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2016 (3) TMI 273 - ITAT CHENNAI

2016 (3) TMI 273 - ITAT CHENNAI - TMI - Revision u/s 263 - failure to apply provisions of Sec.14A of Rule 8D by AO - Assessee has raised additional grounds that the matter is a subject matter of appeal before CIT and that the CIT cannot exercise jurisdiction u/s.263 - Held that:- Though Rule 8D came into effect from 24.03.2008 and non applicability of provisions is erroneous and omitted by the Assessing Officer and it is prejudicial to the interest of the Revenue and we do not find any merits in .....

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Assessing Officer takes a wrong decision without considering the material on record or he takes a decision without making a enquiry into matters, where such enquiry prime facie warranted. In the present case, the Assessing Officer has to consider the provisions applicable under Rule 8D effective from assessment year 2008-09. But the Assessing Officer made disallowance by following Co-ordinate Bench decision for earlier assessment year. It is apparent from facts and circumstances the order of th .....

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r of Income Tax -1, Madurai dated 30.03.2015 for the assessment years 2010-2011 and 2011-2012 passed u/s.263 of the Income Tax Act, 1961. 2. The assessee has raised the grounds challenging the order of u/sec.263 of the Act and also additional grounds. The assessment was made denova without considering the objections raised by the assessee. The issue in these two appeals are common in nature, hence these appeals are combined, heard together, and disposed off by this common order for the sake of c .....

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details as called for. Further mentioned that depreciation on Plant and Machinery were considered based on the Income Tax Rules applicable for assessment year 2006-2007 and there are different asset categorized under head Air and Water pollution. The assessee claimed depreciation quarter wise, whereas considering the rates and also additions to machinery, the Assessing Officer has disallowed depreciation and restricted the claim of deprecation on Air and Water pollution control energy saving de .....

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on the decisions of Co-Ordinate Bench, the Assessing Officer made disallowance of 2% of dividend income at :25,30,769/- as addition u/Sec.14A of the Act. The company received investment subsidiary from the Government :5,40,36,767/- and claimed as capital subsidiary based on Accounting standard AS-12 of the Act. The subsidiary was received from State Government for promoting industrial units with new investments in the industrial sector and the same was claimed as deduction. But the Assessing Off .....

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on verification found that deprecation claimed is in excess in case of Air and Water pollution control equipments and made an addition of :52,41,671/- and similarly on energy saving disallowed excess deprecation of :5,66,054/- as in earlier year. The ld.Assessing Officer made disallowance under 14A by applying the Co-ordinate Bench decision disallowed 2% of dividend income as expenditure :.6,03,742/- incurred on exempted income and on the same lines the ld. Assessing Officer disallowed capital s .....

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ated 09.03.2015. The show cause notices was issued based on records with the Assessing Officer on the following issues:- On perusal of miscellaneous records for assessment year 2010-11 it is notice that (i) The assessee does not seem to have paid to the Dividend Distribuiton Tax u/s.115 O of the I.T. Act. (ii) The ROC fees to the tune of :7,50,000/- has not been capitalized. (iii) The disallowance u/s.14A of the IT Act has not been worked out in accordance with Rule 8D of the I.T. Rules. (iv) Th .....

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led proof of challans evidencing payment of Dividend Distribution Tax :36,82,098/- on 14.08.2009. On the second issue of ROC fees the assessee made submissions that Authorized capital of the company was increased from :5 crores to :20 crores and the amount :7,50,000/- was paid as ROC fees. The assessee company filed copy of board resolution, copy of form filed with ROC and copy of fees receipt. The increase in authorized capital is in respect of issue of Bonus shares and relied on the decision o .....

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evant previous years. The assessee company has made investment in listed companies and dividend income is directly credited into bank accounts. The Assessing Officer has made the disallowance u/sec14A of the Act. The assessee company challenged the addition by way of appeal before the Commissioner of Income Tax (Appeals) Madurai. On the issue of deduction u/Sec.80IA of the Act the assessee filed the Audit report and certificate of Chartered Accountant in form 10CCB in assessment proceedings and .....

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roceedings u/s.263 Act. 5. Upon submission of information, the Commissioner of Income Tax without verifying the correctness distinguished the judgments submitted by the assessee and relied on the findings of Malabar Industrial Cement Co. Ltd vs. CIT 243 ITR 83 (SC) and viewed that assessment was erroneous and prejudicial to the interest of Revenue and issued directions to the Assessing Officer to enquire into the findings referred in Revision order and any other issue and cancelled the assessmen .....

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the Act and also on the grounds of cancelling the order of the Assessing Officer and no fresh inquiry should be directed. The assessee also raised additional grounds on the issue of disallowance u/s.14A r.w.Rule 8D and the assessee as filed an appeal on disallowance u/Sec.14A before the Commissioner of Income Tax (Appeals) on the same subject matter. The Commissioner of Income Tax cannot cancel entire assessment, and reiterated his submissions made before the lower authorities. The Commissioner .....

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submitted in the assessment proceedings and Assessing Officer has applied his mind and after due verification and examination completed assessment. Against the order of assessment u/s.143(3) r.w.s. 263 dated 23.09.2013, the assessee has filed an appeals before the Commissioner of Income Tax. The only issue arises that the order of Commissioner of Income Tax u/s.263 is without jurisdiction in treating the assessment denova. Since the issue of Sec.14A is a subject matter of appeal before Commissio .....

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41 ITR 293 (Kar) and 313 ITD 182 (AT) Special Bench, Chennai. 8. We heard the rival submissions of both the parties, perused the material on record and judicial decisions cited. The ld. Authorised Representative pointed out the jurisdiction aspect and Commissioner of Income Tax has not proved that the assessment order is erroneous and prejudicial to the interest of the Revenue. The Commissioner of Income Tax has power to revise and pass orders based on assessment record but not on issues where t .....

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