2018 (8) TMI 979 - ITAT DELHI

Deduction u/s 80IA - assessee has allegedly not maintained the separate books of accounts - failure to comply with audit as prescribed under section 80 IA (7) of the act in respect of the windmill undertakings - Held that:- According to the subsection 7 of section 80 IA the only requirement is that, the accounts of the undertaking are required to be audited. In the present case, the assessee has submitted the audited accounts. If the auditor has not qualified those audited accounts, there is no reason to reject them at the threshold without making further verification. The Ld. assessing officer should have verified whether the assessee has properly computed the income derived from the industrial undertaking or not. If the assessing officer finds that such working is not proper then only he can say that that the audited accounts of the assessee are not reliable.

The principle of consistency also demands the assessee may be treated as eligible for deduction and it may not be rejected merely based on non-maintenance of books of accounts. Same is also not found as the mandatory conditions for deduction. Therefore, we do not approve the approach of the assessing officer in rejecting the claim of the assessee at the threshold merely on the basis that no separate books of accounts are maintained even when the assessee has submitted the audit report of the accounts of the industrial undertaking which was the requirement of subsection 7 - Deduction allowed - Decided in favor of assessee.

Assessment u/s 144C - Disallowance u/s 14A r.w.rule 8D - built-in cost in the investment activity - appropriation of cost of composite funds needed to be allocated towards earning of exempt income - expenses having direct/ proximate nexus with earning of the dividend income - failure on the part of DRP/AO to record satisfaction for the purpose of section 14A - Nature of expenses incurred on repair of cost tank - revenue or capital expenditure - Held that:- before invoking the provisions of rule 8D the Ld. assessing officer has failed in his duty as per the provisions laid out under section 14 A read with rule 8D to point out any discrepancy in the claim made by the assessee having regard to its accounts. It is further the fact that investment of the assessee in the mutual fund is out of this para surplus funds. - Additions made u/s 14A deleted.

Regarding expenditure on repairs - Held that:- In the light of the various discussion, it is respectfully submitted that there is no warrant to make any disallowance of the revenue portion of engineering services, since there can be no doubt or ambiguity about rendering of the services before 31.3.2010 and accordingly, 14% of the expenditure should be allowed as revenue expenditure. - Decided in favor of assessee.