TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1085
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....peal of the assessee as under: ITA no.3754 /MUM/2023 GROUND NOs.1,2 and 3 2. In all these grounds, the assessee has claimed that the order was not passed as per procedures laid down in section 144B of the Act. It is also claimed that no personal hearing was allowed by the ld.CIT(A) despite request. Thus, the proceedings are bad in law. It is further stated that the adjustment made by CPC was wrongly upheld by the ld.CIT(A). However, in the course of hearing before this Bench, the Ld. Authorised Representative of the assessee vide written communication dated 26/11/2024 did not press these grounds. Therefore, they are considered as being withdrawn and dismissed accordingly. GROUND NO. 4 3. In various related grounds, it is claimed that the CIT(A) confirmed the addition made by the AO in invoking provisions of section 41(1) of the Act and thereby making addition of Rs. 33,00,549/- treating it as extinguishment of liabilities u/s. 41(1) without establishing that any such loss/ expenditure/trading liability had been claimed and allowed in the earlier years. He further erred in not granting an opportunity to cross examine the parties who have written off bad debts resulting in gross....
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....and obtain ledger account of the assessee even after request made to him. No cross-examination was also allowed. The assessee submitted confirmations from two parties CSV Techno and Nikhil Comforts in support of the claim the assessee paid only the net amount and bad debt was neither debited or paid in financials of the assessee. It never claimed any bad debt amount written off. 6. On careful consideration of above facts by us, it appears that the addition was made by the ld.AO due to non availability/production of any reply/evidences by the assessee in support of its contentions. Moreover, it is observed submissions made to CIT(A)do not appear to be complete for properly evaluation by him. The AO also did not make any independent enquiry in the matter with the respective parties as well by invoking provisions of section 131 or 133(6) of the Act. The assessee has also contended that no cross-examination of the parties was allowed before taking adverse view of the matter. 6.1 In view of all the above aspects of the case, we are of the considered view that it would be in the fitness of things to set aside the matter to the ld.AO in the interest of principles of natural justice for ....
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....ect in concluding that the Appellant had not submitted any written submission with supporting documents. He Further erred in confirming the action of AO in applying section 50C/43CA to capital assets covered by section 50 (depreciable assets) and in computing the capital gains on the sale of depreciable assets by adopting the Stamp Duty valuation. He further erred in alleging that the Appellant has not established that properties have been considered under Block of Assets and that it is also not clear whether the above said block is in existence or not which is factually incorrect since the appellant clearly demonstrated that the said properties were part of Block of Assets. He wrongly invoked section 50C without making reference to valuation officer despite being request made by Appellant u/s. 50C(2)(a) since the value assessed by the stamp valuation authorities exceeded the fair market value of the property as shown in the approved valuer's report. He did not appreciate that Section 50C does not apply to sale of assets forming part of Block of Assets. Provisions of section 50 as well a section 50C are mutually disjoint provisions and are special provisions for specific purpos....
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....22 was claimed to have been made explaining all relevant aspects of the case. It was submitted that the sold out property was a dilapidated house property at Kolkata was valued Rs 11,55,19,784/- by stamp value authorities. The valuation report clearly showed that the property was old since it was purchased in 1996 and heavy repairs were needed. The assessee proposed to make a distress sale at lesser value of Rs 7 cr. to one Deepak Builder P.Ltd. The property consisted of 32 flats. Copy of reply dated 9.8.2023 to the ld.CIT(A) is also part of paper book pages 137 to 147 enclosing copies of sale agreements of flats alongwith their photos showing poor conditions thereof. It was submitted that the flats were earlier held by ING Vysya Bank which was merged with the assessee on 01.04.2015 mainly for the purposes of providing residential accommodation to the employees of the ING. It was further claimed that since the flats were used for residential purposes and subsequently for keeping bank records, they could not be treated as capital assets for the purposes of LTCG. Also the provisions of section 43C(6)(c) apply where the capital assets enters a block of asset as in case of the assessee....
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.... provisions of section 50C are not applicable to block of assets is concerned, it would be worthwhile to extract the relevant paras of decision given in the context of provisions of section 50 vis-a-vis section 50C of the Act in the case of Special Bench of the Tribunal in the case of ITO v. United Marine Academy [2011] 130 ITD 113 (Mum)as below: "This Special Bench has been constituted by the Hon'ble President, Income-tax Appellate Tribunal to dispose of the appeal filed by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)- XXII, Mumbai dated 20.11.2006 and to answer the following question, which is arising from the grounds raised therein : "On a proper interpretation of sections 48, 50 & 50C of the Income Tax Act, 1961, was the Assessing officer right in law in applying section 50C to capital assets covered by section 50 (depreciable assets) and in computing the capital gains on the sale of depreciable assets by adopting the Stamp Duty valuation?" PARA-11 We have considered the rival submissions and also perused the material on record. We have also gone through the various judicial pronouncements cited by the leaned representatives of both the ....
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....and a non-depreciable asset and it, therefore, cannot be said that the said provision is not applicable in a case of transfer of depreciable asset which is covered by section 50. Para-20..............................................................In our opinion, the Assessing Officer thus was right in applying the provision of section 50C to the transfer of depreciable capital assets covered by section 50 and in computing the capital gain arising from the said transfer by adopting the stamp duty valuation. We, therefore, answer the question referred to this special bench in the affirmative i.e. in favour of the Revenue and against the assesse." 13.2 We find that the hon'ble Special Bench while interpreting the sections 50 and 50C of the Act w.r.t. applicability in respect of depreciable assets, block of assets and non-depreciable assets has categorically held that the provisions of section 50C are equally applicable to asset forming a block of asset as well. This finding is contrary to the contentions of the assessee as stated above paras. This decision though given in the context of section 50 of the Act, has not been appreciated either the assessee or the Revenue in the impug....
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....mpower the AO to compute disallowance as per the provisions of Rule 8D of the Income-tax Rules, 1962 with effect from Assessment Year 2008-09, provide that the disallowance under Rule 8D can be computed, only if the AO, having regard to the accounts of the assessee, is not satisfied with the claim of the assessee regarding the expenditure claimed to have been incurred/ not incurred in relation to the exempt income. As per the provisions of sub-section (1) of Section 14A of the Act, the AO is empowered to not allow the assessee any deduction with regard to any such expenditure which has been incurred by the assessee in relation to income which does not form part of its total income, i.e. the income which is exempt. The provision of sub-section (2), which was inserted by the Finance Act, 2006 with effect from 01 April, 2007 further provides that if the AO is not satisfied with the correctness of claim of assessee in respect of expenditure in relation to exempt income, the AO is to determine the amount of such expenditure incurred in accordance with the method as prescribed. Rule 8D provides for a mechanism of computing the expenditure to be disallowed by the AO under Section 14A. Sub....
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....axmann.com 244(Gujrat)wherein it has been held that where the Ld. Assessing Officer gave detailed reasons for making disallowance under Section 14A in respect of exempt dividend income and long-term capital gain earned by assessee discarding assessee's theory that to earn the income assessee incurred no expenditure whatsoever, mere fact that AO did not arrive at the satisfaction in a particular manner while making the disallowance under Section 14A, would not per se destroy the mandate of Section 14A. Also hon'ble Delhi High Court of Delhi in the case of India Bulls Financial Services Ltd vs DCIT, (2016) 76 Taxmann.com 268 (Delhi)on scrutinizing the provisions of Section 14A, has reached to a conclusion that where the AO has carried out an elaborate analysis and has thereafter followed the steps enacted in the statute in determining the amount of expenditure incurred for earning tax exempt income, the fact that he did not record his dissatisfaction about assessee's calculation of disallowance, could not be a ground for rejection of the stand taken by the AO. 17. In the present case, perusal of the assessment order reveals that the ld.AO has dealt with the issue starting in paras 3....
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....circumstances, the Ld CIT(A) was justified in holding that disallowance u/s 14A is to be restricted to the exempt income whereas Finance Act 2022, explanation to section 14A has been inserted which provides for applicability of the section even in absence of exempt income, being clarificatory in nature being retrospective effect. 21.1 It is stated that the AO mechanically applied Rule 8D(2)(ii) without recording any satisfaction for rejecting the suo-motto disallowance made by assessee in return of income. The ld.CIT(A) accepted the alternative plea of assessee and directed the AO to compute the disallowance based on decision of Special Bench in case of Vireet Investments Pvt. Ltd. 165 ITD 27 (Delhi-Trib.). i.e. disallowance to be made considering only those investments which yield exempt income during the year 22. It is pleaded by the ld.AR. that the assessee has made all investments, which yield tax-free income out of its capital and reserves i.e. owned funds. No administrative expenditure can be attributed towards making such investments or earning dividend income there from. Without prejudice, appellant has already suo motto disallowed in the computation an amount of Rs. 2.37....
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....rinciples laid down in Biocon (supra) is not accepted. 26. It is further claimed that case of the assessee is identical to the case of Biocon, It is submitted before us that based on favourable decision in Respondent's own case by CIT(A) for AY 2013-14, 2014-15 & 2015-16 and the Hon'ble ITAT Mumbai in ITA No. 3865/M/2019 dated 16-02-2023 and ITA No. 781 & 782/M/2018 dated 27.08.2019, the disallowance was deleted by CIT(A).Besides, the same is allowed in favour in respondent's own case by ITAT Mumbai in ITA No. 4056 & others/Mum/2023, ITA No. 3267 to 3269/Mum/2019, ΙΤΑΝο. 781/782/mum/2018, ITA No. 2817/Mum/2016 and 168 ITD 529(Mum). 27. Rewarding employees through share-based benefit schemes has been an effective tool for the companies to not just recognise their contribution to the company but also retain them by imbibing a sense of belonging and ownership. One such scheme, popular among the companies for almost last two decades, has been to grant of Employee Stock Option Plans ("ESOPs"). In simple terms, an ESOP is an option and not an obligation, provided by a company to its employees, to purchase its shares at a future date at a pre-determ....
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....10 ITR 244 which confirmed the findings of hon'ble Delhi High Court in this case that since as per prudential norms issued by RBI, ICD had become NPA on which no interest was received and possibility of recovery was almost nil, it could not be treated to have accrued to the assessee. 30. In view of the foregoing, considering the fact that issue in hand is recurring in nature and is being consistently decided in favour of the assessee, respectfully following the decision referred above, the disallowance made is accordingly deleted. 31. GROUND No. 4- Disallowance of Broken Period Interest "On the facts and the circumstances of the case, the ld.CIT(A)erred in holding that Broken period interest is allowable on matching principles without realising that the same has not been incurred for realising the interest on securities as enunciated by the Apex Court in Vijaya Bank Ltd (57Taxman 152(SC)." 32. Relying upon decision of CIT(A) for AY 2013-14, AY 2014-15 & AY 2015-16, in assessee's own case, it is contented by the ld.AR that the issue has been allowed in favour of the assessee by the ld.CIT(A).Before us, it is submitted relying upon favourable decisions of ITAT Mumbai in Responde....
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....tember 19, 1990, where broken period interest was classified as capital expenditure and hence not deductible as a business expense. 33.1 In view of the foregoing, considering the fact that issue here is identical, recurring in nature and is being consistently decided in favour of the assessee, respectfully following the decision referred above, the disallowance made is accordingly deleted. 34. GROUND No. 5 & 6 - Provision for Standard Asset as provision for "Bad & Doubtful Debt u/s 36(1)(viia)" "5. Whether on the facts and the circumstances, the ld. CIT(A) was correct in allowing deduction u/s 36(1)(vii) of the Act when in fact the assessee is claiming deduction u/s 36(1)(viia)) and the first proviso to section 36(1)(vii) restricts the deduction to the same. 6. Whether on the facts and the circumstances of the case and law, the ld.CIT(A0 was correct in allowing provisions on standard assets of Rs 41.36 cr. When in fact standard assets are neither bad or doubtful as required by section 36(1)(viia) of the Act.' 35. As per the ld.Counsel, the assessee makes a provision for bad and doubtful debts as per directions of RBI. The RBI categorises loans into various categories based o....