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2018 (5) TMI 504 - AT - Income TaxAssessment of income - disregarding the loss worked-out by special auditor (appointed by Income Tax Department)- Held that:- In the assessment year under appeal, when special auditor determined the income of assessee at loss, A.O. differed with it and taken tentative figure of profit shown in the return of income. The A.O, therefore, cannot take different view in assessment year under appeal. It is the duty of the Revenue Authorities to work-out correct taxable income of the assessee. The special auditor was appointed by the A.O. and as such, its report is binding on the A.O. Therefore, the A.O. should have adopted the base figure of loss to work-out the taxable income of assessee.The Ld. CIT(A) being an Appellate Authority has correctly came to the conclusion that loss determined by the special auditor appointed by the Department shall have to be accepted by the A.O. as against tentative figure given by the assessee. No infirmity have been pointed out in the order of the Ld. CIT(A). - Decided against revenue Addition u/s 40(a)(ia) - tax was not deducted at source before the close of the relevant financial year - Held that:- CIT(A) merely deleted the addition because of the amendment in Section 40(a)(ia) of the I.T. Act without considering the issue on merit and even without considering the findings of the A.O. that assessee admitted that there was a default for TDS on the payment of ₹ 12,41,447/-. Even for other deposits of TDS, no details have been brought on record as to when tax was deducted and deposited. The matter, therefore, requires reconsideration at the level of the Ld. CIT(A). We, accordingly, set aside the order of the Ld. CIT(A) and restore this issue to his file with a direction to redecide this issue in accordance with law, by giving reasons for decision on merit in the appellate order, by giving reasonable, sufficient opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes. Addition made on account of interest earned on earmarked funds - treatment given to liability for earmarked funds being treated as income of the assessee - Held that:- in earlier year, C & AG of India has directed that interest earned during the year on unspent earmarked fund should be credited to the same earmarked fund. Assessee is bound to follow the directions of C & AG of India. The assessee, therefore, correctly taken the interest to such fund and rightly contended that it has no authority to use, expend or utilise the interest earned for its own purposes. Therefore, when interest on earmarked fund is not related to the assessee and shall have to be spent for specific purpose, it could not be treated as income of the assessee. The Ld. CIT(A), correctly, deleted the addition - Decided in favour of assessee Disallowance under section 14A - calculated expenses u/s 14A by the special auditor were made exclusively for the income which does not form part of the total income under this Act - Held that:- No merit in this ground of appeal of the Revenue. The special auditor was appointed by the Income Tax Department who has reported that though assessee has made investments in shares of various companies, but, no dividend is received on such investments. It is, therefore, clear that no dividend income have been received or earned by the assessee. No other fact brought on record against the assessee. In the case of Cheminvest Ltd [2015 (9) TMI 238 - DELHI HIGH COURT] held that “no disallowance be made under section 14A when no exempt income is received or receivable”. Since, assessee did not earn any exempt income in assessment year under appeal, therefore, no disallowance is permissible. - Decided in favour of assessee
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