Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 440 - AT - Income TaxAddition u/s. 14A r.w.r. 8D(2)(iii) - HELD THAT:- Opinion of the assessing officer in the latter part [of Section 14A(2)] is to be based upon an appraisal of objective material relating to the assessee's voluntary disallowance of amount/amounts. Not only that, if in the course of assessment, the AO enquires from the assessee about the amounts spent, which are to be disallowed, and the assessee in fact discloses a larger amount (than the one given in the return), it is still incumbent upon the AO to enquire into such larger amounts and determine whether it has nexus with expenditure relatable to exempt income to attract Section 14A(1). Section 14A would be reduced to a mere formality which it appears to have become in the circumstances of the case. Holding this the Hon'ble Jurisdictional Court has dismissed the appeal of the revenue wherein the non-satisfaction as required u/s. 14A has not been drawn/specified. Matter has been fairly brought to the notice of the AO who however failed to draw any dissatisfaction as to how the voluntarily disallowance was unreasonable and non-satisfactory with regard to the correctness of the claim of the assessee. Hence, we hereby hold that the disallowance which has been made in contravention with the prescribed mode, methodology and steps for calculation envisaged u/s. 14A(2) is liable to be deleted. Loss transaction with regard to NSEL - Deduction under two specific section namely Section 28 and Section 36 and 37 - HELD THAT:- Assessee paid amount to Philip Commodities India Pvt. Ltd. in the month of June 2013 of ₹ 1,50,66,407/- and also got the amounts till March 2014 and could not receive money of ₹ 47,58,533/- owing to crash of NSEL. This gives rise to a situation where the assessee incurred business loss owing to his transaction with M/s. Philip Commodities India Pvt. Ltd. Hence, the loss will have to be allowable at loss incidental to the business while computing the income u/s. 28. It is not an expenditure, the provisions u/s. 30 to 37 are not attracted in this case. We hold that loss must be during the course or of incidental to business. It is the nexus with the business which is more relevant to claim the loss (CIT Vs. Textool Co. Ltd. -1981 (9) TMI 92 - MADRAS HIGH COURT). The loss must have a direct and proximate nexus with the business operations and the loss is incidental to it, then such loss is deductible as, without business operations, no profit can be earned. If profit is earned in such an endeavour it is to be taxed and if loss is earned it is to be allowed. Without going into the grammatical issue of debt or bad debts or receivables, since the facts clearly prove that the assessee has incurred loss by the way of his business with M/s. Philip Commodities India Pvt. Ltd. and the loss has been in the current year itself, in the peculiar facts and circumstances of the case, such loss incurred in such transaction with regard to NSEL is allowable. Any subsequent recovery needs to be taken into consideration in computation of total income. Appeal of the assessee is allowed.
|