TaxTMI 
TaxTMI 
2024 (12) TMI 1054
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....wance worked out by the Appellant which has also not been found to be incorrect by the Assessing Officer under section 14A(2) of the Act. 3. On the facts and circumstances of the case and in law since the assessee had sufficient funds of its own, no borrowings were used for the purpose of any investment and consequently no interest is disallowable under section 14A of the Act. 4. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in completely ignoring the fact that prior to August 2006, the Company did not resort to any borrowings and hence investments made prior to August 2006 amounting to Rs. 1,391.26 crores ought to be excluded while computing the disallowance under Section 14A of the Act. 5. On the facts and in the circumstances of the case and in law, the Learned CIT (A) has erred in not relying on the auditor of the Appellant who, after due verification, have certified that the loans were used for the purposes for which they were obtained. 6. On the facts and in the circumstances of the case and in law, the Learned CIT (A) has failed to appreciate that interest paid on borrowed funds (i.e. working capital demand loan, buyers credit....
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....d deleting the addition of Rs. 57,02,96,000/- on valuation of inventory using FIFO method. 4.1. At the outset, the Ld.AR submitted that both these issues raised by the revenue are held in the favour of the assessee by coordinate bench of this Tribunal in assessee's own case as well as decision of Hon'ble Bombay High Court in ITA No. 1686 of 2019 dated 17.02.2012. 4.2. Ground No. 1 raised by the revenue is in allowing the software expenses related to website/portal. It is submitted that, for A.Y. 2008-09 revenue was in appeal before this Tribunal in ITA No. 3537/M/2012 on identical issue. This Tribunal vide order dated 08.01.2018 considered the issue by observing as under: "23. The only issue raised by the revenue in this appeal is against the deletion of the disallowance of Rs. 50,64,781/- by the Ld. CIT(A) as made by the Ld.AO by disallowing software expenses relating to website portal as capital in nature. 24. The facts in brief are that the assessee is in the business of printing and publishing of newspapers and periodicals on various online additions of Times of India, Economic Times, Mahabharat Times, Navbharat Times as well as various portals viz. Property Times, Ed....
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....ue stands covered by the decision of Hon'ble High Court in assessee's own case in ITA No. 1686/2009 vide order dated 17.02.2012 that was rendered for A.Y. 1997-98. Hon'ble High Court after considering the fact that LIFO method was consistently upheld by this Tribunal from A.Y. 1982-83, onwards observed as under: 3. "As regards question (i), the Tribunal has observed that the LIFO method of accounting of the closing stock was followed by the Assessee right from Assessment Year 1987-88. The Tribunal, following the decision of its coordinate bench, directed the Assessing Officer to value the closing stock in accordance with the LIFO method and further directed that if on verification it is found that duty bearing stock has been fully consumed in the year, no addition should be made. 4. The attention of the Court has also been drawn to an affidavit filed by the Assessee on 15 July 2009 in a companion Income Tax Appeal No.1904/2009. The Affidavit states that in the Assessment Year 1982-83, the Tribunal had, by its order dated 23 October 1991, held that the change in the method of valuing the closing stock from FIFO to LIFO method was bona fide and accordingly, accepted the c....
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....rved that identical issue has been decided by Hon'ble High Court, Mumbai in assessment years AY 1997-98 and by CIT(A) in A.Y. 2006-07 in favour of the appellant by holding that LIFO is an accepted method for valuation of stock and this method has been regularly followed by the assessee. This is not a case where the Assessing Officer was not satisfied with the completeness of the accounts of the assessee or where the method of accounting has not been regularly followed or does not comply with the accounting standards. Respectfully following the earlier years order, the AO is not justified in applying FIFO method for valuation of inventory. Ground is allowed. As observed by Hon'ble High Court LIFO method is consistent approach adopted by assessee and has been accepted by the authorities in the past. Respectfully following the same we do not find any infirmity in view taken by Ld. CIT(A) and the same is upheld." 7.1. Considering the fact that the Ld. CIT(A) rely on the view of Hon'ble High Court in assessee's own case. On this issue we do not find any infirmity in the view taken by the Ld. CIT(A) and the same is upheld. Accordingly Ground No 2 raised by the revenue stand....
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....ffered by the assessee having regards to the accounts submitted by the assessee was accepted. He placed reliance on the observations of coordinate bench of this Tribunal for A.Y. 2012-13 to 2014-15 in ITA Nos. 2166-2168/mum/2024 vide order dated 30/09/2024 as under: "10. We have given thoughtful consideration to the rival submissions and perused the material on record. 11. It is settled legal position that it was only after the Assessing Officer had recorded his dissatisfaction as regards the correctness of the voluntary disallowance made by an assessee under Section 14A of the Act that the provisions contained in Rule SD of the IT Rules can be invoked. Relevant observations of the Hon'ble Supreme Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT: 394 ITR 449, in this regard, are as under "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where ....
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....arning both exempt and taxable income; and in respect of the same the quantum of disallowance under Section 14A was computed at INR.4,16,898/- on proportionate basis (Exempt Income/Total Revenue). While rejecting the suo-moto disallowance made by the Appellant under Section 14A of the Act, the Assessing Officer neither made reference to nor alluded to either the accounts of the Appellant or the expenditure debited by the Appellant to the Profit & Loss Account for the relevant previous year. On perusal of paragraph 3.3 to 3.7 of the Assessment Order, we find merit in the contention advanced on behalf of the Appellant that the Assessing Officer has failed to record requisite dissatisfaction before invoking Rule 8D of IT Rules. During the course of hearing it was contended on behalf of the Revenue that the Assessing Officer has recorded that the voluntary disallowance computed by the Appellant was not as per provision of Rule 8D of the IT Rules and the same constituted requisite satisfaction. We note that the aforesaid contention of the Revenue was rejected by the Hon'ble Bombay High Court in the case of Principal Commissioner of Income Tax-2 Vs. Bombay Stock Exchange Ltd: [2020] ....
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....tertained. 15. Accordingly, appeal is dismissed." (Emphasis Supplied) 15. In view of the above, we hold that the Assessing Officer has failed to record requisite dissatisfaction in terms of Section 14A(2) of the Act before invoking the provisions contained in Rule 8D of the IT Rules. Therefore, the additional disallowance of INR.1,43,83,306/- made by the Assessing Officer as per Section 14A of the Act read with Rule 8D of the IT Rules cannot be sustained and is, therefore, deleted. Thus, Ground No. 2.1, 2.2 and 2.5 raised by the Appellant are allowed while Ground 2.3, 2.4 and 3 are dismissed as being infructuous." 8.5. He thus submitted that, rejecting disallowance computed by the assessee was not in accordance with Rule 8D would only arise once the Ld.AO is not satisfied of the suo moto disallowance made by the assessee having regards to the accounts of the assessee. The Ld.AR contended that once the assessee makes the suo moto disallowance tinkering can be made to the disallowance by the Ld.AO only after recording satisfaction that such a disallowance was not in consonance with the accounts of the assessee. He submitted that in present facts of the case the suo moto disallow....
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....oints of time and for each transaction the appellant needs to establish that no interest bearing funds/O.D. limits were utilized. This could be only possible if appellant had produced the day to day cash flow statement of not only the previous year but also of past years when the investments were made. It is very much possible that an assessee may have say Rs. 10 Cr. of share capital and reserves but no cash balance to invest and that he utilizes the O.D. a/c for making the investments. Thus, the comparison of share capital plus reserves vis-à-vis investment cannot lead to conclusion that investment was made out of interest free funds. It is also banai that interest is paid on outstanding balances and these could be continuing from past many years. In fact to overcome such complications and differences Rule 8D was brought in statute and onus is on the appellant to establish with cash flows that there was no interest bearing funds employed for making the investments and there was no indirect expenses relatable to such investments. In the case of Reliance Utilities and Power Ltd cited by the appellant there was a clear finding of fact that that assessee had interest-free funds....