AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 328
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....e orders of Ld. CIT(A) passed against the assessment/penalty order by Addl.CIT/ACIT/DCIT, Mumbai. Consolidated details of these appeals are tabulated below: Sr. No. ITA No. Order of CIT(A) Assessment order Assessment year Appeal by No. Date Passed by Date Passed u/s. 1. 4315/Mum/2007 CIT(A)-1/IT/210/04-05/32 10.03.2005 Addl. CIT Range 1(1), Mumbai 31.1.2005 143(3) 2002-03 Assessee 2. 4161/Mum2007 CIT(A)-1/IT/210/04-05/35 10.03.2005 Addl. CIT. Range 1(1), Mumbai 31.01.2005 143(3) 2002-03 Revenue 3. 4316/Mum/2007 CIT(A)-1/IT/62/05-06/76 26.04.2005 Addl. CIT, Range 1(1), Mumbai 23.03.2005 143(3) 2003-04 Assessee 4. 4162/Mum/2007 CIT(A)-1/IT/62/05-06/77 23.03.2007 Addl. CIT, Range 1(1), Mumbai 23.03.2005 143(3) 2003-04 Revenue 5. 3861/Mum/2009 CIT(A)-I/IT/276/05-06/399 & 400 23.03.2009 Addl CIT, Range 1(1), Mumbai 31.01.2006 143(3) 2004....
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....Revenue 20. 2610/Mum/2017 CIT(A)-2/IT-156/2015-16 31.01.2017 ACIT, Range 1(1), Mumbai 17.03.2015 143(3) 2012-13 Assessee 21. 2862/Mum/2017 CIT(A)-2/IT-156/2015-16 31.01.2016 ACIT, Range 1(1), Mumbai 17.03.2015 143(3) 2012-13 Revenue 22 4983/Mum/2017 CIT(A)-2/IT-11/2016-17 20.04.2017 DCIT, Range 1(1)(2), Mumbai 25.02.2016 143(3) 2013-14 Assessee 23. 5110/Mum/2017 CIT(A)-2/2/IT-11/2016-17 20.04.2017 DCIT, Range 1(1)(2), Mumbai 25.02.2016 143(3) 2013-14 Revenue 24. 4217/Mum/2017 ITBA/NFAC/S/250/2023-24/1055384 587(1) 24.08.2023 DCIT- 1(1(2), Mumbai 30.03.2018 143(3) r.w.s. 250 2013-14 Revenue [Appeal against order giving effect, passed u/s. 143(3) r.w.s. 250] 25. 2666/Mum/2024 ITBA/APL/S/250/2023-24/1062378 628(1) 11.03.2024 DCIT, Range 1(1)(2), Mumbai 26.02.2018 143(3) r.w.s. 144C(3) 2014-15 Assessee 26 2980/Mum/2024 ITBA/APL/S/250/2023-24/10623786....
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....4B 2020-21 Revenue Assessee [Appeals against Penalty Order passed u/s. 271(1)(c)] 39 4313/Mum/2010 CIT(A)-I/IT-378/2009-10 09.03.2010 DCIT, Range 1(1), Mumbai 30.03.2009 271(1)(c) 2002-03 40 4314/Mum/2010 CIT(A)-I/IT-374/2009-10 09.03.2010 DCIT, Range 1(1), Mumbai 30.03.2009 271(1)(c) 2003-04 41 2866/Mum/2012 CIT(A)-I/IT-682/2010-11 06.02.2012 DCIT, Cir-1(1), Mumbai 08.10.2010 271(1)(c) 2005-06 42 2867/Mum/2012 CIT(A)-I/IT-731/2010-11 07.02.2012 DCIT, Cir-1(1), Mumbai 08.10.2010 271(1)(c) 2006-07 2. Except for appeals mentioned at Sr. Nos. 24 and 39 to 42 in the above table, all the appeals arise out of assessment orders passed u/s. 143(3) of the Income-tax Act, 1961 ('the Act') for assessment years 2002- 03 up to 2020-21. Since, similar issues are arising in several years, before dealing with each of the issues, reference is made in a tabular form to the ground numbers where the said issue is arising in all the concerned assessment years. 2.1. There are delays in filin....
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.... been raised on that issue and presented while dealing with each of the said issue. 2.4. We have heard both the parties at length with hearings spread over several days and perused the material placed on record including tabulated details, synopsis, detailed written submissions, judicial precedents and paper books. We place on record our appreciation, both for the ld. Counsels for the assessee and the ld. CIT DR for their effective representations in assisting the Bench to take up this voluminous bunch of 42 appeals spread over 19 assessment years involving multiple issues. Submissions made by both the parties are dealt by us while adjudicating the respective issues. Therefore, the same are not narrated separately for the sake of brevity and to avoid repetition. 2.5. After careful perusal of multiple grounds of appeals including sub-grounds as well as additional grounds filed by both, the assessee and revenue, in all these 42 appeals spread over 19 assessment years, the essence of the same is encapsulated in the form of 25 "issues to be adjudicated" on these appeals, which are listed below for adjudication: I. Quantum of deduction to be allowed u/s. 36(1)(viii) of th....
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....l debts u/s. 36(1)(viia) of the Act. XXII. Deduction of bad debts u/s. 36(1)(vii) of the Act. XXIII. Addition of interest income on income-tax refund. XXIV. Dropping penalty proceeding initiated u/s. 270A of the Act. XXV. Penalty imposed u/s. 271(1)(c) on disallowance on deduction u/s. 36(1)(viii) 3. Relevant grounds for each of the assessment years, both in the case of appeals by assessee and by Revenue for each of the issue is tabulated while dealing with that issue (including additional grounds, if any). We will deal with these above listed issues seriatim which will cover the grounds raised by both, the assessee and the Department in their respective appeals (including additional grounds, if any) for covering relevant assessment years, taken together. I. Quantum of deduction to be allowed u/s. 36(1)(viii) of the Act: 4. Issues arising on this aspect of the matter are bucketed under four categories which are as under: a. Whether assessee is entitled to deduction u/s. 36(1)(viii) of the Act in respect of: i. Profits derived from housing loan for a period less than five years; ii. Profits derived from lo....
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....at Rs. 160,48,20,056/-. For the two streams of income mentioned at Sr. No.4(a)(i) and (ii) i.e., profits derived from housing loans for a period less than 5 years and profits derived from loans given for non-residential purposes, deduction was not claimed in the computation of total income but was made by way of a separate note below the computation of total income. In the said note, it was stated that profits derived from the 'business of long-term finance' includes income earned on housing loans for residential purposes for a period of less than 5 years which amounts to Rs. 33,92,56,891/- and for non-residential housing loans amounting to Rs. 165,07,33,573/- and fee income amounting to Rs. 13,37,12,633/-. Business of assessee is predominantly that of providing long term finance for residential purpose. In the course of carrying on such business, assessee also gives finance for a period of less than 5 years as well as for non-residential housing. In the said note, assessee claimed that the aggregate of Rs. 212,37,03,097/- for the aforesaid three items should be included in the figure of "income from housing finance" for the purpose of deduction u/s. 36(1)(viii). In the same note, ....
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....ermined after giving effect to the findings of the Tribunal with respect to characterization of income from eligible business and those from ineligible business. On this also, he referred to the findings given by the Co-ordinate Bench in assessee's own case for Assessment Year 1998-99 and 1999-2000 (supra), wherein direction had been given to the ld. Assessing Officer to re-compute the profits eligible for deduction u/s. 36(1)(viii) and thereafter allocation be done. 5.4. In the aforesaid two orders of the Co-ordinate Bench for Assessment Year 1998-99 and 1999-2000, it was observed and held that section 36(1)(viii) grants deduction in respect of profits derived from "business of providing long term finance". The word "business of" is of wider import, which cannot be restricted to profits from each transaction of lending long term housing finance. Granting loans for a period less than five years and otherwise cannot be regarded as two different businesses of the assessee nor as a source of income other than business. Reference was also made to paragraph 26 of circular no.717, dated 14.08.1995 issued by CBDT, wherein it is clarified that amendments brought in Section 36(1)(viii) w....
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.... in respect of income from securities/debentures held as permanent investment. 5.6. For the issue at Sr. no.4(b) towards allocation of entire interest cost on foreign currency borrowing and provisions for contingencies, the Co-ordinate Bench had given the direction to make the allocation towards the income which would be eligible and ineligible in the ratio as finally determined after giving effect to the findings arrived by it with respect to characterisation of income from eligible and ineligible business. Similar direction was given for allocation of administrative expenses against the ad-hoc ratio of 80:20 applied by the ld. Assessing Officer. 5.7. In the above paragraphs, the observations and findings of the Coordinate Bench in assessee's own case for Assessment Year 1998-99 and 1999-2000 (supra) have been recapitulated which applies to the present set of facts in the appeals before us on the issues listed at Sr.No.4(a) and 4(b). From the perusal of the said orders of the Coordinate Bench, we note that facts and circumstances are similar in the present cases before us and there is no material change in the applicable law and thus, applies squarely. The said orders have e....
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....inance business. Thus, the special reserve created and maintained by it u/s. 36(1)(viii) is only in respect of business of providing long term finance for development of housing in India. According to him, assessee is not engaged in providing long term finance for infrastructure facility in India and therefore loan given to NTPC Ltd. does not qualify as a loan given for development of infrastructure facility, thereby disallowing the claim. 6.2. In this respect, assessee contended that it has fulfilled the requirement of creation of special reserve with respect to profits derived from long term finance for development of housing as well as development of infrastructure facility in India. In aggregation, deduction claimed is restricted to special reserve so created in the year. According to the assessee, it qualifies as a "specified entity" for the purpose of clause (a) of Explanation to section 36(1)(viii), falling within sub-clause (vi) as "any other financial corporation including a public company". It also submitted that NTPC Ltd., was given loan for development of infrastructure facility in India which falls in sub-clause (iii) of clause (b) of Explanation below the said prov....
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....isallowing the claim, though referring to the reasoning of the predecessor as the basis. In respect of claim for Assessment Year 2009-10 to 2014-15 for which Revenue is in appeal, the same stands dismissed in view of our finding given hereinabove for Assessment Year 2008-09. Further, this issue has been raised by the Revenue in its appeals for Assessment Year 2015-16 and Assessment Year 2018-19 to 2020-21 though this issue is not involved in the impugned assessment orders or first appellate orders for the said Assessment Years. Having perused the orders in this respect for the said Assessment Years, the grounds so raised by the Revenue in its appeal for Assessment Year 2015-16 and 2018-19 to 2020-21 are dismissed as not arising in the present appeals. 7. With respect to the issue as referred to in paragraph 4(d) hereinabove, being grant of deduction u/s. 36(1)(viii) of the Act in respect of interest arising from securitization of debt or such income earned by virtue of holding of PTCs of Securitization Trusts, the assessment years including the relevant grounds are tabulated below: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal ....
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....tion u/s. 36(1)(viii). Assessee has securitised long term housing loans from its pool of retail housing loans which constitute its receivables and a portion of loan portfolio securitised is retained were from interest is earned. In consideration of such securitisation, assessee received discounted value of the future receivables together with interest. The surplus received by it over the principal amount of the loan represented net present value of interest on the housing loans so securitised. Assessee claimed deduction in respect of such surplus. It is claimed that share of assessee in the loan portfolio is represented by PTC which has the loans as underlying asset. Similarly, assessee has also invested in loans originating from other housing finance companies yielding income, categorised 'Income from securitised debt". It is claimed that these assets have residential loans as underlying assets and therefore the same has been considered for arriving at qualifying amount for deduction u/s. 36(1)(viii). 7.4. Ld. Assessing Officer in this respect held that such income does not have immediate nexus with the business of long-term finance for housing purpose and thus, claim of assess....
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.... 2018-19 2.1 & 2.2 - 2019-20 2.1 & 2.2 - 2020-21 1.1 & 1.2 - 8.1. Appeals before us, both by the assessee and Revenue on the issue of disallowance u/s. 14A covers the entire range of 19 Assessment Years from 2002-03 to 2020-21. To delve on the issue, we will take up the entire range of Assessment Years in two parts, viz., first from Assessment Year 2002-03 to 2007-08 which relates to period prior to introduction of Rule 8D of Income-Tax Rules, 1962 (the Rules) and second from Assessment Year 2008-09 to 2020-21 which is post introduction of Rule 8D. 8.2. We first take up appeals relating to period prior to introduction of Rule 8D of the Rules, i.e. Assessment Year 2002-03 to 2007-08. During AY 2002-03 assessee earned income by way of dividend from companies and units of mutual funds which during the year under consideration was exempt u/s. 10(33) and interest on tax free bonds which was exempt u/s. 10(15)/10(23G) of the Act. Details relating to investments which yielded such exempt income and the interest free funds available with the assessee by way of Share capital and Reserves and surplus is tabulated below: Assessment year Investments yield....
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....(viii) and exemption u/s. 10, by not allocating any interest expense towards exempt income which resulted into the amount of total interest expenditure allocated from the two said sources exceeding the total interest. Ld. CIT(A) in his appellate order for Assessment Year 2002-03 has taken note of this contradiction in para 4.2 and para 4.4. Further, while deciding the first appeal for Assessment Year 1999-2000, ld. CIT(A) has held that once the Assessing Officer himself admitted the fact of not allocating any interest cost to earn exempt income, then there is no justification for making disallowance u/s. 14A towards interest cost. 8.5. In the given set of undisputed and verifiable facts, whereby owned funds i.e., share capital and reserves and surplus available with the assessee far exceeded the amounts invested in securities yielding tax free income and in view of the decision of Co-ordinate Bench in assessee's own case for Assessment Year 1998-99 and 1999-2000, no interest cost needs to be disallowed against the exempt income. 8.6. With respect to disallowance of other expenses/administrative expenses, ld. Assessing Officer worked out pro-rata allocation of such expenses of....
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....isallowance has not been made in accordance with the method prescribed u/r 8D since the said rule is not binding on the assessee but on the ld. Assessing Officer only if, he is not satisfied with the method adopted by the assessee. In order to justify the said suo moto disallowance computed by the assessee, it gave the following explanations, which is extracted below as reproduced in the impugned assessment order from page 40 onwards: I.12. The Corporation has incurred an interest expense of Rs 5,142.87 crore during the captioned AY. It may be noted that out of the said expenditure, Rs 4,137.74 crore was incurred towards foreign and domestic borrowings. These borrowing have been made for the purpose of housing finance exclusively. The same is evident from the fact that in past assessment orders the AO has specifically stated that the domestic and foreign borrowing have been made for the purpose of housing finance. In view of the fact that the borrowing have been specifically made for the purpose of housing finance, and the interest on such borrowing have been allocated to housing finance for the purpose of computing deduction under section 36(1)(viii), it can be said that ....
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....ncidence on fulfilment of SLR requirements. Therefore, we are of the considered view that section 144 has no application in this case". I.16. In view of the above, the Corporation has worked out a ratio and Interest calculation as under: Rs in Crore Nature of Deposits 2007-08 2006-07 Average Ratio Interest Interest after SLR Exempt from maintaining SLR 4,032.85 3,770.88 3,901.87 36.05% 362.34 362.34 Not exempt from maintaining SLR 7,245.38 6,598.15 6,921.77 63.95% 642.79 562.44 11,278.23 10,369.03 10,823.63 1,005.13 924.78 I.17. On perusal of the aforesaid table it is observed that the interest expenditure to be taken into consideration for computing disallowance under section 144 is Rs 924.78 crore. I.18. We would now like to proceed with the calculation of investments yielding tax free income. It may be noted that the average investments yielding tax free income for the captioned AY amounts to Rs 3,095.11 crore. However, the said amount includes average investment amounting to Rs 1,189.79 crore ....
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....llocation of interest expenditure. The same has been explained as under: The total interest expenditure incurred during the AY 2008-09 amounts to Rs 5.142.88 crore. It is submitted that if disallowance is made in accordance with section 144 of the Act read with Rule 8D, then it would amount to Rs 227.72. The working of the same is shown as under: Particulars Rs in crore a) The amount of expenditure directly related to exempted income Nil b) Interest expenditure which is not directly related to exempted income (Interest expenditure Average value of investments yielding tax free income/Average value of total assets)= 5,142.88 * 3,095.11/74,995.92) 212.24 c) Amount equal to 0.5% of avg value of investments (opening value of investment + Closing value of investment)/2 = 0.5% * (4,057.46+2,132.75)/2 15.48 Total 227.72 1.25 On perusal of the above table it is observed that if Rule 8D is applied then on claiming an exemption of Rs 72.39crore in respect of dividend and interest on tax free bonds, the Corporation would have to bear a total disallowance of Rs 227.72 crores by way of 14A disallowance. Thus, the Corporation is infact losing by cl....
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....ance under section14A read with rule 8D is attracted also in cases where no dividend or exempt income is actually earned. Hon'ble ITAT has held that it is not necessary that the investments should yield dividends in the relevant year which is in line with the words "shall not form part of total income in rule 8D. Hence, all investments like shares and mutual funds, whether quoted or unquoted, income from which does not or shall not form part of total income have to be considered within the meaning of clauses (i) and (iil) of rule 8D(2). Therefore, the assessee's argument that it is suffering disallowance higher than the exempt income is not acceptable as there would be certain years where the disallowance of expenses would be much lower than the exempt dividends/Income. d) The assessee co. has not proved any nexus between investment in shares and its own funds. Therefore, it can be reasonably inferred that investment in shares has been made both out of its own funds and its borrowed funds. e) The Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT, Range10(2), Mumbai (234CTR1) has held that dividend Income and income from mut....
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....enerating exempt Income. Thus, interest has been incurred in relation to such investments also and Rule 8D is applicable. Once Rule 8D is applicable, the entire Interest of Rs. 5142.88 and total assets have to be considered. i) The assessee's argument that if disallowance of interest is made on the basis of Rule8D(2)(il),it will amount to a disallowance higher than the Interest is not correct as such disallowance on the basis of ratio of average of dividend yielding Investments to the total assets would be much lower than the total interest as computed later. j) The assessee's contention that Investments in subsidiaries or other Investments should not be considered for specific reasons is not correct as under Rule 8D all investments yielding/likely to yield exempt dividends have to be considered. The assessee's stand in applying percentage lower than than 0.5% prescribed under Rule SD(2)(1) is not correct as the rule does not specify any exceptions where a lower percentage can be adopted. k) The assessee's working of interest to be allocated in relation to the Income not forming part of the total income based only on interest payable on pu....
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....llowance made by the assessee can be held to be not satisfactory when the manner in which the disallowance by ld. Assessing Officer made for the years under consideration was found to be reasonable by the Co-ordinate Bench in assessee's own case for Assessment Years 1998-99 to 2001-02. 9.4. Reliance was placed on the decision of Hon'ble Jurisdictional High Court of Bombay in the case of PCIT vs. Tata Capital Ltd. [2024] 161 taxmann.com 557 (Bom), wherein it was observed in para 7 by placing reliance on its another decision in the case of PCIT vs. JSW Energy Ltd. [2023] 153 taxmann.com 208 (Bom) that "The most fundamental requirement is the Assessing Officer should record his dissatisfaction with the correctness of the claim of the assessee in respect of the expenditure and to arrive at such dissatisfaction, he should give cogent reasons." In para 11, it was observed that "The Assessing Officer has not expressed his satisfaction in the way it should have been. The Assessing Officer does not say he is not satisfied and why he is not satisfied. There are no reasons given." Ld. Counsel thus, pointed out that Hon'ble Court dismissed the appeal of the Revenue by holding that n....
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....wever, specific to Assessment Year 2011-12, it is pleaded by the assessee that the aggregate amount of disallowance be restricted to exempt income earned during the year, since disallowance otherwise so computed exceeds, the exempt income earned. On this plea, it is a settled position of law that disallowance u/s. 14A cannot exceed the exempt income earned by the assessee during the year. Hence, the plea so made is accepted and we direct the ld. Assessing Officer to restrict the disallowance to the extent of exempt income earned in Assessment Year 2011-12. The factual position with respect to exempt income and disallowance u/s. 14A for this year is tabulated as under for ease of reference. Exempt income earned during the year Disallowance made by the AO u/s 14A Dividend 225,39,21,967 Rule 8D(2)(i) 313,59,07,682 Capital gains 55,46,81,454 Rule 8D(2)(ii) 517,18,20,270 Rule 8D(2)(iii) 43,92,65,575 TOTAL 280,86,03,421 TOTAL 874,69,93,527 (refer paragraph 4.1 on page 22 of the Assessment Order for AY 2011-12) (refer page 46 of the Assessment Order for AY 2011-12) Disallowance only considerin....
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.... has listed as many as 11 reasons justifying his stand of applying Rule 8D though in the context of administrative expenses, he has merely noted that the said Rule does not specify any exception where a lower percentage than 0.50% can be adopted. Hence, applicability of this decision is distinguished. 10.5. On the 11 reasons listed by ld. Assessing Officer for justifying his stand on applying Rule 8D, ld. Counsel of the assessee has submitted his rejoinder explaining how they are not relevant for the purpose of making the disallowance. The same is extracted below for reference. "d. The discussion on recording of dis-satisfaction by the AO is in paragraph 4.3 at pages 44 to 46 of his order. Therein, he has given (11 reasons running from paragraph (a) to (k). In paragraph (a), reference has been made to framing of Rule 8D in accordance with the provisions of sub-sections (2) and (3) of section 14A. In paragraph (b), sub-sections (2) & (3) of section 14A have been referred to as procedural provision. The assertions in paragraphs (a) and (b) hereinabove, have no relevance. In paragraph (c), reference has been made to decision of the Special Bench of the Tribunal in the case....
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....l Ltd. (2024) 298 Taxman 714 (Bombay) (copies separately handed over at the time of hearing). In paragraph (g), referring to the aforesaid judgment of Godrej & Boyce (supra) it has been observed that prior to AY 2008-09 i.e. Rule 8D becoming applicable, the AO must adopt a reasonable basis or method for computation of such disallowance. In the present case, it is submitted that the method for computation of disallowance which has been found by the Tribunal to be reasonable for AYs prior to AY 2008-09 cannot be regarded as non-satisfactory from AY 2008-09. In paragraphs (h) and (i), observations have been made to the effect that entire interest incurred by an Assessee has to be taken into account for the purposes of application of Rule 8D which has no relevance to the issue under consideration. With respect to allocation of administrative expenditure, in paragraph (j), which is the only place where there is any reference to the allocation of administrative expenditure, it is observed that "the Assessee's stand in applying percentage lower than 0.5% prescribed under Rule 8D(2) (iii) is not correct as the rule does not specify any exception where a lower percentage can be adopted"....
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....er has erred in invoking the provisions of Rule 8D for making disallowance of administrative expenses in absence of recording of objective satisfaction "having regard to the accounts of the assessee" and therefore, the disallowance u/s. 14A is to be restricted to the amount of suo moto disallowance made by the assessee. It is important to note that the finding arrived here for these Assessment Years is not on the same footing of "reasonableness" applied in Assessment Years prior to introduction of Rule 8D but for non-recording of objective satisfaction "having regard to the accounts of the assessee" for rejecting the suo moto disallowance made by the assessee. Accordingly, grounds raised by both assessee and revenue are partly allowed. 10.7. The above finding arrived at by us is fortified by the decision of Hon'ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT(A) [2018] 402 ITR 640 (SC) while emphasising on aspect of recording of satisfaction by the ld. Assessing Officer for which it observed as under: "41. Having regard to the language of section 14A(2) of the Act, read with rule 8D of the Rules, we also make it clear that before applying the theory o....
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.... (a) In its return of income, the respondent made a suo-moto disallowance of Rs. 15.21 lakhs being the expenditure incurred to earn exempt income under Section 14A of the Act. The Assessing Officer disregarded the same and proceeded to disallow an amount of Rs. 1.10 crores under Section 14A of the Act read with Rule 8D of the Rules as expenditure incurred to earn exempt income. Thus, adding Rs. 1.10 crores to the income of the respondent. (b) Being aggrieved, the respondent filed an appeal to the CIT(A) but without success. (c) On further appeal, the impugned order of the Tribunal while allowing the appeal held that before invoking the provisions of Rule 8D of the Income Tax Rules, the Assessing Officer has to record his non satisfaction with the suo moto disallowance of expenditure made towards earning exempt income by the respondent. This exercise not having been carried out by the Assessing Officer before applying Rule 8D of the Income Tax Rules, the disallowance of expenditure to earn exempt income cannot be sustained. (d) This issue is no longer res integra as the Apex Court in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT, 394 ITR 449 decided the issu....
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.... Pvt. Ltd. [2017] 82 taxmann.com 415 (Del Trib) (SB). III. Increasing the book profits computed u/s. 115JB by the amount disallowed u/s. 14A of the Act. 11. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2014-15 - 6 to 8 2015-16 - 6 to 8 2016-17 - 3 2017-18 - 1 11.1. All the appeals on the aforesaid issues are by the Revenue since, ld. CIT(A) by following the decisions of Hon'ble High Court held that amount disallowed u/s. 14A r.w.r. 8D cannot be added to the book profit computed u/s. 115JB. Facts relating to the issue under consideration are undisputed. We note that grounds raised by the Revenue are no longer res integra as held in plethora of decisions that disallowance made u/s. 14A r.w.r.8D under the normal provisions of the Act cannot be read into the provisions of Section 115JB for computing book profit since there is no express provision in clause (f) of Explanation 1 to Section 115JB to this effect. Few of the decisions on the stated issue relied upon are as under: i. CIT vs. Gokaldas Images (P.) Ltd [2020] 122 taxmann.com 16....
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.... 12.3. In view of the above, there being no material change in the facts and applicable law, ground taken by the assessee is allowed. V. Computation of amount eligible for deduction u/s. 80M of the Act. 13. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2003-04 2 2 13.1. For the year under consideration i.e., AY 2003-04, dividend income received from shares was chargeable to tax in the hands of the assessee who is entitled to claim deduction u/s. 80M of the Act. 13.2. Deduction u/s. 80M is allowed on net dividend income i.e. after reducing the income by the expenses relating to it and there is no dispute with respect to this principle on account of judicial precedent laid out by Hon`ble Apex Court in the case of CIT v. Distributors (Baroda) Pvt. Ltd. 155 ITR 120. Dividend income has always been included under the head 'income from other sources' u/s. 56(2) of the Act. Accordingly, the net dividend income as contemplated u/s. 80M has to be computed by allowing deduction in respect of expenditure as permissible u/s. 57(iii). This is further supported by provisions of sec....
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....ccount. Our observations and findings on this aspect are not repeated here as already dealt elaborately in the above paragraphs. 13.5. With respect to allocation made towards administrative expenditure by the ld. Assessing Officer, the said amount has been determined by applying a pro-rata proportion to the income which would qualify for deduction u/s. 36(1)(viii) and other income which for which ld. CIT(A) has given partial relief. For such an action of pro-rata allocation, we refer to the provisions of Section 57(iii) and find that ld. Under the said section, Assessing Officer has no power to bifurcate on pro-rata basis and deduct a part of it from the gross dividend income. There is no scope for any estimation of expenditure and hence no scope for allocation of notional expenditure. The deductions contemplated are the expenditure laid out or expended wholly and exclusively for the purpose of making or earning the said dividend income, thereby referring to actual expenditure. Further, from reading of section 80AB, we note that it is not open for the Assessing Officer to deduct expenditure attributable to income under one head from the income under another head. Before us, noth....
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....(A) has relied upon the first appellate order for Assessment Year 2002-03 but denied the claim of assessee of reducing the taxable income by the amount credited to lease equalisation account. Considering the facts as stated above, for the purpose of consistency, we find it appropriate to remand this issue back to the file of ld. Assessing Officer for reconsideration as directed by ld. CIT(A) in Assessment Year 2002-03. Accordingly, ground raised by the assessee is allowed for statistical purposes. VII. Assessment of amount withdrawn from reserve created u/s. 36(1)(viii). 15. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2004-05 - 2 2006-07 - 3 2007-08 - 3 15.1. On this issue, ld. Assessing Officer noted that assessee had withdrawn a sum of Rs. 50 Crores from Special Reserve No. 1 towards "provisions for contingency" as reported in Schedule II of the balance sheet for the year under consideration. According to him, Section 36(1)(viii) speaks only of special reserve created under that section without making any distinction between reserve created before th....
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.... 36(1)(viii) prior to amendment and which amounts were subsequently withdrawn should not be subjected to tax. Before us, Revenue is in appeal on the relief so granted by ld. CIT(A). 15.5. From the audited financial statements of the assessee as extracted above, it is an admitted fact that assessee has bifurcated the creation of special reserve required u/s. 36(1)(viii) owing to the amendment brought in the said section along with corresponding amendment u/s. 41(1A) which are effective from Assessment Year 1998-99. Assessee had explained this aspect before the ld. Assessing Officer by clarifying that special reserve had been created over the years out of the profits and "Special Reserve No. I Account" relates to amount which had been transferred up to financial year 1997-98. Thus, it is not as though assessee has surreptitiously transferred any amount nor it is a case of Revenue that transfer of such fund from the special reserve was in any manner contrary to any law. In view of these facts and judicial precedent, we do not find an infirmity in the conclusion drawn by the ld. CIT(A) granting relief to the assessee. Hon'ble Jurisdictional High Court of Bombay in the case of CI....
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....ature of the expenditure incurred by the assessee cannot be said to be a capital expenditure. The second test culled down in Assam Bengal Cement Co. Ltd.'s case (supra) is that expenditure should bring into existence an asset or an advantage for the enduring benefit of a trade. In the present case, the corporate membership of Rs. 6 lacs was for a limited period of 5 years. The corporate membership was obtained for running the business with a view to produce profit. Such membership does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred on the assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset. Therefore, the reasoning given by Delhi, Bombay and Gujarat High Courts in respect of members of Clubs is based upon correct enunciations of the princi....
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....n and not to deem the asset as short-term capital asset. Therefore, it cannot be said that section 50 converts long-term capital asset into a short-term capital asset. 17.3. Facts on record on the above issue are undisputed as already stated above. The issue in hand is in respect of addressing the position of law for the claim made by the assessee u/s. 54EC on capital gain which has been deemed to be a short-term capital gain u/s. 50 of the Act. Ld. CIT(A) granted the relief by following the decision of Hon'ble Jurisdictional High Court of Bombay in the case of Ace Builders (supra) as well as Assam Petroleum Industries Pvt. Ltd. (supra) by Hon'ble High Court of Guwahati. Before us, ld. Counsel for the assessee placed reliance on the decision of Hon'ble Supreme Court in the case of CIT vs. V.S. Dempo Company Ltd. [2016] 74 taxmann.com 15 (SC), wherein by referring to the decision of Hon'ble High Court of Bombay in Ace Builders (Supra), the Hon'ble Apex Court held its view in agreement with the view taken by the Hon'ble High Court of Bombay. Accordingly, appeal by the Revenue was dismissed. The moot point concluded in the said decision is that assessee is e....
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....of CIT vs. Secure Meters Ltd., [2010] 321 ITR 611 (Raj) and Hon'ble Delhi Court in the case of CIT vs. Havells India Ltd., [2013] 352 ITR 376 (Del). 18.3. On the given set of facts and judicial precedents discussed above, Revenue could not submit any reason as to why a different view on this issue should be taken as taken by various Hon'ble High Courts. Accordingly, respectfully following the above referred judicial precedents including that of Hon'ble Jurisdictional High Court of Bombay, ground raised by the assessee is allowed. XI. Set-off of short-term capital loss. 19. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2007-08 4 - 2008-09 3 - 2010-11 - 7 2011-12 - 8 19.1. During the year, assessee reported its income under the head 'capital gains' which included short term capital gains/loss on shares/units of mutual funds, details of which is tabulated as under: Tax rate Rs. A. Mutual Funds (STT not paid) 33.66% 38,76,36,426 B. Venture funds (STT not paid) 33.66% 4,09,20,928 C. ....
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....ssessee an option as to decide on giving preference for set off of the short-term capital loss. Such an exercise of option by the assessee if results into higher benefits in terms of saving in tax as per law, the same cannot be denied. Ld. Assessing Officer has observed that it is an extreme case of tax planning which is not permissible as the proper way to tax such gains would be to first treat gains taxable at the special rate as a separate block and then set off losses under that block, if any, against another rate block. He thus, re-computed the short-term capital gain on shares/mutual funds to arrive at a net figure of Rs. 27,91,89,922/-, as short-term capital gain taxable at a rate of 33.66%, being non-STT paid. 19.5. On a specific query by the Bench on the use of the phrase "under a similar computation made for the Assessment Year" u/s. 70(2), we noted that income under the head 'capital gains' is determined as per section 45 to 55A. Section 48 provides for the computation mechanism for computing income chargeable under the head 'capital gains' which is to be computed by deducting from the full value of consideration received or accruing as a result of transfer of capital....
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....curred by the fund in relation to such income and the relevant investments in respect of which assessee had not passed entries in the books of account. 20.2. Brief facts in the present case are that India Value Fund had distributed an amount of Rs. 3,95,97,144 in relation to divestment of its investment in DQ Entertainment Ltd. After reducing the cost of investment of Rs. 2,02,15,532 and expenses incurred by the Fund of Rs. 58,37,201, profit being capital gains chargeable in the hands of the assessee was computed at Rs. 1,35,44,411. Computation details as per Form 64 for this as provided by India Value Fund vide letter dated 15.10.2010 is extracted below which also states that the said amount would be chargeable to tax as long-term capital gains on sale of shares (without STT): Particulars Date Amount (Rs.) (to the extent of HDFC's share) Gross Sales Proceeds Dec 18, 2007 43,322,663 Less: Carry 3,725,519 Amount Distributed 39,597,144 Less: Cost of acquisition and Expenses Cost of DQ Investment July 1, 2004 20,215,532 Fund Expenses Various 5,837,201 &nbs....
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....added in the hands of the assessee. According to the assessee, the difference is on account of cost incurred by India Value Fund for which assessee had not passed certain entries in its books of account. Assessee has reported the income as certified by India Value Fund in terms of Form 64 which is not in dispute. However, for the difference, assessee has expressed its inability to explain the same owing to passage of time. In the given set of facts and circumstances, what the assessee has returned is the correct amount of income as communicated by India Value Fund and nothing contrary has been placed on record to dis-prove the same except for the entry in the books of account. Income really accruing or arising to or received by the assessee as contained in section 115U(1) is of Rs. 1,35,44,411/- as long-term capital gain duly substantiated by communication received from India Value Fund as prescribed in Form 64. 20.6. While addressing the issue in hand, reference is made to the decision of Hon'ble Supreme Court in the case of Taparia Tools Ltd [2015] 55 taxmann.com 361 (SC) wherein it noted in para 19 that, "It has been held repeatedly by this Court that entries in the books....
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....8042 31-03-2008 Steel Authority of India Ltd., Ispat Bhavan, Lodhi Road, New Delhi-110003 39,00,000 Total 39,47,368 21.2. In the assessee's appeal for Assessment Year 2008-09, ld. CIT(A) confirmed the said addition. However, similar nature of addition was deleted by the ld. CIT(A) in appeal for Assessment Year 2010-11 for which Revenue is in appeal. 21.3. In respect of addition for Assessment Year 2008-09, for the substantive amount of Rs. 39 lakhs appearing against Steel Authority of India Ltd. (SAIL), assessee had furnished a copy of letter dated 03.02.2011 before the ld. CIT(A) which did not find favour with the assessee. In the said letter, SAIL confirmed that a sum of Rs. 39 lakhs was estimated as a liability which was accounted for and provided in its books of accounts for the year ended on 31.03.2008 and applicable TDS was done. Against this estimation, assessee had not raised any bills for the relevant year which were done in parts only in the subsequent years. For the appreciation of correct factual position, contents of the letter from SAIL are extracted below: "Subject: Reference to your letter dated 14th January 2011 regarding det....
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....HDFC Ltd. Hope that this clarifies the position to you." 21.4. On the above stated factual position, against which nothing has been brought on record by the Revenue, assessee claims that no addition can be made solely based on information available on ITS/AIR. Reliance is placed on the judicial precedents including by Co-ordinate Bench of ITAT, Mumbai in the case of ANS Law Associates vs. ACIT in ITA No.5181/Mum/2012, wherein it was held as under: "It has been held time and again by this Tribunal that the additions made solely on the basis of AIR information are not sustainable in the eyes of the law. If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative. Reliance can be placed in this respect on the decision of the Tribunal in the case of "DCIT vs. Shree G Selva Kumar in ITA No. 868/Bang/2009 decided on 22.10.10 and another case in the case of "Aaarti Raman vs. DCIT in ITA No. 245/Bang/2012 decided on 05.10.12." 21.5. On the above facts, we note that assessee had discharged its onus by reconciling substantial amount of ITS/AIR....
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....and increased by 5% (Five percent) compounded annually. At the exercise of the purchase option, the Lessor shall adjust the Security Deposit against the Purchase Price. However, in the event of the Lessor obtaining a bank loan against the security of the Property, the Lessor shall satisfy the Lessee prior to the Lessee purchasing the Property that the entire loan along with any interest accruing from it have been duly paid to the bank and that the title of the Property is clear of all encumbrances, liens, charges or any imputations whatsoever. The Lessor shall obtain and provide to the Lessee a certificate from the bank indicating that there are no further liabilities or dues arising from the said bank loan. In the event of any failure to make payment of the said bank loan by the Lessor, the Lessee shall have the right to make the payment to the bank on behalf of the Lessor and deduct the same, including interest thereon if any, paid to the bank, from the sale consideration payable to the Lessor for the purchase of the Property. In the event the Lessee exercises the Option to Purchase, the external maintenance of the Property would be carried out by the P....
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....strict Valuation Officer (DVO) on 18.02.2013. However, since the assessment was getting time barred and the valuation report from the ld. DVO had not been received, he adopted the stamp duty value as the full value consideration. By the time the matter came up for hearing before ld. CIT(A), ld. DVO had determined the fair market value of the said property at Rs. 51,79,13,000/- vide his valuation report dated 21.06.2016. Based thereon, ld. CIT(A) gave partial relief of Rs. 8,66,12,000/- to the assessee for which Revenue is not in appeal. 22.2. Before us, it was submitted that the third proviso to section 50C provides for an exception, according to which, where the value adopted or assessed or assessable by the stamp valuation authority does not exceed 105% of the consideration received or accruing as a result of transfer, the consideration so received or accruing as a result of the transfer shall be deemed to be the full value of consideration. The said threshold of 105% was increased to 110% by the Finance Act, 2020 w.e.f. 01.04.2021. Assessee further submitted that the said amendment is curative and declaratory in nature and hence shall apply retrospectively. Assessee placed re....
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....However, ld. CIT(A) allowed the said claim. Assessee placed reliance on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. (supra). 23.2. In the given set of facts, dispute is only in respect of allowability of the claim made by assessee when made before the Assessing Officer without filing the revised return. We are in agreement with the view arrived at by ld. CIT(A), since Hon'ble Supreme Court in the case of Goetze India Ltd. (supra) has stated that "nothing impinges on the power of the appellate authorities to entertain such a claim of the assessee". Accordingly, ground raised by the Revenue is dismissed. XVI. Refund of excess dividend distribution tax. 24. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2011-12 - 9 2012-13 - 8 2013-14 - 8 24.1. In the present case, assessee paid excess dividend distribution tax (DDT) of Rs. 11,59,82,950/- for AY 2011-12 and claimed refund of the same in its return of income. There is similar excess DDT paid for AY 2012-13 and 2013-14 also. In Assessment Year 2011-12, assessee received divide....
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....g to which if any person satisfies the Assessing Officer that amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any Assessment Year exceeds the amount with which he is properly chargeable under the Act for that year, he shall be entitled to a refund of the excess amount. Further, substantively, when law confers benefit on the assessee under statute, it cannot be taken away by the authority on mere technicalities. In this regard, reference is made to Article 265 of the Constitution of India in terms of which it is a settled position of law that no tax can be levied / recovered without the authority of law. 24.4. In this respect, we also refer to the provisions of section 115-O(1A) which provides that the amount referred to in sub-section (1) shall be reduced by amount of dividend received by the domestic company during the year, if such dividend is received from its subsidiary and the subsidiary has paid the applicable DDT. It is important to note that receipt of dividend of Rs. 83,73,25,003/- from the subsidiaries is not in dispute as to fulfilment of conditions prescribed u/s. 115-O(1A). In the given set of facts and applicable provisions....
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..... vs. PCIT [2020] 117 taxmann.com 944 (Kol) iii. Ammann India (P.) Ltd. vs. ACIT [2022] 134 taxmann.com 10 (Ahd) iv. Softel Overseas Pvt. Ltd. vs. ACIT (ITA No. 1942/Kol/2019) 25.3. Considering the facts on record and the judicial precedents listed above, we find no infirmity in the findings arrived at by the ld. CIT(A) on this issue. Accordingly, grounds taken by the Revenue are dismissed. XVIII. Disallowance of year-end provisions. 26. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2014-15 - 11 2015-16 - 11 2016-17 - 5 2017-18 - 3 2018-19 - 5 26.1. In respect of this issue, ld. Assessing Officer during the course of assessment proceedings, on examination of tax audit report in Form- 3CD noted qualification remark given by the tax auditor on clause 21(b) relating to amounts inadmissible u/s. 40(a). The said note is reproduced below for ready reference: "Note. Considering the diverse nature and the volume of transactions in respect of which tax is deductible at source on payments covered by the provisions of....
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....ovisions are made on the basis of reasonable estimates or on the basis of past trends in order to present true and fair state of financial position and the same are in accordance with generally accepted accounting practices. Assessee further explained that precise amount and identity of the vendor/service provider is not known at the time of making of provisions and there are occasions where actual invoices are pending to be received though services/supplies have been rendered. These provisions are written back in the first month of the next financial year. On receipt of actual invoices, these expenses are accounted for and paid/credited subject to appropriate deduction of tax at source. There is a neutralising effect for these year-end provisions for expenses since a reversal entry at the beginning of the year on the same account is made in the books of account, though with varying amounts. By placing reliance on certain judicial precedents, assessee submitted that TDS mechanism cannot be applied until identity of the person in whose hands it is includible as income, can be ascertained. 26.4. However, ld. Assessing Officer held that provisions made towards expenses represents p....
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....) as the scheme of TDS proceed on the assumption that the person whose liability is to pay income knows the identity of beneficiary or recipient of the income and that amount of payment should be exactly quantified. The operative part of the order of Id CIT(A) is extracted below; "6. Decision: I have considered the AO's order, the submissions of the appellant and the details filed. I find that the appellant is regularly following this practice of making provisions for various expenses for the month of March, which is then reversed on the 18t of April, next year and the expenses are considered on the basis of actual payment in the subsequent year. The provision has been made, for the expenses incurred for which invoices/full details were not received till the end of the month i.e. 318t of March, by considering the average one month expense. I am inclined to agree with the appellant's submission that these provisions cannot be held to be contingent expenditure since the expenditure have already been incurred and the provision has been made on a certain basis for each head of expense so that the account adopted by the appellant represent a true and, fair view of the s....
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....sing Officer. On appeal before the Tribunal, the disallowance was maintained. In the said case, the recipient of commission was identifiable. However, fact of the present case is quite different. The assessee made provision with regard to 31 different items. The Assessing Officer has not brought any fact on record that recipient were certain or identifiable. The assessee has made provision in the last month the Financial Year only on the basis of estimation of earlier month of the Financial Year. The Assessing Officer has not examined whether the provision made for the month of March 2015 was not a reliable estimate on account of past obligations. Similarly, in case of Abad Builders (P.) Ltd. (supra), the Assessing Officer made disallowance under section 40(a)(ia) as the assessee has not made TDS on provision of sundry creditor. The assessee claimed deduction of the same amount in subsequent AY. The Id. CIT(A) confirmed the disallowance by taking view that the assessee cannot claim double deduction of a very same amount on which assessee deducted and paid TDS. In the said case, the recipient was identifiable and the assessee has not pleaded that such obligation was a result of past....
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....g book profit under the said section. Thus, what can be added is provision for unascertained liabilities i.e., liabilities contingent in nature. In the present case, provision for expenses made by the assessee at the year-end are on a reasonable estimate basis having regard to past trends for which consistent accounting practice has been adopted by way of creating a provision at the year end and reversing the same on the first day of the next financial year so as to reflect true and fair state of affairs since assessee follows mercantile system of accounting. Such a practice has been followed by the assessee, year on year basis in terms of generally accepted accounting practices. This issue has already been dealt with above whereby provision for expenses has been allowed negating the stance taken by ld. Assessing Officer of treating it as contingent liability. Accordingly, in the given set of facts and detailed discussion made hereinabove, we do not find any infirmity in the findings arrived at by ld. CIT(A) in this issue. Accordingly, grounds raised by the Revenue, including that by way of additional grounds are dismissed. XX. Deduction in respect of expenditure incurred on Emp....
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....n the assessment made pursuant to "order giving effect" which in our considered view does not fall within the scope of assessment made for giving effect to the first appeal. Since, appeal against the original assessment made u/s. 143(3) is also before us, assessee sought liberty to raise its claim by filing additional ground in this appeal in ITA No.4983/Mum/2017. Since, we have already held for allowing the assessee to raise the additional claim in view of finding of Hon'ble Supreme Court in the case of Goetze India Ltd. (Supra), additional ground raised by the assessee herein is admitted for adjudication. ii. For Assessment Year 2014-15 to 2017-18, the said issue was raised as additional grounds of appeal filed before the ld. CIT(A). iii. For Assessment Year 2018-19 to 2020-21, the said issue was raised in the course of assessment proceedings itself before the ld. Assessing Officer. 28.3. This issue is no longer res integra as has been dealt by Co-ordinate Bench in the case of HDFC Bank Ltd. (supra) with similar view taken by Hon'ble Special Bench, ITAT, Bangalore in the case of Biocon Ltd., vs. DCIT [2013] 144 ITD 21 (Bang)(SB), the same having been ....
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..... Assessing Officer in the assessment completed u/s. 143(3) vide order dated 28.12.2019. This fact for Assessment Year 2017-18 is verifiable from para-7 of the said order wherein total income of the assessee is computed by the ld. Assessing Officer interalia allowing claim towards provisions for bad and doubtful debts u/s. 36(1)(viia) of Rs. 308,51,14,016/-. 29.2. From the perusal of order for Assessment Year 2018-19, we note that it is not in dispute that assessee is eligible to claim deduction u/s. 36(1)(viia)(d). Ld. Assessing Officer disallowed the claim by observing that "no details whatsoever have been placed on record as to what were the records maintained like provisions for bad and doubtful debts, what were the balances brought on from the earlier years, etc. and etc.". He also observed that "assessee did not bring any new things/facts on the record. Further, during the course of VC, the assessee discussed and explained this issue but they reiterated same thing as discussed in earlier reply, nothing new were brought on record." On appeal by the assessee, ld. CIT(A), after taking into account the provisions of section 36(1)(viia)(d), facts of the case and material on rec....
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....tional Housing Bank and is exempted from the requirement of registration with RBI. In this regard, RBI has clarified as under. "In terms of Section 45-1A of the RBI Act, 1934, no Non-banking Financial company can commence or carry on business of a non-banking financial institution without a) obtaining a certificate of registration from the Bank and without having a Net Owned Funds of 25 lakhs (Two crore since April 1999). However, in terms of the powers given to the Bank, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982, Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company." [emphasis supplied by us by underline] 29.7. In view of the amendment made by the Finance Act, 2016 and RB....
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....documents provided by the assessee in respect of sample parties, since volume being large with 624 parties/individuals having bad loans, directed the ld. Assessing Officer to verify the claim and allow bad debts written off to the extent same could be linked to the provisions created up to 31.03.2016. For assessee failing to do so in enabling the said examination, ld. Assessing Officer was further directed to adjust the bad debts written off against section 36(1)(viia)(d) account. While giving the said direction, ld. CIT(A) arrived at a view that bad debts written off during Assessment Year 2018-19 should be allowed if the same is out of provisions created upto 31.03.2016 as well as if the same was never claimed as a deduction. In absence of fulfilment of this requirements, bad debts written off should be adjusted against credit balance in the account relating to section 36(1)(viia)(d) and claim of bad debt should be allowed when the bad debts exceed the credit balance in the account created in respect of deduction u/s. 36(1)(viia)(d). 30.3. On the above issue, we first take note of the relevant provisions of the Act. i. Section 36(1)(vii) provides that any bad debt or ....
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....tten off should be first adjusted against the opening balance of Rs. 2695,34,05,782/- in 'Provision for bad and doubtful debts Account' which was never claimed as a deduction by assessee in the past and once this balance is exhausted, the provision created under section 36(1)(viia) of the Act should be utilized. 30.6. As already noted, ld. Assessing Officer disputed the claim of bad debts written off under section 36(1)(vii) for Assessment Year 2018-19 on the basis that no ledger accounts of the concerned parties have been placed on record which otherwise could have been examined for ascertaining the genuineness of the claim. In this regard, ld. Counsel asserted that assessee did submit the details to the ld. Assessing Officer (NFAC) vide letter dated 27.09.2021 against Point 4 towards a reply to his show cause notice. Out of 624 parties, details of sample parties submitted to the ld. Assessing Officer (NFAC) are extracted as under: Loan Account No. Name of the Borrower Amount Written off (in Rs. ) Reference 609205426 Chaurasia Shashank 60,47,867 Annexure7-1a 607981017 Sawant Amit Kamalakant 50,86,767 Annexure7-1b 604674097 Borgo....
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....5 - 2007-08 5 - 2008-09 4 - 31.1. On this issue, assessee had received interest of Rs. 3,91,43,395/- u/s. 244A on the refund of income-tax, upon processing of its return u/s. 143(1) for Assessment Year 2003-04 which remained to be offered to tax in its return for Assessment Year 2004-05. Ld. Assessing Officer made the addition for this receipt of interest for bringing it to tax while making assessment u/s. 143(3) for Assessment Year 2004-05. Subsequently, assessment for Assessment Year 2003-04 was subjected to regular assessment proceedings u/s. 143(3) whereby demand was raised. While arriving at the demand for Assessment Year 2003-04 on assessment made u/s. 143(3), ld. Assessing Officer recovered the refund which had already been granted at the time of issuing intimation u/s. 143(1). Thus, the interest on income-tax paid to the assessee was recovered while arriving at demand for Assessment Year 2003-04. Assessee moved a rectification application before the ld. Assessing Officer claiming that interest on income-tax refund which was brought to tax on receipt basis has been recovered from the assessee and therefore the addition so made ought to be deleted. Ld.....
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....eady been dealt in this consolidated order. Accordingly, ground raised by Revenue in this respect is dismissed as pre mature and consequential. XXV. Penalty imposed u/s. 271(1)(c) on disallowance on deduction u/s. 36(1)(viii). 33. This issue arises in the following appeals: Assessment year Ground No. in Assessee's appeal Ground No. in Revenue's appeal 2005-06 1(1.1 to 1.15) - 2006-07 1(1.1 to 1.15) - 2002-03 1 to 7 - 2003-04 1 to 7 - 33.1. On this issue, ld. Assessing Officer made disallowance of claim u/s. 36(1)(viii) for which penalty proceedings were initiated u/s. 271(1)(c) for furnishing inaccurate particulars of income on account of difference in deduction claimed by the assessee and that disallowed by him. Aggrieved, assessee went in appeal before the ld. CIT(A), who confirmed the penalty so imposed except in Assessment Year 2005-06 and 2006- 07 where the penalty imposed at the rate of 200% by ld. Assessing Officer was reduced to 100% and the same is now, before the Tribunal. 33.2. Issue relating to claim of deduction u/s. 36(1)(viii) along with its various facets have been elaborately dealt by us in the above ....
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.... 2004-05 Revenue Dismissed 7. 3862/Mum/2009 2005-06 Assessee Partly allowed 8. 3788/Mum/2009 2005-06 Revenue Dismissed 9. 5033/Mum/2010 2006-07 Assessee Partly allowed 10. 5707/Mum/2010 2006-07 Revenue Dismissed 11. 5442/Mum/2011 2007-08 Assessee Partly allowed 12. 5005/Mum/2011 2007-08 Revenue Dismissed 13. 2868/Mum/2012 2008-09 Assessee Partly allowed 14. 2093/Mum/2017 2009-10 Assessee Partly allowed 15. 2326/Mum/2017 2009-10 Revenue Partly allowed 16. 5885/Mum/2017 2010-11 Assessee Partly allowed 17. 5673/Mum/2017 2010-11 Revenue Partly allowed 18. 2609/Mum/2017 2011-12 Assessee Partly allowed 19. 2861/Mum/2017 2011-12 Revenue Partly allowed 20. 2610/Mum/2017 2012-13 Assessee Partly allowed 21. 2862/Mum/2017 2012-13 Revenue Partly allowed 22. 4983/Mum/2017 2013-14 Assessee Partly allowed 23. 5110/Mum/2017 2013-14 Revenue Partly allowed 24. 4217/Mum/2017 2013-14 Revenue Allowed 25. 2666/Mum/2024 2....