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Adani Port and Special Economic Zone Ltd Versus Addl. C.I.T., Range -1, Ahmedabad

Revision u/s 263 - section 14A disallowance - Held that:- This assessee had declared exempt income from dividends amounting to ₹ 1,77,47,783/-. The AO invoked rule 8D to disallow proportionate interest and administrative expense of ₹ 16,49,33,648/- and ₹ 3,78,60,000/- aggregating to ₹ 20,27,93,648/- in question. There is no dispute that the CIT(A) confirmed the same in principle in his order dated 10.10.2014 falling much before section 263 show cause notice issued on 20.0 .....

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hat hon’ble jurisdictional high court in Nirma Industries vs. DCIT (2006 (2) TMI 92 - GUJARAT High Court ) rejects such a contention to invoke merger principle by holding that an assessment order does not have any independent existence after the same is subjected to appeal and it stands adjudicated. Our view in this backdrop of facts is that the assessment order in question sought to be revised does not have any independent existence. Even the issue on merit is rendered academic in view of CIT’s .....

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e A.O in earlier years in the assessment order passed u/s. 143(3) and those orders have attained finality. - Claim of deduction u/s. 35D - Held that:- As far as the claim of deduction u/s. 35D is concerned it is not the case of the Revenue that the expenses have been incurred in the year under consideration but on the contrary it is assessee’s submission that the same have been incurred in earlier years and the deduction u/s. 35D has also been allowed in earlier years. It is also not a case .....

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law or was upon erroneous application of legal principles initiating the exercising of revisionary powers u/s. 263. In view of the aforesaid facts, we are of the view that ld.CIT was not justified in resorting to revisionary powers u/s. 263 of the Act - Assessee appeal allowed. - ITA No.3577/Ahd/2015 - Dated:- 23-8-2016 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Appellant : Shri P.M. Mehta, A.R. For The Respondent : Dr. Banwari Lal, C.I.T. (D.R.) ORD .....

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nd sales development business. It filed return on 25.09.2009 stating income of ₹ 21,50,85,734/-. The Assessing Officer completed regular assessment on 15.05.2013 inter alia making TP adjustment of ₹ 61,87,200/-, section 80IAB deduction disallowance of ₹ 13,86,27,839/- and Section 14A disallowance of ₹ 20,27,93,648; respectively. The assessee preferred appeal. The CIT(A) in his order dated 10.10.2014 confirmed section 14A disallowance hereinabove. He however accepted asses .....

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. 2009-10. The assessment in this case was completed under section 143(3) r.w.s. 144C of the I.T. Act, 1961 on 15.05.2013 determining total income at ₹ 61,90,96,520/-. 1. It is seen that the assessee had invested ₹ 757.20 crore in exempted income and hence expenditure to the tune of ₹ 32,84,78,040/- was required to be disallowed u/s. 14A r.w.s. 8D of the Act. However, only an amount of ₹ 20,27,94,648/- was disallowed by the AO. The AO has completed the assessment without .....

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expenses are incurred prior to 1.4.2009. 4. It appears that the AO has not noticed the amendment in section 35D(1)(ii) w.e.f. 1.4.2009 and completed the assessment without disallowing the assessee s claim. 5. In view of the above, it appears to the undersigned that the order dated 15.05.2013 passed under section 143(3) r.w.s. 144C of the I.T. Act, 1961 by the DCIT, Circle-1, Ahmedabad is erroneous and prejudicial to the interest of Revenue within the meaning of Section 263(1) of the I.T. Act, 19 .....

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Therefore, no recourse to section 263 could be taken. It is also submitted that even after proposed disallowances/additions, there is no case of revenue loss since income of the assessee company would still be eligible for deduction u/s 80JAB of the Act. 5.1 However, I do not find merits in the contention of the assessee in as much as the AO has incorrectly applied specific provisions of law. There is apparent incorrect conclusion drawn even if he did consider the issues in hand. Provisions of .....

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to be added to the total income of the assessee. Similarly on office equipment, the assessee has claimed depreciation @ 15% amounting to ₹ 1,11,22,9247- whereas the assessee is entitled to depreciation @ 10% amounting to ₹ 74,15,309/- only and the excess depreciation allowed of ₹ 37,07,655/- is required to be withdrawn and to be added to the total income of the assessee. Further, as per the amended provisions of section 35D(l)(ii) w.e.f. 1- 4-2009, the assessee is not entitled .....

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issues discussed above for the said assessment year after giving proper opportunity to the assessee as per law. 6. We have heard both the parties vehemently arguing in support of their respective stands. We come to the first issue of section 14A disallowance forming CIT s revision adjudication. This assessee had declared exempt income from dividends amounting to ₹ 1,77,47,783/-. The AO invoked rule 8D to disallow proportionate interest and administrative expense of ₹ 16,49,33,648/- a .....

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sue in question. The Revenue at this stage supports CIT s order that the impugned disallowance ought to have been computed by adopting net instead of actual disallowable sum of ₹ 32,84,78,040/- in the nature of interest. We notice that hon ble jurisdictional high court in Nirma Industries vs. DCIT (2006) 283 ITR 402 rejects such a contention to invoke merger principle by holding that an assessment order does not have any independent existence after the same is subjected to appeal and it st .....

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risdiction under section 263 of the Act on the issue of depreciation. He observes that the same ought to be claimed/granted at the rate of 10% instead of 15% on office equipments amounting to ₹ 74,15,309/- instead of ₹ 1,11,22,924/- respectively resulting in excess clam of ₹ 37,07,655/- The CIT s view that the relevant depreciation schedule in Annexure-I [(Rule 51)] is allowable on written down value @ 10% under the prescribed head of Furniture/fittings including electrical fit .....

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r adjudicating both these latter issues against the revenue as follows:- 15. On the merits on the issue of amortization of cost of lease hold land, we find on perusing the computation of total income, which is placed at page 27 to 30 of the paper book, that the claim of Assessee of amortized value of lease hold land development was not u/s. 35D whereas ld. CIT in the order has held that the claim of Assessee was u/s. 35D and therefore in such a situation, A.O s order on that issue cannot be cons .....

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