the period releva....
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....ect of ground No. 5 of appeal, the learned AR submits that the assessee is engaged in the business of manufacturing and sale of iron steel products. Raw material required for manufacturing finished goods are: coal, iron ore and other minerals. The assessee has been granted mining lease rights in the states of Jharkhand and Odisha for mining of coal, iron ore and other minerals. The mining lease areas which are covered under the forest areas are governed by statutes enacted for preservation of natural forest, management of wildlife, promotion of environmental services etc. The assessee under said statutes is under obligation to contribute to Compensatory Afforestation Fund. During the period relevant to assessment year under appeal, the assessee has contributed Rs. 9,84,356/- towards the Compensatory Afforestation Fund and has claimed the same as expenditure u/s 37(1) of the Act. The AO disallowed the same. The DRP simply followed the directions of DRP in AY 2014-15. The DRP in AY 2014-15 confirmed the addition just to keep the issue alive as the Department was contesting the issue in appeal before the High Court. In the impugned AY, the DRP upheld the findings of AO on the iss....
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....of section 14A of the Act. The learned DR in particular referred to the observation of DRP in para 8.2 of the directions on the issue. FINDINGS 6. We have heard the submissions made by rival sides and have examined the orders/directions of authorities below. 6.1 In ground No. 2 of appeal, the assessee has assailed disallowance u/s 14A r.w.r. 8D computed by the AO. Insofar as the amount of dividend income received by the assessee during the relevant period and the amount of suo-moto disallowance u/s 14A of the Act the same is not in dispute. The assessee is aggrieved that satisfaction by AO as required u/s 14A (2) of the Act before computing disallowance under Rule 8D is not recorded. Section 14A(2) of the Act mandates that "if the AO having regards to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income, the AO shall determine the amount of expenditure incurred in relation to such income in accordance with the method prescribed under Rule 8D." Though there is no prescribed performa/format for recording of the satisfaction, however, t....
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....s claim on the ground that the said expenditure claimed is not in the nature of interest. The assessee is not under obligation to repay Perpetual Debentures and hence, returns of such debentures cannot be classified as interest per se under the definition of interest under the provisions of the Act. We find that in AY 2011-12 and 2012-13, the PCIT had invoked revisional jurisdiction on the same issue. The matter travelled to the Tribunal. The Tribunal vide order dated 23/12/2022 (supra) held as under: "4.7. We find that the assessee during the course of assessment proceedings itself had submitted the entire facts of the case by placing on various provisions of the Companies Act and SEBI Regulations and had also taken efforts to explain the meaning of the term "debentures", "debts", "bonds", "shares" etc., under provisions of various Acts. The assessee had specifically pointed out in para 5 of its reply filed before the Id. AO vide letter dated 27/02/2015 filed on 02/03/2015 that the purpose of issue of this Hybrid Securities is clearly set out in page 39 of the Information Memorandum wherein it specifies that utilisation of funds proposed to be raised through this priva....
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....expenditure. The relevant extract of the findings of the Co-ordinate Bench on this issue are reproduced herein below: "4. We have heard the rival submissions and perused the material before us. We find that the CIT had invoked the provisions of section 263 of the Act with regard to three issues. that after due verification the AO had dropped two issues out of the three and had passed order about the first issue i.e. contribution to CAF We further find that identical issue was decided in favour of the assessee in various Benches of the Tribunal. In case of the sister concerns, the Tribunal had decided the issue in their favour. We would like to refer to the case of Ramgad Minerals and Mining Pvt. Ld. (supra) and it reads as under: "3. The Commissioner of income tax vide order at Annexure B confirmed the order of the Assessing Authority. The appellate Tribunal vide annexure-a has made the following observation. "We find force in the submission of the learned counsel that pavements to the Government are to be paid once the mining lease is obtained and such payments are governed by various acts along with the Apex Court making a ruling for State Governments t....
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.... the Act. The Special Bench of the Tribunal in the case of Asst. CIT Vs. Vireet Investments Pvt. Ltd. (supra) has held that the computation under clause (f) of Explanation 1 to section 115JB is to be made without resorting to the computation as contemplated u/s 14A r.w.r. 8D of the Act. Thus, in light of the decision of Special Bench on this issue, ground No. 9 of the appeal is allowed for parity of reasons. 6.9 In ground No. 10 of appeal, the assessee has assailed rejection of assessee's claim for deduction of interest on PNCD in computation of Book Profit u/s 115JB of the Act. The learned AR fairly admitted that the claim was not made in the return of income. The claim was made for the first time in assessment proceedings before the AO. 6.9.1 The Hon'ble Apex court in the case of Goetze India Limited (supra) as held that the AO has no power to accept claims other than the claims made in return of income/revised return of income. Thus, we find no error in the AO rejecting assessee's claim for deduction of interest on PNCD. However, the Hon'ble Apex Court has in an unambiguous terms has clarified that powers of the Appellate Tribunal are not impinged to admit additional claim....
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....earned DR vehemently defended the assessment order. The learned DR specifically referred to the findings of the AO in para 10.3 and 10.4 of the draft assessment order. The learned DR submits that the assessee has failed to furnish details of unpaid liability. 10. We have heard the submissions made by rival sides on the issue of disallowance of provisions for leave encashment. A perusal of the draft assessment order reveals that the AO in para 10.2 of the draft assessment order has observed that the assessee's claim for allowability of the provision for leave encashment in excess of the amounts actually paid till the date of filing of return of income cannot be entertained. Whereas, the case of the assessee is that claim has been made only on the basis of actual payments. The AR of the assessee has also drawn our attention to Note No. 4 to the accounts, the same reads as under: "4) The Company contends that the provision for leave encashment is not disallowable under section 43B in view of the decision of the Hon'ble High Court of Calcutta in the case of Exide Industries Limited vs. Union of India (2007) 292 ITR 470 (Cal.) and the Hon'ble Kerala High Court in the ca....