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2022 (9) TMI 651 - Income Tax
Powers of ITAT in dealing with the claim otherwise than by revised return - whether claim not allowed in the assessment proceedings be allowed during the appellate proceedings? - Denial of claim of exemption u/s 10(38) as assessee did not claim deduction - HELD THAT:- We note that in the said order, Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] the Hon’ble Apex Court has expounded that the said decision would not impinge upon the powers of ITAT in dealing with the claim otherwise than by revised return. Accordingly, we direct the Assessing Officer to consider this issue and decide as per law.
Addition invoking section 56(2)(vii)(a) - difference of share price and FMV as deemed income u/s 56(2)(viia) - Valuation of shares for the purpose of calculation of FMV as done by CA u/r 11UA(1)(e) on 10.09.2014 @ Rs. 103/- - HELD THAT:- Rules in this regard contained in section 11UA are already reproduced by us earlier. The same clearly provide for taking the book value of shares as in the balance sheet for the computation. The same was amended by the Income Tax Rules 2017 with effect from 1.4.2018 where instead of book value, fair market value of share is mentioned. The Act does not provide that this amendment is retrospective. It is clearly mentioned that this amendment is with effect from 1.4.2018. Hence, Assessing Officer's adoption of fair market value for making the computation which is not in accordance with the extant provisions has rightly been deleted by the learned CIT(A). It is not disputed that when the book value of the shares is adopted as per the extant rules the addition will not be justified. Hence, we do not find any infirmity in the same. We note that nothing has been brought before us by the revenue as to why the Assessing Officer has applied the same retrospectively - we agree with the submission of the ld. Counsel of the assessee and remit back the issue to the file of the AO to examine the issue on the basis of exposition in the case law pointed above. Needless to add, the assessee should be granted adequate opportunity of being heard.
Disallowance of Processing fees under the head ‘Interest & Finance Costs’ - HELD THAT:- As assessee submitted that the revenue authorities have erred in disallowing the expenditure by holding that processing fee for purchase of capital asset is capital expenditure relied upon the decision of Hon’ble Supreme Court in the case of India Cements Ltd. [1965 (12) TMI 22 - SUPREME COURT] as expounded that loan is neither an asset nor any business advantage and that nature of expenditure incurred in raising a loan is not dependent upon nature and purpose of loan. Accordingly, we set-aside the order of authorities below and decide the issue in favour of the assessee.
Allowability of loss - shares continue to be held as capital assets and have not been transferred during the year - whether diminution in the value of the investments can be claimed as revenue expenses? - HELD THAT:- Assessee’s justification regarding the allowability of this loss is without any basis whatsoever and is against the basic principles of accounting. As we find that authorities below are correct in holding that this claim of Bad Debts is not justified. Hence, we uphold the order of the ld. CIT(A).
Appeal of the assessee is partly allowed for statistical purpose.