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2022 (5) TMI 331 - AT - Income TaxDisallowance made under section 14A r.w. Rule 8D - Assessee made suo moto disallowance - Mandation of recording satisfaction - HELD THAT:- The assessee has received dividend income and has suo motu disallowed expenses under section 14A of the Act as expenses relating to exempt income. However, the Assessing Officer disallowed an additional amount but while making additional disallowance under section 14A of the Act, the Assessing Officer has not recorded any satisfaction as to how the claim of the assessee was incorrect and had resorted to the provisions under section 14A r.w. Rule 8D. Assessing Officer has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. Moreover, before the ld. CIT(A) also the assessee has revised the disallowance. The ld. DR could not controvert the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd.[2018 (3) TMI 805 - SUPREME COURT] - thus we hold that the Assessing Officer was not justified in making disallowance under section 14A - Decided in favour of assessee Disallowance of royalty payment - as assessee has claimed royalty paid to Shriram Ownership Trust for use of the logo by treating the expenditure as capital expenditure, the Assessing Officer allowed depreciation @25% - HELD THAT:- As decided in own case [2016 (7) TMI 1642 - ITAT CHENNAI] CIT(A) directed the Assessing Officer to allow the royalty payment by treating it as revenue expenditure. DR could not controvert the above decision of the Tribunal in assessee's own case. Just because the Revenue has filed an appeal against the order of the Tribunal before the Hon'ble Madras High Court, we cannot take a different view until and unless the decision of the Tribunal has been reverted or modified. The ld. CIT(A) has rightly followed the decision of the Tribunal and thus, we find no infirmity in the order passed by the ld. CIT(A). Accordingly, the ground raised by the Revenue stands dismissed. Interest income not offered to tax - AO has noted that the assessee has not offered the entire receipts on the ground that it is classified as NPA - Since the assessee has claimed full TDS credit as in Form 26AS, the Assessing Officer has called for explanation on why the above two amounts not offered to tax should not be added to the total income - CIT(A) has observed that as per the provision of section 198 and section 199 of the Act, an assessee can claim credit for TDS against the income declared - HELD THAT:- There is no provision under the Act to assess the notional income based on TDS which is incorrectly claimed unless the Assessing Officer has material evidence towards suppression of income. Since no material evidence towards suppression of income was brought on record and in view of the above facts, the ld. CIT(A) has rightly deleted the addition of Rs. 1.23 crores made by the Assessing Officer towards undeclared interest income and further directed the Assessing Officer to assess the corresponding interest income in the relevant assessment year in which it actually arises and to allow TDS thereof in the relevant assessment year in which interest income is offered in respect of those two parties. Consequently, the ld. CIT(A) has also directed the Assessing Officer not to allow credit for the TDS in respect of those two parties. Hence, we find no reason to interfere with order passed by the ld. CIT(A) on this issue and thus, the ground raised by the Revenue is dismissed. Exclusion of disallowance under section 14A while computing the book profits under section 115JB - HELD THAT:- So far as disallowance under section 14A of the Act while computing the book profit under section 115JB of the Act is concerned, in the recent judgement in the case of Sobha Developers Ltd. [2021 (1) TMI 378 - KARNATAKA HIGH COURT] has held that the disallowance made under section 14A of the Act could not be added to book profits of the assessee under section 115JB. Allowability of credit for TDS by Jinal Mercantile and Mehul Chinubhai Choksi in the assessment year 2014-15 - HELD THAT:- By considering the submissions of the assessee that there was uncertainty in realizing interest income and since there was no provision under the Act to assess the notional income based on TDS, the ld. CIT(A) has deleted the addition of Rs. 1.23 crores made by the Assessing Officer towards undeclared interest income. Further, the ld. CIT(A) has directed the Assessing Officer to assess the corresponding interest income in the relevant assessment year in which it actually arises and to allow TDS thereof in the relevant assessment year in which interest income is offered in respect of those two parties. Consequently, the ld. CIT(A) has also directed the Assessing Officer not to allow credit for the TDS in respect of those two parties. Therefore, we are of the opinion that there is no merit in the ground raised by the assessee and accordingly, the ground raised by the assessee is dismissed.
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