TMI Blog2018 (9) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... ee by the decisions of the coordinate benches of this Tribunal and also by the decision of The Hon’ble Delhi High Court in the case of Cheminvest Ltd., (2015 (9) TMI 238 - DELHI HIGH COURT) wherein it has been held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year. Therefore, subject to verification that the assessee has not earned any exempt income during the relevant P.Y., ground treated as allowed and other grounds are not adjudicated as it would only be an academic exercise. Capitalization of interest - Held that:- Assessee submitted that interest expenditure debited to the P&L A/c is for the loan taken for specific purpose and not for the purpose for the capital work-in-progress, therefore, capitalization of interest is not called for. Assessee has filed financial statement and as seen from the schedule 20 thereof, assessee has paid interest on term loans and other interest of bank and finance charges. Assessee’s contention that the interest paid is towards a particular loan, is not established. As assessee submitted that this issue may be remanded to the AO for verification. We remand this issue to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds, The Ld. Pr. CIT(Central), erred in invoking the provisions of Sec 263 of the Act when the appeal on the original assessment order passed u/s 143(3) of the Act, dated 27-03-2013 is pending in appeal. 8. Wiithout prejudice to the other grounds, The Ld. Pr. CIT(Central), ought to have appreciated that the mistake apparent from record (i.e. claim of depredation @30% instead 15%) can be rectified by an order u/s 154 of the Act instead of an order u/s 263 of the Act. 9. Without prejudice to the other grounds, The Ld. Pr. CIT(Central), erred in disallowing an amount of ₹ 25,16,719/- u/s 14A of the Act, without appreciating that the assessee has made investment of ₹ 8.5 crores from cumulative profits of ₹ 23.29 crores. 10. Without prejudice to the other grounds, The Ld. Pr. CIT(Central), ought to have appreciated that the assessee also has enough of own funds, loan funds, liabilities to make investment on which no interest is payable. 11. Without prejudice to the other grounds, The Ld. Pro CIT(Central), ought to have appreciated that the capital work-in-progress of ₹ 1,00,18,000/- was out of the cash generated from operations during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 4.2 In reply to the show cause notice, the assessee accepted that the claim of depreciation @ 30% was made erroneously and accepted that allowable depreciation can only be of 15%. As far as investment u/s 14A is concerned, it was submitted that the assessee had its own funds, out of which, it has invested in equity shares and, therefore, provisions of section 14A are not applicable. As far as capitalization of interest towards the amount spent on capital work-in-progress is concerned, it was submitted that the capital work-in-progress is from internal accruals and, hence, capitalization of interest does not arise. 4.3 The Pr. CIT, after considering the above submissions of the assessee, held that there was a discrepancy regarding depreciation, disallowance u/s 14A and proportionate interest capitalization for AY 2010-11. Therefore, he held that the assessment was erroneous and prejudicial to the interests of revenue. He, therefore, directed the AO to examine all the issues specified in his order and directed him to re-do assessment on merits and in accordance with law. 4.4 Accordingly, the AO passed assessment order u/s 143(3) r.w.s. 263 of the Act. 5. Assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to contest the facts on the basis of which the Commissioner had come to his conclusions as recorded in the order. Before holding the order to be legally unsustainable the Court would have to be satisfied that in the Course of the revisional proceeding the assessee, actually and really, did not have the opportunity to contest the facts on the basis of which the Commissioner had concluded that the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. In the course of the revisional exercise relevant facts, documents, and books of account which were overlooked in the assessment proceedings were considered. At each stage of the revisional proceeding the authorised representative of the assessee had appeared and had full opportunity to contest the basis on which the revisional authority was proceeding or had proceeded in the matter. If the revisional authority had come to its conclusions in the matter on the basis of the record of the assessment proceedings which was open for scrutiny by the assessee and available to his authorised representative at all times the requirement of giving of a reasonable opportunity of being heard as contemplated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of the impugned issues. 6. The Ld. Commissioner of Income-tax (Appeals) erred in confirming the disallowance of ₹ 25,16,719/- made under section 14A of the Income Tax Act,1961 read with Rule 8D of the Income tax Rules, 1962. 7. The CIT (A) ought to have appreciated the fact that the appellant has made investments during the year under consideration out of Free Reserves and Non-Interest Bearing Funds of the appellant company. 8. The CIT(A) erred in confirming the disallowance made u/s 14A read with rule 8D of IT rules 1962 of the Act, without appreciating the fact that the investments have been made by the appellant company in view of business expediency. 9. The CIT(A) ought to have appreciated that no dividend income which is exempt has been received on the investment made during the year of account. 10. The CIT(A) ought to have appreciated the fact that no expenditure has been incurred directly or indirectly in connection with the investment, the income from which is exempt. 11. Without the prejudice to other grounds the CIT (A) ought to have appreciated that only the value of investment on which dividend income is earned has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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