TMI Blog2015 (2) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered bad in law and has to be quashed.Considering the facts and circumstances of the case,we are reversing the order of the FAA and decide the effective ground of appeal(GOA-1)in favour of the assessee. - ITA No.3782/Mum/2013 - - - Dated:- 20-8-2014 - Sh.Vijay Pal Rao and Rajendra, JJ. Assessee by : Shri Sanjay B. Sawant Revenue by : Shri Manoj Mishra Per Rajendra Challenging the order dt.28.03.2013 of the CIT(A)-40,Mumbai,Assessee has raised following Grounds of Appeal: On the facts and in the circumstances of the case and in law, the assessment order passed u/s 143(3) r.w.s. 147 dated 09.11.2012 is bad in law as the proceedings u/s 148 are initiated on mere change of opinion on same set of facts. 2(a).On the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, Aayakar Bhavan, Mumbai-400020 the returned income of ₹ 3,59,740/-. Subsequently, the Assessing Officer(AO) noticed that during the year, the assessee had business loss of Ps.1,19,694/- and long-term capital gain of ₹ 4,79,432/- and after setting off the above business loss against the long-term capital gain, it had arrived at the income of ₹ 3,59,740/-,that it had dividend receipts of ₹ 1,09,12,450/-, which was claimed exempt u/s.10(34) of the Act,that it had not quantified any amount of expenditure attributed to exempted income which needed to be disallowed in terms of Sec. 14A of the Act.He worked out the amount disallowable u/s. 14A read with Rule 8D at ₹ 1,77,529/-, and as no disallowance was made while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.08 crores, as against the total investment as on 31/3/2007 amounting to ₹ 2.04 crores,that it had had sufficient funds for making investments,that it had even repaid part of the loan during the year,that out of the total expenditure of ₹ 1,52,461/- incurred during the year, after excluding the interest expenses of ₹ 1,04,253/-, the remaining expenditure of ₹ 48,208/- was general expenditure incurred for sustaining the corporate existence of the assessee-company,that a company not earning any income, while carrying on any business,in an accounting period was eligible to claim such expenditure as business expenditure /business loss and such expenditure could not be treated as expenditure in relation to earning taxfre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m where exempt income was derived,that the accounts of assessee were mixed for accounting exempt and non-exempt income. He restricted the disallowance made by the AO,to ₹ 1,00,000/-. 4.Before us,the Authorised Representative(AR)stated that the original assessment was completed u/s.143(3)of the Act,that the AO had made inquiries about the applicability of the provisions of section 14A of the Act,that he did not make any addition on that account,that in the reasons recorded for re-opening the assessment the AO had not brought anything that could be held to reasonable,that it was a case of mere change of opinion,that in the case of sister concern;where similar addition was restricted by the FAA to ₹ 1 lakhs in similar circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich do not form a part of the total taxable income. In the present case assessee has claimed dividend receipts as exempt income. However, assessee-company has not quantified any amount of expenditure attributed to exempted income which needs to be disallowed in terms of section 14A of the ITACT, 1961. 3, Section 14A of the IT Act, 1961 provides that no deduction shall be al/owed in respect of expenditure incurred by the assessee in relation to the income which do not form part of the total taxable income. In the present case, assessee has claimed dividend as exempt income. However, assessee has not quantified any amount of expenditure attributed exempted income which needs to be disallowed in terms of section 14A of the IT Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: The primary requirement to reopen any assessment is a reason to believe that income chargeable to tax has escaped assessment. The reason should be based on tangible material. Tangible material would mean factual material and not inference or opinion on material already in existence and considered during the assessment proceedings(emphasis supplied). Once a query is raised during the original assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that the assessment order should contain reference or discussion to disclose his satisfaction in respect of the query raised. The reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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