TMI Blog2024 (5) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... f question no.3 (a) is not relevant in this case as the assessment is for the year 2013-14, therefore, the amendment proposed in Section 14 (A) of the Act as discussed hereinabove would not be applicable in the present case and the submission of the appellant in respect of Section 14 (A) of the Act is not relevant in light of the amendment, therefore, the contention of the appellant to this effect that order of CIT appeal as well as an order of ITAT may be quashed is hereby rejected. The judgment rendered in the case of Chivenwest [ 2015 (9) TMI 238 - DELHI HIGH COURT] is worthy of reference, where it has been categorically held that Section 14 (A) of the Act will not apply, if no exempt income is received or receivable during the relevant previous year by the assessee and this finding is just and proper and further contention of the appellant in respect of the pendency of the case in the Apex Court i.e. PCIT vs. Adani Wilmart Ltd. [ 2021 (8) TMI 1390 - SC ORDER] against the order of the [ 2021 (1) TMI 1260 - GUJARAT HIGH COURT] and in the PCIT Vs. Karnataka State Financial Corporation [ 2021 (4) TMI 652 - KARNATAKA HIGH COURT] against the judgment of the Karnataka High Court are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue against the order passed by the ITAT, Bench Indore in ITA No. 329/2022 affirming the the order passed by the CIT (Appeal) wherein, the addition of Rs. 1,68,64,954/- made by the Assessment Officer[referred to as 'AO' hereinafter] has been deleted for the assessment year 2013-14. 2. Before adverting to the legal issue involved in the present appeal, it would be apt to put up certain facts which are necessary for adjudication of the issue involved in this case. The assessee company being involved in the business of construction of road and building has filed its return of income tax for the assessment year 2013-14 and declared total income of Rs. 1,41,30,104/- on 01.10.2013. The scrutiny of the return in terms of Section 143 (3) of the income tax Act 1961 was made and completed on 07.03.2016 and assessing authority determined the total income of the assessee of Rs. 8,19,07,840/- . 3. After scrutiny, assessment proceedings were carried out wherein notice had been issued to the assessee and assessee was directed to submit the relevant documents in respect of operating expenses, cost of material consumed, employee benefits and other expenses debited in P L account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed copy of confirmation letter from the creditors/lenders. The confirmation letter clearly mention names, address, PAN details of the creditors/lenders and date of transaction and apart from this, no fresh long term borrowing has been taken by the appellant thus, the assessee has proved reasons for increase in liabilities with supportive documentary evidence. Hence, the CIT(A)directed to delete the addition made by the AO, in respect of Rs. 1,68,64,954/- (iii) The CIT(A) in paragraph no.3.3.2 has further observed that the AO while passing the said assessment order invoked the provisions of Section 14 (A) of the Act and has alluded to above, disallowed equivalent to a sum of Rs. 1,29,26,925/-, being 0.5% of the average investment and for this purpose recourse was taken to the provisions of Rule 8 (D) of the Income Tax Rules, 1962. The main object, on which the assessment order is based, is that no details have been furnished by the appellant and appellant has earned dividend income and therefore, the 0.5% of the average investment had been disallowed. (iv) It is observed by the CIT(A) that provisions of Section 14 (A) was inserted as a response to the judgment of Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT appeal that AO has discredited the documentary evidence submitted by the assessee in support of its claim during the assessment as well as in the remand proceeding. On the basis of the above referred discussion, the CIT appeal has rightly deleted the addition of Rs. 3,79,85,854/- made by the AO. 5. Against the order dated 03.06.2022 of CIT (A), appellant preferred an appeal before the ITAT and ITAT after considering the contentions of the appellant and ITAT before rejecting the appeal had observed that order of CIT(A) is well reasoned order and based on the document sought by the AO and adduced by the assessee and it is further observed by the ITAT that the CIT(A) has rightly drawn the conclusion that AO has passed the order in respect of addition of certain amount without appreciating the documents submitted by the assessee and before rejecting the appeal filed by the appellant, the ITAT has made certain observation. Para 7 and 11 of the order are relevant and the same are reproduced below: 7. The facts given by the Ld.CIT (A) is based on the record and particularly suo-moto disallowances made by AO under Section 40 a (ia) of the Act as well as various precedence on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the expenses? (ii) Whether on the facts and on the circumstances of the case the ITAT was justified in law in upholding the deletion of addition of Rs.1,68,64,954/- on account of difference of current year and previous year of other long term liabilities, current liabilities and statutory liabilities shown in books of account without appreciating that: a) The assessee failed to furnish the details of current and statutory liabilities and other long term liabilities before the Assessing Officer during the assessment proceedings? b) The CIT(A) has grossly erred in admitting 'additional evidences' in contravention of the provisions of Rule 46A of the Income Tax Rules, 1962, more so since the assessee has neither claimed and/or proved, nor the order of CIT(A) has noted, that any of the requisite condition(s) specified in Rule 46A(1) for admission of additional evidence have been met? (iii) Whether on the facts and on the circumstances of the case, the ITAT was justified in law in upholding the order of CIT(A) deleting the addition of Rs.1,29,26,925/- disallowance by holding that no such disallowance was required in view of the fact that the assessee has not disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14 of the Act inserted by the Finance Act, 2022. The ITAT erred in confirming the order of CIT. Hence, the appeal of appellant may be allowed considering the proposed substantial questions of law involved in the appeal and set aside the order of the ITAT. 8. On the other hand, learned counsel for the respondent submitted that the order of CIT(A) as well as the ITAT affirming the same have been passed after considering the facts and circumstances of the case. Hence, the present appeal is liable to be dismissed. 9. Heard, learned counsel for the parties and perused the record. 10. The appellant has filed present appeal and framed as many as five substantial questions of law. During the course of argument, the main emphasis has been laid on question no.3 by submitting that the order of CIT(A) and also the order of the ITAT is contrary to Circular No.5/2014 dated 11.02.2014 issued by the CBDT as also the issue pending in the case of Pr. Commissioner of Income Tax 1 Vs Adani Wilmar Ltd (2021) 133 reported in Texman.com 444 (SC). 11. From the perusal of the order of the assessing authority, it appears that the assessing authority did not consider the documents submitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in order to make the intention of Legislation clear and to make it free from any misinterpretation, it is proposed to insert an explanation to Section 14 (A) of the Act to clarify that notwithstanding anything to the contrary contained in this Act, the provision of the Section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income. It is clarified that this amendment will take effect from 01st April 2022. (i) It is also proposed to amend Sub Section 1 of the said Section, so as to include a non-abstante clause in respect of other provisions of the Income-tax Act and provide that no deduction shall be allowed in relation to exempt income, notwithstanding anything to the contrary contained in this Act. (ii) This amendment will take effect from 1st April, 2022 and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years. 16. From the above discussion, it is clear that the contention of appellant in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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