TaxTMI 
TaxTMI 
2024 (1) TMI 1570
X X X X Extracts X X X X
X X X X Extracts X X X X
.... video conferencing 2. He further erred in rejecting the Appellant's contention that the Assessing Officer ('AO) has passed the assessment order in violation to principle of natural justice without considering the submissions made during the course of assessment proceedings 3. He further erred in passing the impugned order without appreciating and referring to the documents placed on record in the course of Assessment Proceedings and in the course of Appeal 4. The Appellant, therefore, prays that the impugned order passed in gross violation of the principles of natural justice be held as bad in law and the additions/ disallowances made be deleted WITHOUT PREJUDICE TO GROUND I GROUND II: DISALLOWANCE U/S, 14A OF THE ACT AMOUNTING TO RS.82,36,70,816/-: 1. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in upholding the interest disallowance made by the AO u/s 14A of the Act amounting to Rs. 82,36,70,816/-in absence of any exempt income earned during the year. 2. The Appellant prays that the disallowance u/s 14A of the Act of Rs. 82,36,70,816/- be deleted. WITHOUT PREJUDICE TO G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade u/s. 40(a)(ia) amounting to Rs. 3,64,91,478/- be deleted. WITHOUT PREJUDICE TO GROUND I GROUND VI: DISALLOWANCE OF DEDUCTION U/S 35DD OF THE ACT AMOUNTING TO RS, 5,00,00,000/-: 1. On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in upholding the AO's action of disallowing the deduction claimed by the Appellant u/s 35DD of the Act amounting Rs. 5,00,00,000/ being 1/5th of the stamp duty paid on demerger 2. He further erred in holding that since the stamp duty is capitalised to the immovable property, the income from which is offered to tax as Income From House Property, and all available deduction has been claimed, the Assessee cannot claim twin deduction by claiming the same under Section 35DD of the Act 3. The Appellant prays that deduction of Rs 5,00,00,000 being 1/5th of the stamp duty paid on demerger be allowed as per the provisions of the Act WITHOUT PREJUDICE TO GROUND I. GROUND VII: DISALLOWANCE U/S 38(2) OF THE ACT AMOUNTING TO RS. 9,06,12,313/-: 1. On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in upholding the AO's action....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by treating the same as capital expenditure be deleted. WITHOUT PREJUDICE TO GROUND I, GROUND X: DISALLOWANCE U/S 36(1)(iii) OF THE ACT IN RESPECT OF INTEREST COST TOWARDS INVESTMENT IN DEBENTURES: 1. On the facts and circumstances of the case and in law, the LD CIT(A) erred in upholding AO's action of disallowing interest expense pertaining to the investment in debentures on the alleged ground that since the investment is capital in nature, the interest ought to be capitalised, after restricting the quantum of disallowance @10% as against 15% made by AO 2. He further erred in disregarding that the interest income earned on debentures is taxable and has been offered to tax as business income which has been accepted by the AO. 3. The Appellant prays that the AO be directed to delete the entire disallowance made under Section 36(1)(iii) of the Act WITHOUT PREJUDICE TO GROUND I GROUND XI: ADDITION OF RS. 1,99,04,808/- AND RS. 2,57,16,666/- ON ACCOUNT OF DISCREPANCIES WITH FORM 26AS: 1. On the facts and circumstances of the case and in law, the Id CIT(A) erred in upholding the AO's action of adding a sum o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 6. During the course of appellate proceedings before us the ld. Counsel submitted that amendment inserted in Finance Act 2022 is prospective in nature and the same cannot be applied in the case of the assessee for making disallowance u/s 14A of the Act because assessee has not earned any exempt income during the year under consideration. The ld. Counsel has also placed reliance on the decision of Hon'ble Delhi High Court in the case of Pr. CIT Vs. Era Infrastructure (I) Ltd. (2022) 141 taxman.com 289 (Delhi). On the other hand, the ld. D.R supported the order of lower authorities. 7. Heard both the sides and perused the material on record. Without reiterating the facts as discussed above it is undisputed fact that during the year under consideration the assessee has not earned any exempt income from the investment made in the equity shares and in the mutual funds. We have perused the decision of Hon'ble Delhi High Court in the case of Pr. CIT Vs. Era Infrastructure (I) Ltd. as referred by the ld. Counsel wherein it is held that amendment made by the Finance Act 2022 to Sec. 14A by inserting a non-obs....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... paper book filed by the assessee showing depreciation as per Income Tax for the year ending 31.03.2017. It is noticed that assessee has claimed depreciation on the commercial building at Rs. 9,22,25,022/- and the value of this building as on 31.03.2017 was shown at Rs. 98,05,99,826/-. The assessee has also shown part of the building valued at Rs. 141,01,27,116/- given on rent on which it has not claimed any depreciation. The AO has not brought any material on records contrary to the evidences provided by the assessee in supports of its claim of depreciation as discussed above. Interalia the AO has even not considered the aforesaid material brought on record by the assessee. Looking to the above facts and circumstances we restore this issue to the file of the AO to verify and allow the claim of the assessee in case it has only claimed the depreciation for the 10th floor of the building which was used for commercial purpose. Therefore, the ground of appeal of the assessee is allowed for statistical purpose. Ground No. 4: Addition of Notional Rent at Adhoc rate of 8% of the value of the investment in flats of Rs. 144,17,67,600/-: 12. During the course of assessment the assessin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sallowance u/s 40(a)(ia) amounting to Rs.3,64,91,478/-: 16. During the course of assessment the assessing officer noticed that assessee has made payments to the following parties on which no tax was deducted: Sr. No. Particulars Amount (Rs.) 1. Franklin Templeton 6,98,72,628 2. Franklin Templeton 5,15,17,222 3. Alpex Holdings Put. Ltd. 2,48,410 Total 12,16,38,260 The AO stated that assessee has not made any submission, therefore, 30% of the said expenses to the amount of Rs.364,91,478/- was disallowed u/s 40(a)(ia) of the Act. 17. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 18. During the course of appellate proceeding before us the ld. Counsel submitted that the assessee has deducted tax at source wherever the TDS provisions are applicable. In respect of payment of interest on debenture issued by the assessee company and subscribed by the mutual funds tax is not required to be deducted as per provision of Sec. 196(iv) of the Act. The detail of such interest are given in annexure 53 placed at 115 of the paper book. On the other hand, the ld. D.R su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....demerger expenses as the same was incurred as a result of demerger. The demerger scheme was approved by the Hon'ble High Court vide order dated 23.10.2015. The demerger expenses were incurred for the company as a whole for the purpose of registering the scheme in order to give effect to the scheme of arrangement sanctioned by the Hon'ble High Court of Bombay. The assessee has also filed copy of challan at page 277 of the paper book. Since, the assessee has incurred stamp duty expenses on demerger therefore, considering the above facts and material placed on record we direct the AO to allow the claim of deduction as per provisions of Sec. 35DD of the Act. Therefore, this ground of appeal is allowed. Ground No.7: Disallowance u/s 38(2) of the Act amounting to Rs.9,06,12,313/-: 24. During the course of assessment the AO noticed that assessee has claimed expenses towards repairs, rates and taxes, commission and interest expenses attributable to earning the rental income. The assessing officer was of the view that assessee has already claimed standard deduction under the head income from house property, therefore, claim of repair and maintenance and rate and taxes were not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ticed that assessee has shown an amount of Rs.25,39,33,829/- as interest accrued but not receivable in the schedule of current assets. In response the assessee submitted that entire interest accrued but not receivable of Rs.25.39 crores has already been included as a part of total interest income of Rs.155.59 crores credited to the profit and loss account for the financial year relevant to the assessment year. However, the AO has not agreed with the submission of the assessee and added the amount of Rs.25,39,33,829/- in respect of interest accrued but not receivable to the total income of the assessee stated that the assessee has not furnished the documentary evidences. 29. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 30. During the course of appellate proceedings before us the ld. Counsel submitted that assessee has already offered the amount of interest accrued but not receivable in its total income, therefore, the AO and CIT(A) is not justified in making the addition to the total income. The ld. Counsel has also referred the paper book page no. 12 schedule 18 under the head revenue from operation stating that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... acquired these 6 flats during the year under consideration and assessee has shown the amount as loan and advance as evident from the balance sheet and other schedule placed in the paper book. Since the assessee was in the business of real estate property therefore, action of the assessing officer for treating the interest expenses as capital expenditure without verification of the relevant material mentioned in the submission made at the time of assessment as placed in the paper book is not justified. Therefore, we restore this issue to the file of the AO for deciding a fresh after verification of relevant supporting material placed on record by the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purposes. Ground No.10: Disallowance u/s 36(1)(iii) of the Act in respect of interest cost towards investment in debentures: 36. During the course of assessment the AO noticed that assessee has shown interest expenses of Rs. 288,57,85,956/- in the statement of cash flow in respect of utilization of debentures money raised towards the business and towards investment purpose. The AO stated that assessee has not furnished supporting documentary evi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing officer found discrepancies of interest income of Rs.199,04,808/- and other income of Rs. 257,16,666/- and the same was added to the total income of the assessee. 41. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 42. During the course of appellate proceedings before us the ld. Counsel submitted that assessee has filed detailed reconciliation in respect of the income offered to tax and the corresponding credit claimed by the assessee and submitted that same was not verified by the assessing officer. On the other hand, the ld. D.R supported the order of lower authorities. 43. Heard both the sides and perused the material on record. The AO has added the aforesaid amount because of mismatch of interest income shown by the assessee and the amount of interest income appearing in form no.26AS. Further the assessing officer has also made disallowance of contractual and professional and rental income as shown by the assessee compared to the amount appearing in form no. 26AS. In this regard, we find that assessee in its submission dated 27.12.2019 made before the AO as per para 7 of the submission given the pa....