TMI Blog2014 (11) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... the audit report is filed before framing of the assessment, the requirement of the provisions stands complied - the claim of deduction u/s. 80IA cannot be denied because the assessee did not file the audit report along with return of income – Decided in favour of assesse. - ITA No. 3100, 3101, 8741 & 7155/Mum/2010, ITA No. 8246/Mum/2010 - - - Dated:- 25-7-2014 - N. K. Billaiya, AM And Vivek Varma, JM,JJ. For the Petitioner : Shri Rajan Vora And Shri Kirit R. Kandar For the Respondent : Shri Jeevan Lal Lavidiya ORDER Per Bench: These four appeals by the assessee are for assessment years 2005- 06, 2006-07, 2007-08 and 2008-09. ITA No. 8246/M/2010 is cross appeal by the Revenue for A.Y. 2007-08. In all the appeals by the assessee, common grievances have been raised which relate to: (i) Disallowance in respect of provisions for lease rent. (ii) Disallowance u/s. 14A (iii) Denial of deduction u/s. 80IA and (iv) Levy of interest u/s. 234B/234C of the Act. 2. In assessment year 2007-08, Revenue is in appeal against: (i) Allowing the claim of deduction u/s. 35DD of the Act (ii) Disallowance u/s. 14A of the Act. Because of the common issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce made by the assessee being 10% of the salary paid to G.M. (Finance) as a reasonable disallowance. 6. Before us, the Ld. Counsel for the assessee fairly conceded that reasonable disallowance has to be made and therefore 10% of the salary paid to G.M (Finance) has been accepted as a reasonable disallowance in A.Y. 2008-09. A similar view should be taken in other assessment years. 7. Per contra, the Ld. Departmental Representative strongly contended that though Rule 8D is applicable from A.Y. 2008-09, yet the disallowance has to be made drawing support from the spirit of Rule 8D. 8. Having heard both the sides we find that the AO has applied Rule 8D while computing the disallowance u/s. 14A. As per the decision of the Hon ble Jurisdictional High Court in the case of Godrej Boyce Manufacturing (supra), the applicability of Rule 8D is prospective with effect from 2008-09. However, at the same time a reasonable disallowance has to be made. In our considered view, since the AO has accepted 10% of the salary paid to the G.M (Finance) as a reasonable disallowance for A.Y. 2008-09, the same ratio should be followed for A.Y. 2005-06, 2006-07 and 2007-08. We, accordingly, direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e say of the Ld. Counsel that the said claim should be considered in the light of the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs Pruthvi Brokers Shareholders (P) Ltd 349 ITR 336 and in so far as the losses and unabsorbed depreciation pertaining to years earlier to the initial assessment year which have already been set off against the profits of other business cannot be notionally brought forward and set off against profits of the eligible business for the purpose of computing the deduction u/s. 80IA of the Act, the Ld. Counsel relied upon the decision of the Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs ACIT 231 CTR 368, Karnataka High Court in the case of Anil H. Lad Vs DCIT 102 DTR 241. 12. Per contra, the Ld. DR strongly submitted that the AO has rightly denied the claim for non filing of the audit report alongwith return because the AO has no authority to allow any claim beyond what is provided in the statute. The AO is bound to follow the conditions prescribed under the provisions of the Act. The AO cannot allow any artificial time. Since the assessee has not followed the mandatory provisions of the Act th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of the assessing authority and that the judgment does not impinge on the power of the Tribunal u/s. 254. 13.2. This decision of the Jurisdictional High Court has amply made it clear that the assessee can make an additional claim with the appellate authority and the appellate authority is within his power to admit the additional claim. Therefore, the claim cannot be denied on this ground also. 13.3. Lastly, the claim has been denied because the lower authorities has taken a view that the losses and unabsorbed depreciation have to be notionally brought forward and set off against profits of the eligible business. A perusal of the assessment order shows that the AO was satisfied with the mandatory condition for the claim of deduction as there is no specific finding stating that the assessee has not complied with the mandatory condition except that the audit report was not filed alongwith return of income. We find that the AO was not satisfied with the computation of the claim of deduction as he was of the firm belief that losses of earlier years have to be set off against the income of the eligible unit. 14. We have considered the rival submissions carefully perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) and finally concluded that it is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income u/s. 80-IA for the purpose of computing admissible deductions thereunder. 16. A similar view was taken by the High Court of Madras in the case of CIT Vs Emerald Jewel Industry (supra) wherein it was held as under: Assessee is eligible for deduction u/s.80IA in respect of windmill installed by it and the unabsorbed depreciation set off in earlier years could not be reduced from profits for computing deduction u/s. 80-IA . 17. Though the Tribunal Mumbai Benches in the case of Hercules Hoists Ltd 22 ITR (Trib) 527 has taken a contrary view but we find that subsequent to the decision of the Tribunal Mumbai Bench, the Hon ble High Court of Karnataka in the case of CIT Vs Anil H. Lad 102 DTR 241 has followed the decision of the High Court of Madras in the case of Velayudhaswamy Spinning Mills Pvt. Ltd.(supra) and held that: If before claiming deduction u/s. 80IA, the loss and depreciation claimed by the assessee in respect of eligible business is set of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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