TMI Blog2013 (9) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... e figures of the last AY.We also find that there was decrease in loan payment by the assessee.While deciding the issue against the assessee these vital factors were not considered by the AO/FAA.But,it is also a fact that the assessee had not filed required details before the departmental authorities.Therefore,we are of the opinion that matter needs further veri -fication.So,in the interest of justice matter is remitted back to the file of the AO for fresh adjudication of the issue in question.He is directed to afford a reasonable opportunity of hearing to the assessee. Disallowance under section 14A r.w.Rule 8D - Held that:- Provision of Rule 8D of the Rules are not applicable for the year under consideration.But,it is also a fact that the Hon’ble High Court has in the case of Godrej and Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT ] has held that a reasonable disallowance could be made after considering the facts of the case concerned.In our opinion, in the interest of justice matter should be remitted back to the file of the AO for fresh adjudication. - ITA No.6715/Mum/2010 - - - Dated:- 6-9-2013 - S/Sh.D.Manmohan,Vice-President Rajendra,Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt delivered in the case of Pandian Chemicals (262 ITR 278) and (270ITR448),he held that the income of scrap sale was not eligible for deduction u/s.80IB of the Act. 2.2. Against the order of the AO assessee preferred an appeal before the First Appeal Authority (FAA).After considering the submissions of the assessee and the assessment order he held that the income on sale of scrape was not derived from manufacturing activity.Relying upon the judgment of Pandian Chemicals of Hon ble Madras High Court(supra),he confirmed the order of the AO. 2.3. Before us,Authorised Representative(AR)submitted that in the earlier year FAA had allowed the relief u/s. 80IB, that the said order of the FAA was not agitated by the AO before the Tribunal, that the judgment of Pandian Chemicals(supra)dealt with the issue of interest on deposit, that claim in the case under consideration was made u/s.80IB of the Act,that in the case of Pandian Chemicals(supra) amount arising out sale of Scrap was not dealt with. He relied upon the judgment of Sadhu Forging Ltd. delivered by the Hon ble High Court of Delhi (336 ITR 444).Departmental Representative (DR) submitted that sections 80HH and 80IB were ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction on the ground that it was apportionable to the payment of processing charges.During the assessment proceedings AO found that the assessee-company had earned income while doing job work from various parties and had claimed deduction on such income u/s.80IB of the Act.AO was of the opinion that deduction was not available for the income earned under the head processing charges.Therefore,he disallowed the claim made by the assessee. 3.1.Against the order of the AO assessee preferred an appeal before the First Appeal Authority (FAA).After considering the submissions of the assessee,he held that the assessee-company had earned income while doing job work from various parties,that it had claimed deduction on such income u/s.80IB,that the assessee-company had earned income while getting job work done from various parties,that it had claimed deduction on such income u/s.80IB of the Act.Placing reliance on the decision of Hon ble Supreme Court in case of K.Ravindranathan Nair(295 ITR 228),he held that income received from processing charges was not to be fully included for deduction purposes,that although the decision of the Hon ble Supreme Court was regarding the deduction u/s.80H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eversing the order of the FAA,we decide ground no.2 in favour of the assessee. 4.Next Ground of appeal deals with disallowance of interest of ₹ 21,15,000/-u/s.36 (l)(iii) of the Act on the ground that the same should be considered as relatable to acquisition of capital assets.During the assessment proceedings AO found that the assessee had shown capital work in progress of ₹ 17,38,81,950/-,that the assessee had not capitalised interest expenses incurred for work in progress.Accordingly,a show cause notice was issued to the assessee to explain as why interest had not been capitalised.After considering its reply, the AO held that the provisions of section 36(l)(iii) as amended w.e.f. 1/04/2004 were applicable in the case under consideration, that as per the amended provisions, no deduction was to be allowed in respect of any amount of interest paid in respect of capital borrowed for acquisition of an asset till the date on which such asset was first put to use.He further held that assessee had paid interest of ₹ 1,54,42,462/-,that although the assessee had not borrowed the loan directly related to the assets,but interest bearing funds were utilised for the acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogress for the AY under consideration had gone up drastically as compared to the figures of the last AY.We also find that there was decrease in loan payment by the assessee.While deciding the issue against the assessee these vital factors were not considered by the AO/FAA.But,it is also a fact that the assessee had not filed required details before the departmental authorities.Therefore,we are of the opinion that matter needs further veri -fication.So,in the interest of justice matter is remitted back to the file of the AO for fresh adjudication of the issue in question.He is directed to afford a reasonable opportunity of hearing to the assessee. Ground no.3 is allowed in favour of the assessee,in part. 5.Last ground of appeal is about disallowance made by the AO under section 14A r.w.Rule 8D of the income tax Rules,1962 (Rules).During the assessment proceedings AO found that the assessee company had shown dividend income of ₹ 22,70,550/- as exempt u/s.10(34) of the Act,that no disallowance of expenses u/s. 14A was made.Following the decision of the ITAT Mumbai Special Bench in case of Daga Capital Management he computed the disallowance u/s.14A r.w.r. 8D of Rules at & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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