TMI Blog2011 (2) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... rning dividend income, the assessee must be presumed to have incurred some expenditure which had been disallowed under section 14A - In this regard, the facts are that the assessee had earned income by way of interest on UTI Bonds and dividend of Rs. 54,000 and Rs. 9,30,8912 respectively, which was exempted from tax - There cannot be a presumption that certain expenditure is bound to be incurred for earning the exempt income - Quite clearly, the Assessing Officer had only made a presumption that certain expenditures have been incurred for earning the impugned exempt incomes Amount spent on consultancy on tools and dies are obviously revenue expenditure as expenditure on tools and dies itself could not be treated as capital expenditure - On the issue of disallowance under section 14A presumptive expenditure in absence of actual expenditure could not be taken into account - Both the appeals are dismissed - 840 OF 2010 - - - Dated:- 11-2-2011 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. Rajesh Katoch for the Appellant. JUDGMENT Adarsh Kumar Goel, J. This order will dispose of Income-tax Appeals No. 839 and 840 of 2010 as it has been stated by the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the issue at (v) above in assessee s own case for the assessment year 2003-04 as no appeal against the decision of ld. CIT(A) was filed before the Hon ble ITAT, whereas the fact is that the appeal against the decision of ld. CIT(A) passed in Appeal No. 216-IT/CIT(A)-I/2005-06 dated 29-4-2008 in assessee s own case for the assessment year 2003-04 on the issue under consideration was not filed by the Department for the reasons that the tax effect involved in that case was less than the monetary limits for filing appeal before the Hon ble ITAT as per Board s Instruction No. 5 of 2008 dated 15-5-2008? (7) Whether on the facts and circumstances of the case, Hon ble Income-tax Appellate Tribunal is justified in law in allowing exemption on the income i.e., dividend income which was not claimed as exempt in the return of income filed by the assessee and the Assessing Officer had rightly not allowed exemption of dividend income under section 10(35) in view of the decision of Hon ble Supreme Court in the case of Goetze India Ltd. v. CIT [2006] 157 Taxman 1/204 CTR 182." 3. While assessing the income of the assessee for the assessment year in question, the Assessing Officer made cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s High Court in the case of CIT v. Taj Fire Works Industries [2007] 288 ITR 92/[2006] 154 Taxman 380 has upheld a similar proposition. In the case before the Hon ble Madras High Court, the assessee was engaged in the business of fireworks. It was doing job work on the raw materials supplied by the customer and on the income earned, it claimed deductions under sections 80HH and 80-I of the Act. Miscellaneous Income. The CIT(A) has held that the income so credited by the assessee can be said to be derived from the industrial undertaking so as to fall within the meaning of section 80-IB of the Act. In the absence of any adverse material and smallness of the dispute, we are inclined to affirm the conclusion of the CIT (Appeals) and dismiss the ground raised by the revenue. Depreciation on Air-conditioners. The asset has been acquired with the funds of the assessee and is being put to use for its business purpose. Merely because the invoices are raised in the name of the Managing Director and the wife of the Chairman, does not distract from the fact that the beneficial owner is the assessee and that the assets are put to use for the purposes of the assessee s business and not for pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Considered on similar parity of reasoning, in the instant case, the claim of the assessee is in terms of the statutory provision contained in section 10(35) of the Act and the assessee cannot be denied the same merely because it was not raised before the Assessing Officer. Thus, the CIT (Appeals) made no mistake in entertaining the plea of the assessee for exemption under section 10(35) of the Act and holding the assessee eligible for the same." 5. We have heard learned counsel for the appellant. 6. We are of the view that questions raised in the appeal cannot be held to be substantial questions of law. 7. The assessee admittedly did the job work qualifying as eligible business under section 80-IB. On the said issue, view taken by the Tribunal earlier was upheld by this Court vide judgment in case of CIT v. Impel Forge Allied Industries Ltd. [IT Appeal No. 543 of 2008, dated 5-12-2008]. The view taken by the Tribunal being consistent with the earlier view taken by this Court, the said question cannot be held to be substantial question of law. Miscellaneous receipts from rebate, discount and balances written off are incidental to the profits and gains derived from elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pattern. Tools and dies once put to use lost resale value and could be sold only as scrap. The Tribunal affirmed the following observations of the CIT(A) : "I have considered the rival contentions carefully. I agree with the appellant s contention that there is no reason to change the method of accounting regularly followed by it in writing off 80 per cent of tools and dies purchased every year. The appellant has been followed the method of accounting year after year, which has been accepted by the Assessing Officer in earlier years. No new facts have been emerged this year which can justify the change in revenue s stand. Once the tool/die has been put to use, it loses resale value as a tool/die and can only be sold as scrap. That being the case, even if the tool/die is used for a few days, its value will reduce to the scrap value of the product. In the case of Leader Valve Ltd. (supra), the Hon ble Punjab and Haryana High Court have held that keeping in view the principle of consistency the Revenue could not be permitted to raise an issue in isolation only for one year while accepting the findings on the same issue for other assessee and for other years in the case of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estments were made from combined funds of the assessee which could not be bifurcated. Against the deletion of addition, the revenue is in appeal before us. 26. Obviously, the issue is to be decided in the light of the judgment of the Hon ble jurisdictional High Court in the case of Hero Cycles Ltd. (supra). As per the Hon ble jurisdictional High Court, the disallowance under section 14A requires a finding of incurrence of expenditure for earning the exempt income. In case no expenditure has been incurred, the disallowance under section 14A is not justified. In other words, there cannot be a presumption that certain expenditure is bound to be incurred for earning the exempt income. Considered in this light, we find that there is no mistake in the order of the CIT (Appeals). Quite clearly, the Assessing Officer had only made a presumption that certain expenditures have been incurred for earning the impugned exempt incomes. Therefore, following the parity of reasoning laid down by the Hon ble jurisdictional High Court in the case of Hero Cycles Ltd. (supra), we affirm the decision of the CIT (Appeals) and accordingly, ground raised by the revenue is dismissed." 12. We have heard l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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