TMI Blog2015 (4) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... as explained in the case of Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] would only be of the investment as having been financed out of own funds, toward which we find valid basis on facts. Thus the investment in shares, etc., is funded by the assessee out of own capital. Consequently, no disallowance of interest cost u/s. 14A r/w rule 8D shall arise in the facts and circumstances of the case. Coming to the disallowance in respect of indirect, administrative expenditure, worked out at ₹ 15,075/- by following the prescription of rule 8D(2)(iii), i.e., at 0.5% of the average investment for the year, the assessee did not raise any argument before us nor do we find any such before the authorities below, i.e., towards non-application of the said estimate or at a lower sum. Thus no reason or any basis in law to interfere therewith. - Decided partly n favour of assessee. Disallowance under the MAT provisions - disallowance made under Sub section (2) and (3) of Section 14A added to the book profits computed under section 115JB - Held that:- The deletion of the disallowance of interest component (at ₹ 1,43,865/-) of the total disallowance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he primary facts, and not in the manner in which the same is to be pursued or otherwise utilized in assessing the total income by the assessing authority. The reassessment proceedings are without jurisdiction, and the resulting assessment, therefore, void in law. - Decided in favour of assessee. - ITA Nos. 2942 & 2941/Mum/2012 - - - Dated:- 27-2-2015 - Sanjay Arora, AM And Vivek Varma, JM,JJ. For the Appellants : Mr Nitesh Joshi Mr Vipul K Mody For the Respondent : Mr Sacchidanand Dubey ORDER Per Sanjay Arora, AM. These two appeals filed by the assessee for AY 2009-10 2004-05 are against two different orders of the CIT(A)-22, Mumbai both dated 24.02.2012 for AY 2009-10 2004-05 respectively. First of all we shall deal with appeal for AY 2009-10: ITA No. 2942/Mum/2012 : Asst. Year 2009-10 : 2. The following grounds have been taken by the assessee: 1. The Commissioner of Income Tax (Appeals) erred in upholding the disallowance of a sum of ₹ 1,58,940/- under section 14A read with rule 8D. It is further submitted that interest paid by the appellant is for specific borrowing and cannot be apportioned to the investments. The conclusions arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt, which too was deposited straight into the bank and that neither it is a case of diverting interest bearing funds towards making investments therefrom, and neither it is a case of a making efforts to earn dividend/exempt income. The AR also submitted that the disallowance cannot be made under MAT provisions as well because under MAT provisions, the reliance on book results is not taken into account. The AR, therefore, pleaded that the addition made to be deleted. 10. The DR on the other hand supported the order of the revenue authorities. 11. We have heard the arguments and have pursued the order of the revenue authorities and material placed on record. 12. The assessee has clearly proved, with reference to its accounts (PB pgs. 3-22), that the investment under reference (Rs. 30.15 lacs) was in fact made in the past. The assessee has, as at 31.3.2008, i.e., at the beginning of the relevant previous year, a capital base of ₹ 13,291.58 lacs, as against a miniscule investment portfolio of ₹ 30.15 lacs, and which continues for the current year as well. Even excluding the fixed assets thereat (Rs. 8508.51 lacs), i.e., net of that financed by term loans (Rs. 3,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's Ground # 2. 14. In the result, the assessee's appeal for AY 2009-10 is partly allowed. ITA No. 2941/Mum/2012 : Asst. Year 2004-05 : 15. The following grounds have been raised by the assessee: 1. The Commissioner of Income-tax (Appeals) erred in upholding the reopening of the assessment completed under section 143(3) of the Act. It is submitted that the Commissioner of Income-tax failed to appreciate that no material has been brought on record to suggest that the income chargeable to tax has escaped assessment due to failure on part of the appellant to disclose fully and truly all material necessary for assessment. A change of opinion cannot be construed as income having escaped assessment. The assessing officer had no jurisdiction to reopen the assessment completed under section 143(3) of the Act. The notice under section 148 of the Act is bad in law and was sought to be cancelled. 2. Without prejudice to ground 1 and in the alternate the Commissioner of Income-tax erred in upholding computation of deduction under section 80HHC of the Act by excluding 90% of the job work charges from profits of the business. It is submitted that Job Work i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/-, which were not eligible for deduction u/s 80HHC. 90% of the said income from job work charges should have been reduced for computing the deduction u/s 80HHC which has not been done by the assessee resulting into excess claim of deduction to the extent of ₹ 26,82,872/-. Therefore, I have reason to believe that income to the extent of ₹ 26,82,872/- has escaped assessment within the meaning of the provisions of section 147 of the .Act by reason of failure on the port of the assessee 'to disclose fully and truly all material facts necessary for the assessment. Notice u/s 148 of the Act is, therefore, issued. 20. We have heard the parties and perused the material on record. 20.1 The dispute as taken in the reasons pertains to deduction u/s 80HHC, which according to the AO, has been claimed by the assessee was in excess. The assessee contests the appeal on both the legal ground of the validity of the reopening (vide issue of notice u/s. 148 dated 25.3.2011), as well as on the merits of the adjustment to its income made on reassessment, per its Grounds 1 2 respectively. The challenge on the legal ground, which we shall take-up first, is two-fold: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, which is patent from the detailed computation of deduction u/s. 80HHC, furnished twice, as noted above, during the course of the assessment proceedings. The processing charges were considered by him as a part of the assessee's operational income and, thus, a constituent of the turnover. There was, accordingly, no question of deduction of 90% thereof, which is only in respect of independent incomes, which had no relation with an assessee's turnover. Clearly, therefore, the AO regarded the processing charges as a part of the assessee's turnover, while the exclusion under Explanation (baa) to s. 80- HHC was only qua incomes which had no element of turnover. We are, therefore, unable to agree with the ld. CIT(A) that the AO had not considered this aspect of the matter while examining and allowing deduction u/s. 80HHC. The same is essentially a matter of fact, to be gathered from the entirety of the facts and circumstances, including the given position of law, so that the reliance on the decision in the case of Piaggio Vehicles Pvt. Ltd. vs. Dy. CIT, reported at 290 ITR 377 (Bom) and CIT vs. Popular Vehicles and Services Ltd. (2010) 191 Taxman 333 (Ker) would be of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, is beyond a period of four years from the end of relevant assessment year. Where, therefore, the original assessment, as in the instant case, is u/s. 143(3), reassessment proceedings could be initiated only where the escapement of income from assessment is by reason of a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. This constitutes the second limb of the assessee's argument, which we observe to have, in fact, not been answered by the ld. CIT(A) (refer para 2.2 of the impugned order). We have held that the matter had been, as a matter of fact, considered by the AO in the original assessment. The question of the assessee therefore not disclosing fully and truly all the facts in relation to processing charges earned for the year, or of the manner in which the same had been considered by it in computing the deduction u/s. 80HHC, i.e., which constitutes the reason for reopening, which has been abundantly referred to hereinabove and, thus, of any improper disclosure by it, does not arise. The obligation of the assessee's extends to only disclosing the primary facts, and not in the manner in which the same is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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