TMI Blog2016 (5) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... d additional depreciation.- Decided in favour of assessee. Disallowance u/s 14A - Held that:- The assessee has got sufficient own funds which are several times more than the investments made by the assessee. Hence, it can be safely concluded that borrowed funds have not been utilized for the purpose of making investments. Accordingly, we hold that the provisions of Rule 8D(2)(ii) of the Rules could not be invoked in the facts and circumstances of the case. - Decided in favour of assessee. Whether disallowance u/s. 14A could be made to the book profit computed u/s. 115JB - Held that:- In this regard we have already held that no disallowance u/s. 14A of the Act could be made in the facts and circumstances of the case. Accordingly, ground raised by the assessee are allowed. - I.T.A No. 665/Kol/2012, I.T.A No. 335/Kol/2012 - - - Dated:- 18-5-2016 - N. V. Vasudevan (Judicial Member) And M. Balaganesh (Accountant Member) For the Revenue : Shri Niraj Kumar, CIT, DR Shri A. K. Sinha, JCIT, Sr. DR For the Assessee : Shri Akash Mansinka, FCA ORDER M. Balaganesh (Accountant Member) Both this cross appeals by revenue and assessee are arising out of order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the issue accordingly. This issue of revenue s appeal is remitted back to the file of AO and is allowed for statistical purposes. Now, ITA No. 335/Kol/2012 (Assessee s appeal): 5. The first issue to be decided in this appeal is as to whether the assessee is entitled to claim the left over portion of additional depreciation of ₹ 9,02,49,544/- being the carry forward figure from the previous year u/s. 32(1)(iia) of the Act. 6. Brief facts of this issue are that the assessee installed various fixed assets during the AY 2007-08 and had put to use for less than 180 days and accordingly, claimed additional depreciation at 50% of 20% i.e. at 10% in accordance with the provisions of section 32(1)(iia) of the Act in AY 2007-08. During the AY 2008-09 i.e. the assessment year under appeal, the assessee claimed the remaining 50% of the additional depreciation i.e. (remaining 10%) in the sum of ₹ 9,02,49,544/- and included the same in Income-tax depreciation claimed by the assessee. The Ld. AO disallowed the same in the assessment which was also upheld by the Ld. CIT(A) on first appeal. Aggrieved, assessee is in appeal before us. 7. We have heard rival submissions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 11,05,019/- in the facts and circumstances of the case. 9. Brief facts of the issue are that the assessee derived dividend income of ₹ 21,40,700/- out of total investments of ₹ 3.19 cr. The Ld. AO directly resorted to apply provisions of Rule 8D(2)(ii) and (iii) of the Rules and made disallowance of ₹ 11,05,019/- in the assessment. On first appeal, the Ld. CIT(A) upheld the addition made by the Ld. AO. Aggrieved, assessee is in appeal before us. 10. The Ld. AR argued that firstly no satisfaction was recorded by the Ld. AO in term of Rule 8D(1) of the Rules having regard to the accounts of the assessee. It is not in dispute that the assessee had not made any disallowance of the expenses u/s. 14A of the Act. The assessee stated that it had not incurred any expenditure for the purpose of earning dividend income and admitted that the major portion of the investments were made in Kesoram Industries Ltd. to the tune of ₹ 3.04 cr. way back as in FY 1995-96. It was argued that without recording satisfaction in terms of Rule 8D(1) , the Ld. AO cannot mechanically proceed to Rule 8D(2) of the Rules and make disallowance u/s. 14A of the Act thereon. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rules could not be invoked for the purpose of making disallowance. 12. Thirdly, it was argued that even assuming disallowance u/s. 14A of the Act read with Rule 8D(2) of the Rules are to be invoked then the investments yielding dividend income alone should be considered for the purpose of making the disallowance and the investments which had not derived any dividend income have to be ignored for the purpose of computation u/s. 14A of the Act. He placed on record the computation of the same and according to him, even assuming without conceding disallowance is to be made, the same is to be restricted only to ₹ 10,884/-. The Ld. AR pleaded various decisions of the Coordinate Benches of various Tribunals in support of his various contentions including the decision of jurisdictional High Court. 13. In response to this the Ld. DR argued that in the instant case the assessee had not made any claim of expenses as to have incurred for the purpose of earning any exempt income. Hence, according to him, there is no requirement for recording any satisfaction u/s. 14A(2) of the Act . He relied on the findings of the Ld. CIT(A) with regard to the availability of any funds with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised. Therefore, this appeal is dismissed . Hence, we hold that the action of the Ld. AO in directly embarking on Rule 8D(2) of the Rules is not appreciated and hence no disallowance u/s. 14A of the Act could be made in the facts of the instant case. 15. From the aforesaid chart reproduced in para 11 above, we also find that the assessee has got sufficient own funds which are several times more than the investments made by the assessee. Hence, it can be safely concluded that borrowed funds have not been utilized for the purpose of making investments. Accordingly, we hold that the provisions of Rule 8D(2)(ii) of the Rules could not be invoked in the facts and circumstances of the case. In this regard, we place reliance on the decision of the Hon ble Bombay High court in the case of CIT Vs. Reliance Utilities Power Ltd. reported in 313 ITR 340 (Bom). We also are in agreement with the arguments of the Ld. AR that investments yielding dividend income alone are to be considered for the purpose of making disallowance u/s. 14A of the Act read with Rule 8D of the rules. However, this aspect would become infructuous in view of our finding recorded hereinabove that provisions of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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