TMI Blog2015 (5) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... osing stocks in ‘inclusive method’ as prescribed by the ICAI the matter needs to be restored back to the file of the Assessing Officer with similar directions as given in the earlier years. Appeal of assessee is allowed for statistical purposes. - I.T.A. No.6788/M/2011 - - - Dated:- 29-5-2015 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Shri Vijay Mehta For The Respondent : Shri Yogesh Kumar ORDER PER G.S. PANNU, AM: This appeal by the assessee is directed against the order passed by the CIT (A)-41, Mumbai dated 5.8.2011 for the Assessment Year 2008-2009 in the matter of order passed by the Assessing Officer u/s 143(3) of the Income Tax Act 1961 (in short the Act ), dated 31.12.2010. 2. In this appeal, assessee has raised the following Grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Hon ble CIT (A), Mumbai erred in confirming the disallowance amounting to ₹ 13,71,468/- u/s 14 r.w.s Rule 8D attributed by the Assessing Officer towards the dividend income. The appellant prays that the disallowance of ₹ 13,71,468/- u/s 14A of the Act may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the covered nature of the Grounds raised by the assessee in its appeal. Considering the same, Ground wise adjudication is given in the following paragraphs of this order. 6. Ground no.1 relates to the disallowance of ₹ 13,17,468/- u/s 14A of the Act. Briefly stated relevant facts in this regard are that in the return, assessee claimed dividend income of ₹ 6.82 lakhs as exempt u/s 10(34) of the Act and made disallowance of ₹ 14,858/- voluntarily u/s 14A of the Act. During the course of assessment proceedings, assessee was asked as to show cause why the disallowance u/s 14A should not be made as per the provisions of section 14A r.w. Rule 8D of Income Tax Rules, 1962. In this regard, not being satisfied with the explanation given by the assessee, Assessing Officer invoked the provisions of section 14A r.w. Rule 8D of the IT Rules, 1962 as well as followed the judgment of the Hon ble Bombay High Court in the case of CIT vs. Godrej Boyce Mfg. Co. Ltd (328 ITR 81) and worked out the disallowance of ₹ 13,71,468/- and added back to the returned income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT (A). 7. During the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Ld Representative for the assessee further submitted that Assessing Officer has not recorded his satisfaction before invoking the provisions of section 14A r.w. Rule 8D of the Act. In this regard, Ld Representative brought our attention to various orders of the ITAT as well as the judgments of the High Courts, copies of which are placed on pages 63 to 106 of the Paper Book. In this regard, he brought our attention to the decision of the Tribunal in the case of 3DPLM Software Solutions Ltd vs. ITO in ITA No.5736/Mum/12 (AY 2008-2009). In the aforesaid case, while adjudicating a similar issue in para 16, the Tribunal has applied the ratio laid down by the Hon ble Delhi High Court in the case of Maxopp Investment Ltd vs. CIT (347 ITR 272) which is relevant for the proposition that the Assessing Officer first has to reject the claim of the assessee with regard to the extent of expenditure by having regard to the accounts of the assessee and such rejection must be for disclosed cogent reasons. It is the prayer of the Ld Representative that considering the aforesaid propositions, the disallowance made by the AO and confirmed by the CIT (A) u/s 14A r.w. Rule 8D of the IT Rules, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of depreciation @ 30% vis-a-vis 25%. The contention of the assessee is that in the past such depreciation has been granted @ 30%. Ld CIT (A) had invoked section 263 and order of the Learned CIT was quashed by the Tribunal. Therefore, in view of the consistency, we are of the opinion that the claim of the assessee should have been accepted by the Assessing Officer as new facts have been brought on record to justify for different stand taken during the year under consideration and such view is supported by Hon ble Supreme Court in the case of Radhosoami Satsang vs. CIT (193 ITR 321). Accordingly, the ground of the assessee is allowed. 16. Respectfully following the aforesaid decision of the coordinate Bench of the ITAT as well as following the principle of consistency, in our considered opinion, the issue under consideration should be allowed in favour of the assessee. Accordingly, Ground no.2 raised by the assessee is allowed. 17. Ground no.3 relates to the disallowance u/s 145A of the Act in respect of unutilized MODVAT credit u/s 145A of the Act. Brief facts in this regard are, during the course of assessment proceedings, Assessing Officer noticed that the assessee ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard. Considering the significance of the said para 8 of the Tribunal s order and for the sake of completeness of this order, the same is extracted as under: 8. We have heard both the parties and their contentions have carefully considered. Learned AR has not objected to the applicability of section 145A. He has also not objected to the inclusive method which was earlier followed by the assessee. The objection of the Ld AR was limited only to the aforementioned two aspects. First is related to exclusion of excise duty on inventory value on stocks which are not cleared from the factory premises of the assessee and such contention is supported by the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Loknete balasaheb Desai S.S.K. Ltd (supra). Second adjustment sought by the assessee is in accordance with provisions of section 43B of the Act, which states that if the payment of any taxes made before the due date of filing of return, the same is deductible u/s 43B. We find substance in such claim of the assessee. We thereof, hold that section 145A is applicable, the Assessing Officer will calculate the value of the sale and purchase and inventory by including ..... X X X X Extracts X X X X X X X X Extracts X X X X
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