TMI Blog2019 (7) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the assessee. Accordingly, disallowance of interest made by the AO has rightly been deleted by the ld. CIT (A). Disallowance of interest under proviso to Section 36(1)(iii), being interest @12% on capital-work-in-process - After invoking proviso to Section 36(1)(iii), Assessing Officer disallowed interest @12%. - HELD THAT:- We find that in Assessment Year 2007-08, the Tribunal has deleted the similar addition not only in the Assessment Year 2007-08, but also in the Assessment Year 2010-11. Otherwise also, once this fact has not been disputed that interest for the period between the date of disbursement of loan and date of putting the assets in use has been disallowed as per Section 36(1)(iii) by the assessee itself, then without there being any factual infirmity either for the period up to putting the asset in use or in the computation, no such disallowance can be made. Accordingly, this issue is decided in favour of the assessee. Disallowance u/s.14A - HELD THAT:- Assessee has earned dividend of ₹ 11,19,530/- and AO has mechanically applied Rule 8D for making the disallowance u/s.14A without any satisfaction having regard to the accounts maintained by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following grounds:- 1. Ld. CIT(A) has erred on facts and in law in deleting the disallowance to the extent of ₹ 32,42,244/- on account of interest on the investment of ₹ 2,70,18,699/- for non-business expenditure. 2. The Ld. CIT(A) has erred on facts and in law in deleting the addition of ₹ 31,59,173/- made by Assessing Officer by disallowing deduction u/s 10B to this extent claimed on duty drawback received by the assessee as per Scheme framed by the Government under Customs Act. 3. Ld. CIT(A) has erred on fact and in law in deleting the disallowance of ₹ 18,04,390/- made under section 14A of the Income Tax Act, 1961. 3. At the outset, it has been submitted by the ld. counsel that all the issues involved in both the appeals are squarely covered by the decision of the Tribunal, in assessee s own case for the Assessment Year 2007-08 and Assessment Year 2010-11. 4. In so far as the issue relating to deduction u/s.10B is concerned, the facts in brief are that the assesse is a manufacturer and distributor of steering and suspension components of four wheelers. It has two expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking . Sub-section (4), therefore, is the special provision which enables the assessee to compute the profits derived from the export of articles or things or computer software. We do not see any conflict between Subsection (1) and Sub-section (4) to Section 10B, as Sub-section (1) states that deduction of such profits and gains as are derived by a hundred percent export-oriented undertaking from the export of articles or things or software would be eligible under the said Section. Sub- section (1) is a general provision and identifies the income which is exempt and has to be read in harmony with Subsection (4) which is the formula for finding out or computing what is eligible for deduction under Sub-section (1). Neither of the two provisions should be made irrelevant and both have to be applied without negating the other. In other words, the manner of computing profits derived from exports under Sub-section (1), has to be determined as per the formula stipulated in Sub-Section (4), otherwise Sub-section (4) would become o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at would arise is whether the interest on the FDRs could form part of the profits of the business of the undertaking . The attention of the Court has been drawn to the decision of the Karnataka High Court in CIT v. Motorola India Electronics Pvt. Ltd. (2014) 46 Taxmann.com 167 (Kar.) which held that there was a direct nexus between the interest received from the FDRs created by a similarly placed Assessee from the amounts borrowed by it. The High Court approved the order of the ITAT in that case which held that the entire profits of the business of the undertaking should be taken into consideration while computing the eligible deduction under Section 10B of the Act by ITA 392/2015 Page 5 of 5 applying the mandatory formula. 6. Thus, the Hon ble High Court has categorically held that the export benefits of DEPB interest should be considered for the purposes of deduction under Section 10B of the Act. Respectfully following the ratio laid down in the above cases, we direct the Assessing Officer to consider the export benefits for the purpose of deduction under Section 10B of the Act. Therefore, the reasoning of CIT(A) while allowing these grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 6,09,93,541/-. The facts in brief are that the assessee had shown capital-work-in-process at ₹ 6,09,93,541/-, which AO noted that, this was in the nature of asset yet not in use. After invoking proviso to Section 36(1)(iii), Assessing Officer disallowed interest @12%. The case of assessee before the authorities below was that interest of ₹ 5,04,552/- incurred in respect of acquisition of assets for extension of business has already been offered for disallowance by the assessee in computation of taxable income and the complete details of interest computation for the period up to assets put to use. This has been duly checked and certified by the auditors and thereafter auditors have considered the interest for the period between the date of disbursement of loan and date of putting the asset in use as per proviso to Section 36(1)(iii) and AO has not found any fault with the computation. 12. The ld. CIT (A) following the earlier years order for the Assessment Years 2007-08 and 2008-09 has deleted the addition. 13. We find that in Assessment Year 2007-08, the Tribunal has deleted the similar addition not only in the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
