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2021 (6) TMI 814 - AT - Income TaxDisallowance u/s 14A read with Rule 8D(2) - assessee had earned exempt income in the form of dividend and had made suo moto disallowance u/s 14A - CIT-A had deleted the disallowance of interest made under Rule 8D(2)(ii) of the Rules on the ground that the assessee company is having sufficient interest free funds in its kitty - HELD THAT:- It is a fact on record that the assessee is having sufficient interest free funds in the form of share capital and reserves to the tune as on 31.3.13 which is evident from the bare perusal of the financial statements for the respective period and that the same is much more than the investments made by the assessee. Hence by applying the ratio laid down by the Hon’ble Jurisdictional High Court in the case of HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] and in the case of Reliance Industries Ltd [2019 (1) TMI 757 - SUPREME COURT] we hold that no disallowance of interest need to be made under Rule 8D(2)(ii) of the Rules. Disallowance under Rule 8D(2)(iii) of the Rules, the ld AR argued that the disallowance already made by the assessee was much more than disallowance warranted under third limb of Rule 8D(2) of the Rules. We are inclined to agree with the same. Hence we direct the ld AO not to make any disallowance u/s 14A of the Act other than the suo moto disallowance already made by the assessee in the return of income, both under normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Act. Accordingly, the Ground No. 1 raised by the revenue is dismissed. Disallowance of business loss on account of NSEL and also treating the said loss as speculative loss - whether the loss arising on the impugned transaction could be construed as speculative loss specifically? - HELD THAT:- We hold that the loss arising on account of payment made to NSEL through registered broker towards purchase of commodities (which were never delivered to assessee) , shall be allowable as regular business loss u/s 28 of the Act. We further hold that the said loss cannot be construed as speculative in nature. Accordingly, we do not find any infirmity in the order of the ld CITA in this regard. Interest income on fixed deposits - Addition under the head Income from other sources or assessee’s claim to be taxed under the head Income from Business - HELD THAT:- CIT-A had categorically given a finding that the investment in fixed deposit made with ICICI Bank has got an inextricable link with the business activity of the assessee and hence the interest income thereon is required to be taxed only as business income. CIT-A also recorded the fact that the ld AO himself had accepted this fact in Asst Year 2015-16 u/s 143(3) of the Act. With regard to resjudicata in income tax proceedings, we find that the ld CIT-A had stated though the principle of resjudicata does not apply to income tax proceedings, but the principle of consistency cannot be given a go by. Reliance in this regard was placed on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] and case of Radhasoami Satsang vs CIT [1991 (11) TMI 2 - SUPREME COURT] Hence we do not find any infirmity in the said order of the ld CITA granting relief to the assessee. Accordingly, the Ground No.1 raised by the revenue is dismissed for the Asst Year 2016-17. Disallowance made u/s 14A of the Act read with Rule 8D(2) of the Rules - HELD THAT:- CIT-A had also recorded a categorical finding that the ld AO had not recorded any objective satisfaction having regard to the books of accounts of the assessee, as to why the claim made by the assessee that no expenditure has been incurred other than for the purpose of earning exempt income, is incorrect. This objective satisfaction with cogent reasons are required to be recorded in terms of section 14A(2) of the Act read with Rule 8D(1) of the Rules. This issue is no longer res integra by the decision of the Hon’ble Supreme Court in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] thereon. We find that the ld CITA had also granted relief on this count by placing reliance on the decision of Hon’ble Delhi High Court in the case of Eicher Motors Ltd vs CIT [2017 (9) TMI 1043 - DELHI HIGH COURT] on which, we find no infirmity. Hence the Ground No. 2 raised by the revenue is dismissed. Adjustment of brought forward business loss and unabsorbed depreciation of Asst Year 2014-15 against the business income of the assessee - HELD THAT:- We have already held in assessee’s own case for the Asst Year 2014-15 hereinabove that the business loss would be allowable as business loss u/s 28 of the Act. Hence the said loss would be eligible to be carried forward to subsequent years in terms of section 72 and 32 of the Act to be set off with the business income or other income, as the case may be. We find that the ld AO had primarily dismissed the claim of the assessee since he had already disallowed the business loss in Asst Year 2014-15 - But the said disallowance has already been deleted by us in Asst Year 2014-15. Hence this ground is effectively consequential in nature. The ld AO is hereby directed to allow the set off of losses from Asst Year 2014-15 after giving effect to our tribunal order for Asst year 2014-15 and whatever loss that is available to the assessee thereafter, should be allowed to be carried forward to subsequent years and allowed to be set off against future business income. Accordingly, the Ground No. 3 raised by the revenue is dismissed.
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