Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (8) TMI 1450 - ITAT MUMBAIDisallowance of interest on borrowings - addition on prorata basis on the ground that borrowed funds are utilized for making investment in tax-free securities - HELD THAT:- Assessee submitted before us that the said issue has been decided against the assessee and in favour of the Revenue by the Tribunal in assessee’s own case by upholding the orders of the authorities below and thereby restricting the disallowance. The learned DR while supporting the orders of the authorities below conceded to the submissions made by the learned AR. However, in respect of Ground I (4), during the year under consideration, as per the arguments of the learned AR exemption u/s 10 (33) of the Act was not available in respect of income earned from dividend for accounting year 2003-04 only and later on, from 2004-05, the said exemption was available. But, for this particular year under consideration exemption u/s 10(33) of the Act was not available. Since, the entire income was taxable, therefore no question of disallowance accrued. Therefore, keeping in view the said legal proposition we agree with the contention of the learned AR and delete the entire addition made by the AO. Resultantly, ground No. I of the assesee’s appeal stands allowed. Disallowance of non-compete Fees paid to ex-directors - HELD THAT:- Issue decided against assessee as relying on its own case. While at the time of hearing of the present appeal of the assessee for assessment year 2003-04, both the sides conceded to the aforementioned fact, we respectfully following the above mentioned order of the Co-ordinate Bench and with a view of maintenance of judicial consistency, uphold the orders of the authorities below. As a result, this ground of assessee’s appeal stands dismissed. Setting off of losses while computing deduction u/s 80HHC - AO rejected the assessee’s claim by observing that the assessee while filing return of income had claimed deduction u/s 80HHC before taking into account the unabsorbed brought forward loss and depreciation and the same claim had also been claimed against the income determined u/s 115JB - CIT (A) rejected the claim of the assessee relying on the decision of J. K. Industries Ltd. Vs ACIT [2013 (5) TMI 152 - KARNATAKA HIGH COURT] as well as CIT Vs Shrike Construction Equipments Ltd. [2007 (5) TMI 194 - SUPREME COURT] by holding that as per the aforesaid case laws, it is now settled that for the purpose of deduction u/s 80 HHC profits will have to be computed after giving full effect to other provisions of the Act, including the provisions relating to carry forward and set off - HELD THAT:- AR during the time of argument has not pointed out or placed on record any material to controvert the decision of the learned CIT (A). On the other hand, the learned DR supported the orders of the learned CIT (A). In view of the above, we find no reason to interfere with the findings of the learned CIT (A) and uphold the same. Accordingly, Ground No. V of the assessee’s appeal stands dismissed. Deduction of Miscellaneous Income and other items from the profits while computing the deduction u/s 80HHC - HELD THAT:- AO has not has not examined the issue in detail before making the disallowance. The learned CIT (A) also rejected the claim of the assessee by confirming the order of the AO holding that there was no direct nexus between the nature of income clubbed under the heading miscellaneous income and the export activity of the appellant without considering the detailed break-up of the aforesaid income as have been placed on record by the assessee. Therefore, we restore this ground back to the file of the AO in order to examine the details of the documents filed by the assessee and then to decide the same regarding applicability of the claim of deduction as raised by the assessee u/s 80HHC of the Act after affording adequate opportunity of being heard to the assessee. Consequently, this ground of appeal is allowed for statistically purpose. Not allowing set off of incentives against profits - assessee claimed set off of miscellaneous income - HELD THAT:- As noticed that the assessee’s claim of deduction u/s 80HHC relates to assessment year 2003-04 i.e. prior to the date of amendment of the provisions with effect from 1st April, 2005. In view of the above, we respectfully following the decision of the Hon’ble Apex Court in the case of CIT Vs Avani Exports cited [2015 (4) TMI 193 - SUPREME COURT] hold that the order of the learned CIT (A) is not sustainable and accordingly we reverse the same. Resultantly, this ground of appeal of the assessee stands allowed. Deduction of income from service while computing profits u/s 80HHC - claim rejected by the AO on the ground that the assessee had not filed any break-up of the income from services - HELD THAT:- We find that the order of the learned CIT (A) on this ground is not sustainable since the detailed break up has not been examined by the authorities below. We, therefore, set aside the order of ld. CIT(A) and restore back the issue to the file of the AO for deciding the same afresh in accordance with law after examining the details of service income provided by the assessee after granting the assessee adequate opportunity of being heard in order to substantiate its claim. Resultantly, this ground of appeal of the assessee stands partly allowed for statistical purpose. Computation of book profits u/s 115JB / disallowance u/s 14A - HELD THAT:- The issue has already been decided in assessee’s own case for assessment year 2002-03 issue of disallowance of interest on the borrowings for both the AYs we have remitted back the matter to the file of the AO. Computation of income as per the provisions of the section 115JB of the Act would depend on the decision taken by the AO Disallowance being 2% of gross dividend on estimate basis out of general and administrative expenses has already been decided against the revenue by the coordinate Bench of the Tribunal while adjudicating the assessee’s own case for assessment year 2002-03 Re-computation of book profits without making adjustment in respective provisions - HELD THAT:- CIT (A) considering the facts of the case and the submissions of the assessee directed the AO to recomputed the book profits without making adjustment in the respective provisions which are on assets of the assessee including provisions for doubtful and advances and provisions for diminution in the value of investments. In view of the amendment of the provisions of section 115JB of the Act being retrospective, we find no reason to sustain the findings of the learned CIT (A). Hence, we uphold the order of AO and while setting aside the order of CIT this ground of appeal of the Revenue is allowed. Reduction of book profits by the quantum of notionally computed deduction u/s 80HHC - HELD THAT:- Issue decided in favour of the assessee and against the Revenue while adjudicating the assessee’s appeal for assessment year 2002-03 held that Special Bench of Mumbai Tribunal, in the case of Syncome Formulations [2007 (3) TMI 288 - ITAT BOMBAY-H] has held that notional computation of deduction u/s 80HHC on the book profit would have to be made and reduced from the book profit for computing tax payable under section 115JB of the Act. Interest u/s 234D - CIT while holding that the amendment is not retrospective in nature, therefore, it was held that interest u/s 234D cannot be charged - HELD THAT:- As perused the judgment CIT vs. IOCL [2014 (10) TMI 262 - BOMBAY HIGH COURT] and after hearing both the parties, we respectfully following the orders of Hon’ble High Court in the case CIT vs. IOCL (supra) where it was held that amendment to section 234D is from 01.06.2003 and is applicable even to period prior to assessment year 2004-05, therefore we order accordingly and AO is directed to recompute the interest in view of our decision. Accordingly this ground of appeal of revenue is allowed.
|