Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

D.C.I.T., Circle – 3 (3) , Mumbai Versus M/s Kail Ltd.

2017 (9) TMI 1219 - ITAT MUMBAI

Disallowance u/s 14A r.w. Rule 8D(2)(ii)/(iii) - Held that:- It is the finding of the Ld.CIT(A) that the own funds of the assessee are much more than the investments and in which case no disallowance is required to be made u/s 14A r.w. Rule 8D(2)(ii) in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT). This finding of the Ld.CIT(A) could not be rebutted with evidences by the Revenue to show .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/- respectively. He also noticed that the assessee earned dividend income of ₹.9,62,500/-, ₹.8,75,200/- and ₹.5,50,000/- during these Assessment Years. In the circumstances the restriction of disallowance under Rule 8D(2)(iii) made by the Ld.CIT(A) cannot be disturbed since it is more than the dividend income earned by the assessee. Thus we sustain the order of the Ld.CIT(A) on this issue. - Adjustment made to book profit u/s 115JB on account of expenses relatable to exempt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for warranty expenses - Held that:- In the case of CIT v. Jay Bee Industries [2007 (9) TMI 626 - PUNJAB & HARYANA HIGH COURT] held that provision of warranty for repairs/replacement is an existing liability at time of sale and is allowable as deduction. Mumbai Bench of the Tribunal in the case of Indian Oil Tanking Ltd. v. ITO [2008 (1) TMI 417 - ITAT BOMBAY-E] held that Assessing Officer cannot make addition of provision of performance warranties to net profit of assessee for arriving at its bo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t. This ground is dismissed. - ITA NO.4415/MUM/2012, ITA NO.1855/MUM/2013 And ITA NO.5716/MUM/2013 - Dated:- 13-9-2017 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHAN, HON'BLE ACCOUNTANT MEMBER For The Assessee : Shri Bhupendra Karkhanis For The Department : Shri M.C. Omi Ningeshen ORDER PER C.N. PRASAD (JM) 1. These appeals are filed by the Revenue for the Assessment Years 2008-09 to 2010-11 against the different orders of the Commissioner of Income Tax (Appeals)-7 M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rned 2008-09 -Nil- 1,22,47,472 12,16,787 9,62,500 2009-10 -Nil- 1,64,73,251 19,02,859 8,75,200 2010-11 -Nil- 2,50,17,377 20,12,296 5,50,000 3. The assessee preferred appeals before the Ld.CIT(A) contending that the investments were made out of surplus own funds which are much more than the investments made in the shares by the assessee. The Ld.CIT(A) taking note of the fact that the own funds of the assessee in the form of share capital, reserves and surplus are more than the investments in all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Rule 8D(2)(ii) of the I.T. Rules. Coming to the disallowance u/s 14A r.w. Rule 8D(iii) of the Act the Ld.CIT(A) sustained the disallowance for the Assessment Year 2008-09 and restricted the disallowance for the Assessment Years 2009-10 and 2010-11 to ₹.9,50,000/- and ₹.8,75,000/- respectively. 4. The Ld. DR submits that Ld.CIT(A) has given a finding that own funds are exceeded investments by simply looking at balance sheet which is not correct. Ld. DR vehemently supported the orders .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es and ₹.237.29 crores and whereas the investments in domestic companies capable of generating tax free income stood at ₹31.08 crores, ₹.31.88 crores and ₹.32.49 crores and the percentage of investments out of own funds stood at 12%, 15% and 14% respectively. Therefore, Learned Counsel for the assessee submits that since own funds are much more than the investments made there should not be any disallowance u/s 14A r.w. Rule 8D(2)(ii) in view of the decision of the Hon' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Ld.CIT(A) could not be rebutted with evidences by the Revenue to show that there were no surplus funds for making investments. In the circumstance we uphold the order of the Ld.CIT(A) in deleting disallowance u/s 14A r.w. Rule 8D(2)(ii). 7. Coming to the disallowance under Rule 8D(2)(iii), we find that the Ld.CIT(A) in so far as Assessment Year 2008-09 is considered entire disallowance as made by the Assessing Officer is sustained and in respect of the Assessment Years 2009-10 and 2010-11 he .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on issue in all these appeals is that Ld.CIT(A) is not justified in deleting the adjustment made to book profit u/s 115JB of the Act on account of expenses relatable to exempt income u/s 14A r.w. Rule 8D of the I.T. Rules. 9. This issue now stands squarely covered by the decision of the Special Bench Delhi in the case of ACIT v. Vireet Investments Private Limited [165 ITD 27] wherein the Special Bench held that the computation under clause (f) of Explanation-1 to section 115JB(2) is to be made w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

count of provision for warranty expenses. 11. Briefly stated the facts are that the Assessing Officer while completing the assessment noticed that assessee made a provision on account of warrantee expenses of ₹.84,13,800/- and while computing the income under normal provisions the assessee in the computation added back this provision. The Assessing Officer was of the view that since this was not added back to the book profits u/s 115JB, assessee was required to explain why this provision f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act. 12. On appeal by the assessee the Ld.CIT(A) allowed the claim of the assessee holding that the provision for warranty is not a contingent liability but is an ascertained liability which was provided based on past experience. 13. The Ld. DR vehemently argues that the provision made by the assessee is only a contingent liability, it is an unascertained liability. He further submits that assessee himself treated this provision as not allowable while computing the normal provisions of the Act. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tricals (P.) Ltd v. DCIT [(2017) 81 taxmann.com 250 (Mumbai -Trib.)] (4) DCIT v. M/s. Century Appliances Private Limited [ITA.No.5132/Mum/2015] dated 16.06.2017. 15. Heard both the parties, perused the orders of the authorities below and the decision relied upon. Assessee made elaborate submissions before the Ld.CIT(A) and contended that the provision made is based on past experience and it is not an unascertained liability. The assessee also contends that since the provision for warranty liabil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

liability and it should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in present though it will be discharged at a future date. Assessee also placed reliance on the decision of the Delhi Bench in the case of M/s. Sony India (P) Ltd. v. DCIT [118 TTJ 865] wherein it was held that no addition can be made to the book profits u/s 115JB of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version