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2016 (1) TMI 539 - ITAT MUMBAI

2016 (1) TMI 539 - ITAT MUMBAI - TMI - Allowability of exemption u/s 10(1) - Held that:- We are of the opinion that the CIT (A) has rightly adjudicated the issue in favour of the assessee following the binding judgment of the Hon'ble jurisdictional High Court in assessee's own case recording finding of the fact that the assessee in fact carried on agricultural operations and that the orders passed to that effect in assessment years 1990-91 to 1992-93 have been accepted by the Revenue. For earnin .....

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changes so for as the applicability of the provisions of section 14A read with Rule 8D is concerned. There is a need for examining the various aspects of the issue such as own funds v/s borrowed funds; dividend yielding investment v/s other strategic investments, the dividend income which is chargeable to tax otherwise etc. Therefore, he pleaded for remanding this issue also to the file of the AO for adjudication. We accordingly find merit in the said Ld Counsel's argument and direct the AO to e .....

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ce, they are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given in the following paras of this order. 2. This appeal filed by the Revenue on 28.6.2013 is against the order of the CIT (A)-17, Mumbai dated 18.4.2013 for the AY 2008-2009. 3. In this appeal, Revenue raised couple of issues and they are (i) the allowability of exemption u/s 10(1) of the Income Tax Act, 1961 (in short 'the Act') and (ii) the disallowance u/s 14A r.w. Rule 8D o .....

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essment, AO denied the claim of deduction u/s 10(1) of the Act in respect of the income from the said agricultural activity and ₹ 50,03,24,246/- is treated as 'business income' of the assessee. After adjustment of the same qua the expenditure of ₹ 2,88,09,147/-, the disallowance is computed to ₹ 47,15,15,099/-. Matter travelled to the first appellate authority. 5. During the proceedings before the first appellate authority, after considering the submissions of the asses .....

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t is only a license holder to enter upon the land and carries out the aricultural operation with the help of farmers. The High Court of Bombay in the appellant's own case vide orders ITA No. 603 to 609 and 633 of 2010, ITA Nos. 3481, 4074, 1526, 3834 and 4015 of 2009 had decided the appeals as under: "1. In all these appeals, the agricultural losses/profits claimed by the assessee were disallowed by the AO on the ground that the agricultural lands did not belong to the assessee. Challen .....

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that effect in assessment years 1990-91 to 1992-93 have been accepted by the Revenue. For earning agricultural income, it is not necessary that the assessee must own the land and it is enough if it is established that the agricultural organizations have been actually carried on by the assessee. In view of the finding of the fact recorded by the ITAT that even in the past, the assessee has been carrying agricultural operations in the obsence of any material to the contrary, the decision of the I .....

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;ble jurisdictional High Court in assessee's own case. Therefore, the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, Ground nos.1 and 2 raised by the Revenue are dismissed. 7. The second issue raised by the Revenue relates to the disallowance u/s 14A r.w. Rule 8D of the Act. During the first appellate proceedings, CIT (A) decided this issue by restricting the disallowance to 2% of the exempt income. He considered the same as ' .....

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the return of income originally. Subsequently, assessee made a request for restricting the disallowance to 2% of the exempt income. AO denied the same and ignored the assessee's request during the assessment proceedings. Aggrieved with the said decision of the CIT (A) ie restricting the disallowance to 2% of the exempt income by relying on the finding of his predecessor in the AY 2007-2008, Ld DR for the Revenue submitted that the said principle of applying the flat rate of 2% of the exempt .....

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of changes so for as the applicability of the provisions of section 14A read with Rule 8D is concerned. There is a need for examining the various aspects of the issue such as own funds v/s borrowed funds; dividend yielding investment v/s other strategic investments, the dividend income which is chargeable to tax otherwise etc. Therefore, he pleaded for remanding this issue also to the file of the AO for adjudication. We accordingly find merit in the said Ld Counsel's argument and direct the .....

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ssee raised 4 grounds in toto. 11. At the outset, referring to the Ground nos. 3 and 4, Ld Counsel for the assessee submitted that the CIT (A) failed to adjudicate the Ground no.3 and prematurely held that the issue raised in ground 7 as consequential without adjudicating the issue relating to the levy of interest u/s 234C of the Act. In this regard, he pleaded for remanding these two grounds (Gr. Nos.3 & 4) to the file of the CIT (A) for fresh adjudication. He brought our attention to page .....

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