TMI Blog2018 (6) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and the TDS deducted wrongly in respect of some transactions, but the ld.CIT(A) has not admitted these additional evidences nor sent them to the Assessing Officer for his examination. CIT(A) ought to take remand report on these additional evidences and adjudicate the issue in accordance with law, but CIT(A) neither examined himself nor he sent them to the Assessing Officer for his examination - set-aside to the file of the assessing officer. Denial of set off of brought forward business losses of the earlier assessment years - Held that:- We note that the CIT(A) has not given instruction to the AO to examine the set off of brought forward losses as per the provisions of the Act. Assessee is entitled to claim the benefit of carry forward of losses, therefore, we think it appropriate to direct the Assessing Officer to examine the claim of the assessee with regard to carry forward of business losses in accordance with law. This ground of appeal raised by the assessee is allowed for statistical purposes. - ITA No. 209/MUM/2017 - - - Dated:- 27-6-2018 - SHRI SAKTIJIT DEY, HON BLE JUDICIAL MEMBER AND SHRI Dr. A.L. SAINI, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in accordance with the formula given in Rule 8D(2)(ii) (A X B/C) NIL (iii) Amount equal to one-half percent of the average of the value of investment income from which does not or shall not form part of the total income as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. Investment as on 01/04/2011 (opening) after given effect to the High Court order approving the scheme of amalgamation. Investment as on 31/03/2012 (Closing) Average 69,33,99,550/- 64,83,99,570/- 67,08,99,56 x 0.5% 33,54,498/- Total expenditure disallowed u/s. 14A 36,18,498 As noted in the table above, the Assessing Officer computed the disallowance under section14A read with rule 8D, in relation to expenditure attributable to the earning of exempt income to the tune of ₹ 36,18,498/-. Since the assessee has disallowed suo-motu under section 14A, read with rule 8D to the tune of ₹ 2,64,000/-therefore, the bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to mean that the entire tax exempt income of the assesseeis to be disallowed. That the window for disallowance is indicated in Section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income. This proportion or portion of the taxexempt income surely cannot swallow the entire amount of tax exempt income. Similar view has been taken by the Hon'ble Punjab Haryana High Court in the case of 'PCIT vs. Empire Package Pvt. Ltd. '(supra).(Para 27) The Hon'ble Delhi High Court in the case of M/s Cheminvest Ltd. vs. CIT (2015) 61 taxman.com 118, wherein also the assessee had made strategic investments in subsidiaries/Group Companies for retaining control over them but has not received any dividend income from such investments, has held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year and that the expression 'does not form part of the total income' in section 14A of the Act envisages that there should be an actual receipt of income which is not included in the total income during the relevant previous year for the purpose of disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable. We note that the Hon'ble Delhi High Court in the case of Joint Investments Pvt Ltd. Vs. CIT 372 ITR 694 (Del)held that by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. 10. We note that in the light of the above judgment of the Coordinate Bench in the case of Tata Industries Ltd.Vs. ITO [2016] 181 TTJ 600 (Mum.), relied by assesseee, (supra), we are of the view that disallowance u/s 14A in this case cannot exceed than the tax exempt income of ₹ 40,068/-, as earned by the assessee during the year. So far as the contention that the assessee itself has offered disallowance in the return of income more than the exempt income earned is concerned, we note that the said issue has also been dealt with the Coordinate Bench, that is, even if the assessee under a mistake or misconception has over assessed itself in the return of income, the Tribunal can give relief to the assessee to the extent the assessee is over assessed and direct the lower authorities to tax the assessee as per the provisions of law. Therefore, respectfull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to ₹ 26,33,944/- under PAN of the assessee company instead of reporting it under the correct PAN of the parties, to whom such transactions actually pertain to. However, the ld CIT(A) noted that the assessee has not made any prayer for admission of additional evidence under Rule 46A of the I.T. Rules, 1962 and the assessee has not explained as to how the conditions laid down in Rule 46A are satisfied by him, so as to admit its additional evidences at this stage. Therefore ld.CIT(A) held that when the evidences were available with the assessee at the initial stage, which were not produced before the AO and the assessee had failed to explain sufficient cause, as to why he had not submitted these additional evidences before the AO, therefore, ld CIT(A) did not accept the additional evidences and upheld the order passed by the Assessing Officer. 13. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. The Ld. Authorized Representative for the assessee has submitted that the additional evidenceswere produced before the ld. CIT(A), but these evidences have not been considered by him. The ld CIT(A) also failed to send these additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) neither examined himself nor he sent them to the Assessing Officer for his examination. We note that the ld. CIT(A) has not followed the procedure prescribed in Rule 46A of the Income Tax Rules, therefore, we are of the view that this issue requires to be set-aside to the file of the assessing officer.Accordingly, we set aside the order of ld CIT(A) and restore the issue to the file of the assessing officer, with a direction, to examine the TDS Confirmations and reconciliations and adjudicate the issue in accordance with law. Thus, this ground of appeal raised by the assessee is allowed for statistical purposes. 16. The third ground of appeal raised by the assessee relates to denial of set off of brought forward losses of earlier assessment years. 17. Brief facts qua the issue are that during the course of assessment proceedings, the Assessing Officer noted that the assessee has claimed brought forward losses to the extent of ₹ 55,97,291/-, aggregating for the Assessment Years 2006-07, 2007-08,2009-10,2010-11 and 2011-12. The Assessing Officer reviewed the assessment orders for these assessment years and noted that there had been certain disallowances in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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