Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 605 - AT - Income TaxDisallowance u/s 14A - Held that:- It is not disputed that there was no dividend or exempt income claimed by assessee during the relevant previous year. Other income shown by the assessee in its Schedule 15 shows dividend income as nil. No doubt there is a sum of ₹ 160,701,177/- appearing as miscellaneous income in the P & L account. However, this was the subject of an analysis by the AO wherein the AO himself has given a finding that ₹ 16 crores was remuneration received by the assessee for development of properties and not any income considered as exempt. In any case, computation of income of the assessee which appear at page 12 of the assessment order start with the figure of ₹ 2,44,62,794/- in the negative, which is the same figure appearing in the audited profit and loss account as profit (loss) before taxation. Thus, the whole of the other income was a part of the net working results and contention of the assessee that it had not made any claim of exempt income is found to be correct. We are of the view that a disallowance u/s.14A could not have been made when there was no claim for exempt income during the relevant previous year. Such disallowance stands deleted. - Decided in favour of assessee. Disallowance u/s.57 in respect of the interest paid on borrowed funds - Held that:- t. None of the Authorities below have examined the purpose for which loan was borrowed from HDFC. U/s.57(iii) of the Act, expenditure should be incurred wholly and exclusively for the purpose of making or earning the income. The claim of the assessee is that interest earned on debentures is 'income from other sources'. Therefore the test for allowing deduction of expenses against 'interest income' laid down in Sec.57(iii) of the Act has to be satisfied. We are therefore of the view that it would be just and appropriate to set aside the order of CIT (A) on this issue and remand the issue to the AO for the limited purpose of verifying the purpose for which loans were borrowed by the assessee from HDFC Ltd, and which were utilised in making investment in debentures. If the borrowing is for working investments then the deduction u/s.57(iii) of the Act has to be allowed. - Decided in favour of assessee for statistical purposes. Set off of losses suffered in the eligible 80IB unit against the income from non eligible unit - Held that:- he contention that under section 80-I(6) the profits derived from one industrial undertaking cannot be set off against loss suffered from another and the profit is required to be computed as if profit making industrial undertaking was the only source of income, has no merits. Section 80-I(1) lays down that where the gross total income of the assessee includes any profits derived from the priority undertaking / unit / division, then in computing the total income of the assessee, a deduction from such profits of an amount equal to 20 per cent has to be made. Section 80-I(1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand section 80-I(6) deals with determination of the quantum of deduction - section 80- I(6) lays down the manner in which the quantum of deduction has to be worked out. After such computation of the quantum of deduction, one has to go back to section 80-I(1) which categorically states that where the gross total income includes any profits and gains derived from an industrial undertaking to which section 80-I applies then there shall be a deduction from such profits and gains of an amount equal to 20 per cent. The words "includes any profits" used by the legislature in section 80-I(1) are very important which indicate that the gross total income of an assessee shall include profits from a priority undertaking. While computing the quantum of deduction under section 80-I(6) the Assessing Officer, no doubt, has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at the deduction under Chapter VI-A. However, this court finds that the non obstante clause appearing in section 80-I(6) of the Act, is applicable only to the quantum of deduction, whereas, the gross total income under section 80B(5) which is also referred to in section 80-I(1) is required to be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. See M/s Synco Industries Ltd Versus Assessing Officer [2008 (3) TMI 13 - Supreme court] - Decided against revenue.
|