TMI Blog2016 (9) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... F vs. CIT (2010 (2) TMI 211 - SUPREME COURT ). We, therefore, set aside the findings of the Ld. CIT(A) and allow the claim of bad debts Eligibility for the claim of depreciation in case of assets put on lease allowed Bogus long term capital loss - Held that:- Since the assessee is unable to establish its claim and has failed to control the findings of the authorities below that the long term capital loss is bogus in view of the brokers note produced not being genuine, we uphold the findings of the learned CIT (A) and consequently dismissed these grounds raised by the assessee. - ITA No. 7174 to 7176/MUM/2010, ITA 5531/MUM/2013, ITA 7177/Mum/2010 - - - Dated:- 26-8-2016 - Shri Jason P. Boaz ( AM ) And Shri Ram Lal Negi ( JM ) Appellant by : Shri. Nitesh Joshi Respondent by : Shri. Neil Philip ORDER Per Bench These five appeals have been preferred by the appellant/assessee against separate orders passed by the Ld. CIT(A) Mumbai, for Assessment Year 2000- 2001 to 2003-04 and 2006-07 to 2007-08. Since all the appeals pertain to the same assessee for different assessment years and the issues involved are common in all the appeals, the same were clubbed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as 'capital loss' or alternatively as 'bad debts'. 6. The learned Commissioner (Appeals) erred in confirming the addition made by the Assessing Officer towards 'notional interest' amounting to ₹ 6,55,89,889/- when the amount advanced to the sister/associated companies were considered as 'bad debts' / 'non- performing assets (NPA)' which includes ₹ 45,02,499/- in respect to Mafatlal Industries Limited which was a company referred to BIFR. 7. The learned Commissioner (Appeals) erred in appreciating that the notional interest calculated @15% on the amount advanced to sister/associated companies were all provided as NPA and the same was disallowed in the respective assessment years as and when provision were made for the NPA, therefore 'notional interest' considered and confirmed as 'income' is not justifiable. 8. The learned Commissioner (Appeals) erred in confirming the disallowance of income tax depreciation on WDV of the leased assets amounting to ₹ 25,44,28,462/- based upon the disallowance made by the Commissioner (Appeals) vide its consolidated order dated 18th June, 2009 for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been controverted by the authorities below. However, even then it cannot be said that no expenses at all were incurred for earning exempt income. In this view of the matter, and going by the decisions of the coordinate Bench, we direct the AO to restrict the disallowance u/s 14A of the Act to 10% of the dividend income. Hence, ground No 1 of the appeal is partly allowed as indicated above. 6. So far as ground No 2 is concerned, in the light of the decision of the Hon ble Jurisdictional High Court, in Godrej and Boyce Mfg.Co. Ltd. vs. DCIT 328 ITR 81, the provisions of Rule 8D of the Income Tax Rules are applicable w.e.f. A.Y. 2008-09. Therefore, the Rule cannot have application in respect of A.Y. 2000-01 which is the year under consideration in this case. Hence, the direction given by the Ld. CIT(A) to the AO to compute disallowance under Rule 8D of the Act, is not in accordance with the decision rendered by the jurisdictional High Court in Godrej and Boyce Mfg. Co. Ltd. vs. DCIT (supra). We, therefore, set aside the findings of the CIT(A) and allow ground No 2 of the appeal. 7. As regards ground no 3 and 4 the Ld. Counsel submitted that the Ld.CIT(A) has upheld the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the AO. Hence, the matter is remitted to the AO for de novo consideration of the above- mentioned aspect only and that too only to the extent of the write off. 10. In the present case, admittedly, the debt in question has been written off as irrecoverable in the accounts of the assessee. Hence, in our considered view, this issue is covered by the ratio laid down by the Hon ble Supreme Court in TRF vs. CIT (supra). We, therefore, set aside the findings of the Ld. CIT(A) and allow ground No 3 and 4 of the appeal filed by the assessee. 11. As regards the ground no. 5, the Ld. Counsel submitted that the CIT(A) has wrongly confirmed disallowance on the ground that the assessee has failed to produce any proof that the market value of shares have become Nil. The Ld. Counsel further submitted that Nil value was adopted based on the evaluation of the market value by its management and in the later years nothing was realized. The Ld. DR relying on the concurrent findings of the authorities below submitted that the impugned order does not suffer fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances given to the Associates/Group Companies of the appellant/assessee being non-interest bearing advances for the period from 1.4.1996 to 31.3.2000 along with an application for allowing admission of the same as additional evidence in support of its claim. Since these documents were not produced either during assessment or during first appellate proceedings, we are of the considered view that the same are required to be examined by the assessing officer for deciding this issue. Hence, we admit the additional evidence filed and remit this issue back to the file of the AO to decide the issue afresh after taking into consideration the additional evidence. Needless to say, that the AO shall afford an opportunity of being heard to the assessee before passing such order. We decide the issue involved in ground No 7and 8 accordingly. 16. As regards the ground no. 8-9 the Ld. Counsel submitted that this issue is covered in favour of the assessee by the order of the Tribunal in assessee s own case for A.Y. 1993-94. Since no new asset has been acquired during the year no addition in respect of the asset taken on lease. On the other hand, the Ld. DR. submitted that since each and every ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed these grounds raised by the assessee. 19. In the result, appeal filed by the assessee for the assessment year 2000-01 is partly allowed. ITA 7175/Mum/2010 for Asst. Year 2001-02 1. The assessee has preferred this appeal raising the following grounds are as under:- 1. The learned Commissioner (Appeals) erred in confirming disallowance of interest u/s 14A amounting to ₹ 12,60,000/- attributable to investments when the appellant had not borrowed any funds and did not make any investments out of the same during the year. 2. The learned Commissioner (Appeals) erred in directing the Assessing Officer to apply Rule 8D for the purpose of disallowance u/s 14A when the Rule 8D is applicable only from the assessment year 2008-09 and there is no proximate cause for disallowance as the appellant has not incurred any expenditure in relation to dividend income earned. 3. The learned Commissioner (Appeals) erred in confirming the disallowance of income-tax depreciation on WDV of the leased assets amounting to ₹ 15,94,90,000/- based upon the disallowance made by the Commissioner (Appeals) vide its consolidate order dated 18th June, 2009 for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no concealment of income. 13. Each one of the above grounds is without prejudice to the other. 14. The appellant reserves the right to amend, alter or add to the grounds of the appeal. 2.1 Ground No 1 and 2 of the present appeal is identical to ground No 1and 2 of the appeal for the A.Y. 2000-01. Since, we have decided the identical issue partly in favour of the assessee in appeal for the assessment year 2000-01, we direct the AO to restrict the disallowance u/s 14A of the Act to 10% of the dividend income and partly allow ground No 1 of the appeal. Similarly since we have allowed ground No 2 of the assessee in appeal for the assessment year 2000-01, we also decide ground number 2 of this appeal in favour of the assessee. 2.2 Similarly ground No 3 and 4 of the present appeal regarding disallowance of depreciation on WDV of leased assets are identical to the ground No 8 and 9 of the assessee s appeal for the A.Y. 2000-01. Since we have decided these grounds in favour of the assessee in assessees appeal for the assessment year 2000 01 aforesaid, we allow ground number 3 and 4 of this appeal. 2.3 Ground No 5 to 7 regarding disallowance of bad debts, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the depreciation on the WDV of the leased assets subject to the rectification and/or determination of WDV as on 1st April, 2002. 5. The learned Commissioner (Appeals) erred in dismissing the penalty proceedings u/s 271 (C) stating that the same is premature when the appellant had demonstrated that the claims were bonafide after making full disclosure and therefore, penalty initiated is unwarranted and should be dropped. 6. Each one of the above grounds is without prejudice to the other. 7. The appellant reserves the right to amend, alter or add to the grounds of the appeal. 2.1 Ground nos. 1 2 regarding disallowance of bad debts are identical to grounds 3 4 of the appeal for the A.Y. 2000-01. Since we have allowed the assessee s appeal on this issue for A.Y. 2000-01, we hold this issue in favour of the assessee in this year also. 2.2 The grounds 3-4 regarding disallowance of depreciation on WDV of leased assets are identical to Ground No.s 8-9 of the appeal for the A.Y. 2000-01. Since we have allowed the assessees appeal on this issue for A.Y. 2000-01 , following the same we allow the assessee s appeal on this issue for this year also. 2.3 Regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals) erred in confirming the disallowance of Income-tax depreciation on WDV of the leased assets amounting to ₹ 2,01,38,381/- based upon the disallowance made by the Commissioner (Appeals) vide its consolidated order dt. 18th June, 2009 for the assessment years 1993-94 to 1998-99, treating the earlier years lease transactions as finance transactions . 2. The learned Commissioner (Appeals) ought to have allowed the depreciation on the WDV of the leased assets subject to the rectification and/ or determination of WDV as on 1st April, 2006. 3. The learned Commissioner (Appeals) erred in dismissing the penalty proceedings u/s 271(c) stating that the same is premature when the appellant had demonstrated that the claims were bonafide after making full disclosure and therefore, penalty initiated is unwarranted and should be dropped. 4. Each one of the above grounds is without prejudice to other. 5. The appellant reserves the right to amend, alter or add to the grounds of appeal. 2.1 Ground nos 1-2 regarding disallowance of depreciation of WDV of leased assets are identical to ground nos 8-9 of the appeal for the A.Y. 2000-01. Since we have h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
