TMI Blog2010 (12) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ms received by the assessee on account of goods in transit, the AO relied on "CIT vs. Khemka Container P. Ltd.", 275 ITR 559 (P and H) to hold that as such claims received could not be held to be income derived from industrial undertaking so as to qualify deduction u/s 80IB of the Act Regarding disallowance u/s 14A - Rule 8D of the I.T. Rules - This was done without pointing out any inaccuracy in the method of apportionment or allocation of expenses, as adopted by the assessee - The onus was on the AO to establish any such expenditure. This onus has not been discharged - Appeal is dismissed - ITA No. 4539/Del./2010 - - - Dated:- 22-12-2010 - A.D. Jain, B.C. Meena, JJ. Gaurav Jain, CA for the Appellant K. Ravi Rama Chandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing/trading activities in different products, unit-wise. The assessee's units at Dadra(PPD unit) and another unit at Samba (Jammu), were entitled for deduction 80IB of the I.T. Act. The assessee claimed such deduction @ 30% and 100% respectively. On perusal of the tax audit report, the AO observed, the assessee having excluded other income amounting to Rs.1706572 in its turnover of its Dadra unit and other income amounting to Rs.1467641 in the total turnover of its Samba unit. These other incomes comprised of interest received from banks, claims received, miscellaneous receipts, excess provision written back, in both the units and also excess depreciation written back in the Samba unit of the assessee. 4. On query, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. vs. CIT", 241 ITR 803 (Mad.), these receipts pertained to sale of scraps. The excess provision written back and the excess depreciation written back were also held to be eligible as directly related to the activity of the eligible units. 6. Apropos interest receipts, the AO held that the interest earned had been derived from FDRs kept as margin money/bank guarantees for import of raw-material, due to which, the interest earned was to be excluded from the profits of the eligible units for calculation of deduction u/s 80IB of the Act. For this, the AO applied the decision of the Hon'ble Supreme Court in the "Pandian Ltd. vs. CIT" 262 ITR 278 (SC). 7. So far as regards the insurance claims received by the assessee on account of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, as such, it gives way to the case of "Spot King India Ltd.", which has been rendered, as noted by the jurisdictional High Court of Delhi. Accordingly, ground no.2 raised by the department is rejected. 12. Apropos ground no.3, the AO made a disallowance of Rs.3045437 in terms of section 14A of the I.T. Act by applying the method provided in Rule 8D of the I.T. Rules, 1962. 13. By virtue of the impugned order, the CIT(A) restricted the said disallowance to Rs.173038, observing that the assessee had, of its own disallowed expenses to the extent of Rs.173038 incurred at its head office from where the investment in mutual funds had been done; that since dividend is not taxable, the expenditure on rent, taxes, salaries, interest, etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income filed, a suo moto disallowance of expenses to the tune of Rs.173038 had been made by the assessee u/s 14A of the Act. In the assessment order, the AO made a disallowance of Rs.3218475 by applying the method provided in Rule 8D of the I.T. Rules, 1962. This was done without pointing out any inaccuracy in the method of apportionment or allocation of expenses, as adopted by the assessee. All through, the assessee has maintained that the assessee was during the year, carrying on manufacturing activities at its manufacturing units at several places. It's head office was at Delhi. The assessee had maintained separate books of account for each unit. Common expenses incurred at the head office and the branches were attributed to all the uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, it was held that the disallowance u/s 14A of the Act requires a clear finding of incurring of expenditure and that no disallowance can be made on the basis of presumptions. In "ACIT vs. Eicher Ltd.", 101 TTJ (Del.) 369, that it was held that the burden is on the AO to establish nexus of expenses incurred with the earning of exempt income, before making any disallowance u/s14A of the Act. In "Maruti Udyog vs. DCIT 92 ITD 119 (Del.), it has been held that before making any disallowance u/s14A of the Act, the onus to establish the nexus of the same with the exempt income, is on the revenue. In "Wimco Seedlings Limited vs. DCIT" 107 ITD 267 (Del.)(TM), it has been held that there can be no presumption that the assessee must have incurred e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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