TMI Blog2014 (2) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) - assessee has not given any reason for non submission of the details before the lower authorities –thus, one more opportunity be given to the Assessee to present before A.O. the required details in support of its claim deduction under section 80IB – Matter remitted back to the AO for adjudication. - I.T.A. No. 2074 & 2143/AHD/2010 - - - Dated:- 7-2-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri J. P. Jhangid, Sr. D. R. For the Respondent : Shri S. N. Soparkar ORDER Per Shri Anil Chaturvedi,A. M. 1. These two appeals, one filed by the Assessee and the other filed by the Revenue are against the order of CIT(A), Gandhinagar dated 17.03.2010 for A.Y. 2006-07. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a specific family trust engaged in the business of manufacturing of corrugated boxes. Assessee filed its return of income for A.Y. 06-07 on 31.12.2006 declaring total income of Rs. 33,93,310/- after claiming deduction of Rs. 11,32,507/- under section 80IB of the Act. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter before CIT(A). Before CIT(A) it was submitted that the investments were made in earlier years, the earliest year of investment was A.Y. 98-99 and the last year of investment was A.Y. 05-06. It was further submitted that no borrowed funds have been used for investment and further no amount was disallowed in earlier years. CIT(A) did not accept the contention of the Assessee. He upheld the order of A.O. by holding as under:- 4.5 The issue has been considered. The legal position with respect of section 14A is, at this point, best elucidated by I.T.A.T. Special Bench's decision in the case of Daga Capital Management (supra), Rule 8D is mandatory and is applicable to all pending assessments. The Special Bench of ITAT has analyzed the legal position very clearly which could be summarized as- i) Even before insertion of section 14A, the expenses incurred towards exempted income were not allowable. ii) Section 14A is applicable to income earned under all heads and being a special provision, shall prevail over the general porovisions. iii) Further, section 14A(2) and 14A(3) are retrospective in nature, as also the method described in Rule-8D to apportion the expenses. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same time the Assessee has raised the loan, it can be presumed that the investments were from interest free funds available with the Assessee. 11. Hon. Gujarat High Court in the case of CIT vs. Gujarat Industrial Development Corporation Ltd. (supra) has held that where interest bearing borrowed funds were not used in the investment no interest could be disallowed under section 14A. 12. Before us, nothing has been brought on record by Revenue to demonstrate that interest bearing funds have been used by Assessee to make investments. In view of the aforesaid facts and respectfully following the aforesaid decision of Hon. High Courts, we are of the view that in the present case no disallowance in is called for and we thus direct the deletion of disallowance made by A.O. Thus this ground of Assessee is allowed. 2nd ground is with respect to deduction under 80IB in respect of freight receipt income. 13. During the course of assessment proceedings, A.O. noted that Assessee has claimed deduction of Rs. 11,32,507/- under section 80IB of the Act. A.O. disallowed the claim of the Assessee for the reason that the Assessee had neither submitted exact sub-section under which the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance. 15. We have heard the rival submissions and perused the material on record. We find that on issue of deduction under 80IB for A.Y. 05-06, an appeal was preferred before the Tribunal. The co-ordinate Bench of Tribunal vide order dated 06.10.2009 decided the issue by holding as under:- "11 Ground no. 6 relates to claim for netting of low of freight receipts against freight expenses while computing deduction u/s 80IB of the Act. During the course of assessment proceedings, the A.O. noticed that the Assessee claimed deduction u/s 80IB of the Act to the extent of Rs. 11,58,396/-. The assessee included job charges of Rs. 1,25,52,643/- and other income at Rs. 8,47,342/- (dividend Rs. 67528 + Kesar of Rs. 45/- and freight income of Rs. 762899/-) while calculating the deduction. According to the A.O., the nature of transportation receipt of Rs. 762859/- revealed that the assessee was not incurring any adventures and thus, the amount was not entitled to deduction u/s 80IB of the Act. 12. On appeal, the ld. CIT(A) concluded as under: "6.8 As far as the issue of freight receipt is concerned, if the contention of the Authorised Representative is correct, obviously these ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80IB. We also direct the Assessee to file all the necessary details called for by the A.O. promptly within a reasonable time. In case of failure of Assessee to file the details, the A.O. shall be free to proceed on the basis of material on record. Thus this ground of Assessee is allowed for statistical purposes. 17. Ground no. 3 was not pressed in view of smallness of amount and therefore the same is dismissed as not pressed. 18. In the result, the appeal of the Assessee is partly allowed for statistical purposes. Now we take up Revenue's appeal( ITA No. 2074/AHD/2010.) Ground no. 2 of Revenue's appeal is with respect to disallowance under section 14A. 19. This ground of Revenue is interconnected with ground no. 1 of Assessee's appeal. We for the reasons given hereinabove, while deciding the ground in the appeal of Assessee dismiss this ground of Revenue. Thus this ground of Revenue is dismissed. Ground no. 2 is with respect to deduction under 80IB. 20. Since this ground is connected with ground no. 3 of Assessee's appeal and while deciding the aforesaid ground of Assessee hereinabove, we have remitted the matter to the file of A.O. to decide it afresh and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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