2023 (3) TMI 473 - AT - Income Tax

Protective addition u/s 80IA(4)(iii) - double addition - HELD THAT:- AO had accepted the contentions of the respondent-assessee that the sale proceeds shown during the year under consideration represents the sales reversed in the financial year relevant to the assessment years 2009-10 and 2010-11, which is nothing but double addition. However, the Assessing Officer had chosen to make a protective addition, as the appeals filed by the assessee before the Tribunal were pending disposal, but however, the appeals for the assessment years 2009-10 and 2010-11 came to be dismissed by this Tribunal vide order [2017 (7) TMI 1444 - ITAT PUNE] and the relevant grounds of appeal challenging the action of the Assessing Officer not accepting the revised returns of income came to be withdrawn by the assessee as evident from para 5 of the order of this Tribunal, which is enclosed.

The submission of the ld. CIT-DR that the matter be remanded to the file of the ld. CIT(A) for fresh examination or verify whether the addition amounts to double addition or not, cannot be accepted for the reason that the Assessing Officer himself had accepted that it amounts to double addition as evident from para 3.14 of the assessment order. He only chosen to make protective addition for the reason that at relevant point of time, the appeals filed by the assessee before the Tribunal were pending disposal. AO never disputed the fact that the sum shown for the year under consideration is nothing but sales reversed during the financial year relevant to the assessment years 2009-10 and 2010- 11.

The submission of the ld. CIT-DR cannot be accepted for another reason that it is settled position of law that the Department Representatives cannot argue the matter beyond the scope of the assessment order. We do not find any merits in the ground of appeal no.2 filed by the Revenue, hence the same is dismissed.

Disallowance offered by the respondent-assessee u/s 14A r.w.r 8D - HELD THAT:- As regards to the disallowance of indirect expenditure under Rule 8D(2)(iii), CIT(A) merely remanded the matter to the Assessing Officer to compute the disallowance in terms of the order passed by this Tribunal in assessee’s own case for the assessment years 2009-10 and 2010-11. The finding of the ld. CIT(A) is under challenge before us in the present appeal. It is undisputed fact that during the previous year relevant to the assessment year under consideration, the appellant had not made any fresh investment which yielded the exempt income. In the earlier assessment years, in which the investments were made, no disallowance u/s 14A was sustained in view of orders of this Tribunal - Similarly, for the subsequent assessment year i.e. 2013-14 also, the Tribunal had deleted the disallowance of interest u/s 14A r.w. Rule 8D(2)(ii) after rendering categorically finding that the interest free funds far exceeds the investments made. Therefore, the findings of the ld. CIT(A) that no disallowance u/s 14A r.w. Rule 8D(2)(ii) is warranted, as it is based on the proper appreciation of facts as well as in consonance with the well settled position of law.

Disallowance of indirect expenses of Rule 8D(2)(iii), CIT(A) only set-aside the computation of the disallowance in terms of the order passed by this Tribunal in assessee’s own case for the earlier assessment years (supra). Therefore, we do not see any grievance for the Department. Thus, ground of appeal nos.3 and 4 stands dismissed.