TMI Blog2014 (3) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... as brought on record any contrary material in its support - the Revenue is contesting the disallowance u/s. 36(1)(vii) and not the deduction u/s. 37 of the Act – thus, there is no reason to interfere with the order of CIT(A) – Decided against Revenue. Deletion on account of loss on sale of property – Held that:- CIT(A) while deleting the addition has noted that Assessee had submitted sufficient documentary evidences and explanation before the AO but A.O. had ignored and over looked - CIT(A) has further accepted the submissions of the Assessee that the property sold was kept as investment, it was given on rent in earlier years, the income from rentals from the property has been offered to tax under the head "income from house property" and no depreciation has been claimed on the property which was sold during the year - the treatment of sale consideration of property was in conformity with the provisions of Section 45 of the Act and had accordingly directed the A.O to work out the capital gain/loss under the head "capital gains" during the year - the Revenue could not controvert the findings of CIT(A), nor has brought any contrary material in its support on record – thus, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore, earned dividend income of Rs. 39,20,000/- which was claimed as exempt and had claimed interest payment to the extent of Rs. 7,98,403/-. The Assessee was asked to explain as to why the expenses incurred for earning exempt income not be disallowed under Section 14A of the Act. Assessee interalia submitted that the investments have been made out of own funds and further no expenditure has been incurred by the Assessee to earn exempt income. The submissions of the Assessee was not found acceptable to the A.O. He was of the view that Assessee has failed to prove the nexus of investment with the interest free funds available with it. He accordingly by applying the formula laid down in Rule 8D of the Income Tax Rules, 1962 worked out the total disallowance u/s. 14A at 14,64,683/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee granted partial relief to the Assessee by holding as under:- 3.3. I have gone through the assessment order and the submission of the appellant carefully. The AO has worked out the amount of disallowance u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules 1962 of Rs.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has earned taxable income on day-to-day balance of investments made in such entities. In nutshell, disallowance under Section 14A is restricted to alternate working of Rs. 373714/- only (Rs.66939 + Rs.306775) provided by appellant and reproduced at para 3.2 herein above. The balance addition of Rs. 1090369 /- made by Assessing Officer is deleted. In the result, this ground of appeal is partly allowed. 5. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. 6. Before us, the ld. D.R. submitted that CIT(A) has granted relief to the Assessee on the basis of alternate working of disallowance submitted before CIT(A), the aforesaid alternate working was neither submitted before the A.O. nor any report on the alternate working was obtained by CIT(A). He further submitted that the provisions of Section 14A read with Rule 8D of the Rules are mandatory in nature and therefore the A.O. has rightly worked out the disallowance under 14A. He therefore submitted that the order of A.O. be upheld and in the alternative, the matter be restored to A.O for verifying of the alternate working of disallowance. On the other hand the ld. A.R. submitted that A.O. had wrongly wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Visa and Master Card. In order to undertake this project various expenses were incurred. Out of the total expenses of Rs. 10,36,995/- incurred by the Assessee, it wrote off 1/5 of the expenses and claimed it as an expenditure. The submission of the Assessee was not found acceptable to the A.O for the reason that the Assessee had not shown any income in any of the previous year under head on which it had incurred expenditure. He was thus of the view that since the Assessee has not fulfilled the condition laid down u/s 36 of the Act, the expenditure cannot be allowed as bad debt. He was further of the view that since the loss was capital in nature it was not allowable. He accordingly rejected the claim of the Assessee. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under:- 4.3. I have gone through the assessment order and the submission of the appellant very carefully. The AO has disallowed the claim of Rs. 2,07,399/- of Deferred Revenue Expenditure written off as expense u/s 36 of Income tax Act, 1961 and added to the total income of the appellant. The appellant has submitted that the appellant has debited the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial on record. We find that CIT(A) while deleting the addition has noted that the Assessee had clamed the expenditure under section 37of the Act and not as bad debts u/s 36(1)(vii) of the Act. CIT(A) has further given a finding that that 1/5 of the expenses as claimed by the Assessee was allowable u/s. 37 of the Act. Before us, the Revenue could not controvert the findings of CIT(A) nor has brought on record any contrary material in its support. We also find that in the ground raised before us, the Revenue is contesting the disallowance u/s. 36(1)(vii) and not the deduction u/s. 37 of the Act. In view of the aforesaid facts we find no reason to interfere with the order of CIT(A). Thus this ground of Revenue is dismissed. 3rd ground is with respect to deletion of addition on account of loss on sale of property of Rs. 16,87,364/-. 12. On perusing the Profit and Loss account, A.O. noticed that Assessee had debited of sum of Rs. 13,36,839/- under the loss on sale of assets . The Assessee was asked to justify its claim. A.O. noted that since the Assessee did not submit any justification or reason for claiming the deduction, the loss on sale of assets claimed by the Assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission the appellant. The addition is directed to be deleted and A.O is further directed to work out the Capital Gain/Loss on sale of property of Kamal Deep Flat amounting to Rs. 16,87,364/- arrived at by the appellant under the head capital gains during the year. 13. Before us, the ld. D.R. submitted that Assessee did not file any explanation before A.O. and therefore the A.O. had rightly disallowed the loss on sale of assets. In the alternate he submitted that the issue be restored to A.O. for verification of the claim of Assessee. ld. A.R. on the other hand pointed out that it had made submissions on various days before the A.O. but the A.O. did not consider the submissions made by the Assessee. He pointed out to the relevant findings of CIT(A). He therefore submitted that after the considering the submissions of the Assessee, CIT(A) has rightly deleted the addition. He thus opposed the requests of ld. D.R. to remit the matter for verification by the A.O and supported the order of CIT(A). 14. We have heard the rival submissions and perused the material on record. The issue before us is about the claim of loss by Assessee. A.O in his order has held that in the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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