TMI Blog2014 (2) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) correctly arrived at the conclusion that the amount had been received by the assessee company from Hotline CPT Ltd. – it was correctly observed that the amount could not be treated as unexplained cash credit u/s 68 of the IT Act - The department has not been able to successfully refute the well-reasoned findings of fact recorded by the CIT (A) in this regard – Decided against Revenue. - ITA No.5527/Del/2010, ITA No.5791/Del/2010 - - - Dated:- 31-1-2014 - Shri G. D. Agrawal And Shri A. D. Jain,JJ. For the Petitioner : Shri Salil Aggarwal, Advocate Shri Shailesh Gupta, CA For the Respondent : Shri Keyur Patel, Sr. DR ORDER Per A. D. Jain, Judicial Member: These are cross appeals for Assessment Year 2006-07 against the Order dated 07.10.2010 passed by the Ld. CIT (A)-VIII, New Delhi. 2. ITA No.5527/Del/2010 has been filed by the assessee whereas ITA No.5791/Del/2010 has been preferred by the department. 3. In ITA No.5527/Del/2010, the following grounds have been taken by the assessee:- "1 (i). That on the facts and circumstances of the case, the Ld. CIT (A) having confirmed the disallowance of the claim of interest to the extent of Rs.14,82,540/- as at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the disallowance of the claim of interest to the extent of Rs. 14,82,540/- as attributable to earning of dividend income on Mutual Fund, no further disallowance can be made in terms of Rule 8D of the IT Rules, since the said Rules are not relevant for the year under consideration. 6. The Assessing Officer made a disallowance of Rs. 2,37,22,905/- u/s 14A of the Act as against deduction of interest expenditure of Rs. 11,42,17,593/- claimed by the assessee. The Ld. CIT (A) directed the Assessing Officer to examine the sources of investment and then to decide the amount of disallowance in terms of the directions given in the first appellate order for Assessment Year 2005-06. The CIT (A) has observed as follows:- "4.4 I have carefully considered the arguments made on behalf of the appellant company and the findings recorded by the ld. A.O. On consideration, I find that there is no merit in the argument of the ld. Counsel that no disallowance was called for u/s 14A of the IT Act, 1961. The validity of provisions of section 14A has been upheld in all the judgments available on the subject, even the Hon'ble Bombay High Court has upheld this position of law in the case of Godrej Boy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercise shall result into enhancement of the disallowable sum u/s 14A of the Act." 4.5 In view of the above and looking to the commonality of facts and the argument of the ld. Counsel that one of the way of resolving the issue was to issue appropriate directions to the A.O. to work out the amount disallowable u/s 14A of the Act as it has been done by my predecessor in A.Y. 2005-06, the A.O. is directed to examine the sources of investment and then decide the amount of disallowance in terms of directions given by my ld. Predecessor for the A.Y. 05-06." 7. The ld. Counsel for the assessee has drawn our attention to the Tribunal Order for Assessment Year 2005-06 dated 08.12.2010. A copy thereof has been placed by the assessee at pages 49-60 of the assessee's paper book. While allowing the assessee's appeal on this issue, the Tribunal has held as follows:- "10. We have heard the rival contentions and perused material on record. Hon'ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. has held that Rule 8D is prospective in nature. Therefore, assessee's case is not covered by Rule 8D. Hon'ble Punjab Haryana High Court in the cased of Hero Cycles 323 ITR 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal for Assessment Years 2005-06 and 2007-08, the said orders of the Tribunal be followed and the CIT (A) be held not justified in restoring the matter to the Assessing Officer to consider disallowance in terms of Section 14A of the Act or Rule 8D of the Rules. 11. The Ld. DR, on the other hand, has placed strong reliance on the impugned order. It has been contended that no prejudice has been caused to the assessee, since the Ld. CIT (A) has merely directed the Assessing Officer to verify the facts and figures of all the investments, the income from which shall lead to exempted income. 12. Having considered the issue in the light of the rival contentions and the material brought on record, we find that the facts for the year under consideration are exactly similar to those present for Assessment Years 2005-06 and 2007-08, i.e., the immediately preceding and the immediately succeeding Assessment Years. The Tribunal has held Rule 8D of the Income- tax Rules to be prospective in nature and the assessee's challenge of CIT (A)'s action in increasing the amount of disallowance u/s 14A of the Act without pointing out any valid basis for such further disallowance was upheld. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, the condition precedent is the ownership of the building. It has been contended that as per 'Mysore Minerals Ltd.' (supra) a wide meaning must be given to the expression 'owner' in Section 32 of the IT Act and where the assessee is in possession of the building on even part payment of price, as per 'Mysore Minerals Ltd.' (supra) even if the building does not stand registered in the name of the assessee, the assessee is the owner thereof for the purposes of Section 32 of the Act and is entitled to depreciation thereon. 16. Further, the ld. Counsel for the assessee has sought to place reliance on 'CIT vs. Panacea Biotech Ltd.', 324 ITR 311 (Del), wherein it has been held that where a flat is fitted with amenities and is ready to use as an office, for business purposes, depreciation thereon is entitled. 17. The Ld. DR, on the other hand, has placed strong reliance on the impugned order in this regard. 18. Having considered the matter apropos the rival contentions in the light of the material on record, we deem it appropriate to remit this issue to the file of the Assessing Officer for decision afresh, before whom, the assessee has agreed to file evidence of user of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the additional evidence filed by the assessee. 26. Apropos this Ground, it is stated by both the parties that this Ground is consequential to Ground No.4. As such, this issue will be adjudicated after the adjudication of Ground No.4. 27. Ground No.4 of the department's appeal contends that the Ld. CIT (A) has erred in deleting the addition of Rs. 4,91,02,321/- made on account of unexplained credits in the bank account of the assessee by wrongly accepting the additional evidence filed by the assessee. 28. Apropos Ground No.4, while examining the sources of investment made by the assessee company in Mutual Fund, shares, etc., the Assessing Officer called for the bank book and bank accounts maintained by the assessee company. The Assessing Officer found that the assessee company had received huge sums of money from certain corporate entities. Further details were called for u/s 133 (6) of the Act from the concerned parties. It was found that Shivalik Bimetal Controls Ltd. and Intel Electron Devices Ltd. had stated to have received sale proceeds through the assessee company on account of sales made to Hotline CPT Ltd. Hotline CPT Ltd., however, denied having any direct trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,02,322/-, observing as follows:- "8.8 Now coming to the addition of Rs 49102321, as stated earlier, the claim of the appellant company is that it is engaged in the business of lCD, bill discounting and other financial activities and also investments in shares, securities and mutual funds. During the FY 04-05 relevant to the A Y 05-06, the appellant company had provided financial assistance to M/s Hotline CPT Ltd by way of extending bill discounting facilities. As per the information submitted by the appellant company, M/s Hotline CPT Ltd had made certain purchases from M/s Shivalik Bimetals Control Ltd and International Electron Ltd and the bills issued by the aforesaid two companies were discounted by the appellant company and payments were made to them on behalf of M/s Hotline CPT Ltd. In this regard, M/s Hotline CPT Ltd had executed hundis/bills of exchange in favour of the appellant company. The income arising as a result of bill discounting charges, margin money etc was duly accounted for by the appellant company during the FY 04-05 relevant to A Y 05-06. Thereafter, during the FY 05-06 relevant to the AY under consideration M/s Hotline CPT Ltd made payment of Rs 49102322 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from M/s Hotline CPT Ltd. We have been informed by the party that requisite confirmation has already been forwarded to the Assessing Officer and copy was also mailed to us. The factual position to this effect was verified with the Assessing Officer and same has duly been confirmed and we have also filed our submission in the context of the same along with copy of account of the concerned parties in our books of accounts Reply dated 6.9.2010 submitted by M/s Hotline CPT Ltd: With reference to the above summons issued by your office in the case of M/s Morgan Securities Credits Pvt. Ltd., we would like to inform you that the company has made the payments mentioned in detail as below: Date Cheque No. Amount 06.04.2005 191846 6,027,086.10 06.04.2005 191847 6,245,492.14 06.04.2005 191848 741,330.32 02.05.2005 191866 2,523,422.20 02.05.2005 191867 4,420,500.24 25.05.2005 191868 2,463,509.36 + 25.05.2005 191870 2,473,815.24 25.05.2005 191871 2,495,202.32 25.05.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, were made in the accounts of the two companies respectively. Certificate issued in this regard by HDFC Bank was duly furnished before the Assessing Officer. The Assessing Officer, however, required a further clear certificate to be issued by Hotline CPT Ltd. stating that the cheques were issued to the assessee company in satisfaction of outstanding dues in the accounts of Shivalik Bimetal Controls Ltd. and Intel Electron Devices Ltd. Hotline CPT Ltd., vide its letter dated 06.09.2010, categorically stated so. The Ld. CIT (A) has, in the above extracted portion of the impugned order, reproduced the said letter of Hotline CPT Ltd. 35. It was on the basis of the above that the Ld. CIT (A) correctly arrived at the conclusion that the amount of Rs. 4,91,02,322/- had been received by the assessee company from Hotline CPT Ltd. On the basis thereof, it was correctly observed that this amount could not be treated as unexplained cash credit u/s 68 of the IT Act. The department has not been able to successfully refute the well reasoned findings of fact recorded by the Ld. CIT (A) in this regard and we hereby confirm the same. Accordingly, Ground No.4 is rejected. 36. The deletion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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