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TMI Blog2015 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made by the Assessing Officer under S.14A of the Act. 4. The assessee in the present case is a company which is engaged in the business of manufacture and sale of electrical distribution transformers (domestic), lightning arresters, power transformers and transformer oil. The return of income for the year under consideration was originally filed by it on 30.9.2008, declaring total income of Rs. 14,59,48,006. Subsequently, revised return was filed by the assessee on 6.1.2009 declaring total income of Rs. 9,95,20,558. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has made investment of Rs. 32.62 crores in the equity share capital of Hackbridge Hewattic Easum Limited ('HHEL' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and unsecured loan of Rs. 0.70 crores represented interest free funds available with the assessee company and therefore, no disallowance under S.14A relatable to the investment made in shares of HHEL to that extent could be made under S.14A. As regards the balance amount of Rs. 2.40 crores, the learned CIT(A) did not accept the explanation of the assessee that the same was directly paid out of its internal accruals, as the assessee could not substantiate the same. Accordingly, he directed the Assessing Officer to restrict the disallowance under S.14A only to the extent of expenses attributable to the investment made in the shares of HHEL of Rs. 2.40 crores. 6 The Learned Departmental Representative, at the outset, submitted that Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in relation to the exempt income as required by the provisions of S.14A in spite of the fact that huge investment of Rs. 32.62 crores was made by it in the shares of HHEL, the dividend income from which was exempt from tax. In the absence of any such disallowance offered by the assessee, we are of the view that there was no requirement on the part of the Assessing Officer to record any dissatisfaction about the correctness of the disallowance offered by the assessee as envisaged in S.14A and he was entitled to make a disallowance under S.14A by applying Rule 8D. However, even while applying Rule 8D, the Assessing Officer should have taken into consideration, the explanation of the assessee of having made the investment in equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulted into sundry debit balances appearing in the accounts of the said Discoms. It was contended that these sundry balances were written off in the books of account of the assessee company in the year under consideration, and the same was claimed as business expenditure. This explanation of the assessee was not found acceptable by the Assessing Officer, in the absence of the relevant details and documents furnished by the assessee to substantiate the same. He also held that the deduction made by the Discoms for late delivery of transformers was in the nature of penalty and the same was not allowable as per Explanation to S.37(1). Accordingly, the claim of the assessee for deduction on account of sundry balances written off was disallowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer and the AR. The penalty which have eventually have debited as sundry balances written off was levied for delay in delivery of transformers by the appellant to the discoms. The delay in delivery of goods cannot be considered to be an infraction of law, merely because the customer happened to be government organizations. As pointed out by the appellant, the Assessing Officer has also accepted the claim in principle. That being so the claim cannot b disallowed merely because the appellant has not furnished the details of payments against the bills raised by it. The disallowance is therefore directed to be deleted." 13. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made by the Assessing Officer on account of sundry balances written off. In our opinion, the onus in this regard is on the assessee to establish its claim for the deduction made by the Discoms on account of late delivery charges, even for the balance amount of Rs. 51,79,590. We therefore, restore this issue to the file of the Assessing Officer for giving the assessee one more opportunity to file the relevant details and documents to substantiate its claim for deduction on account of late delivery charges claimed to be levied by Discoms to the extent of balance amount of Rs. 51,79,590. The Assessing Officer is directed to verify the same and give appropriate relief to the assessee on such verification. Ground No.4 of the Revenue' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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