TMI Blog2020 (7) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 2011-12, which has been confirmed by the Hon ble Delhi High Court, making disallowance by the AO without recording satisfaction mandatory u/s 14A(2), is not sustainable. - Decided in favour of assessee. Deduction u/s 80IA - Claim rejected as no books of account were maintained nor requirement of audit as contained u/s 80IA (7) was fulfilled in the present case - HELD THAT:- Keeping in view the fact that the identical issue has already been decided by the coordinate Bench of the Tribunal in assessee s own case for AY 2010-11 [ 2018 (8) TMI 979 - ITAT DELHI] - Grounds No.2 to 2.3 raised by the assessee are remitted back to the AO to verify the claim of the assessee made on the basis of the audited accounts and accordingly grant the deduction u/s 80IA in accordance with law. Appeal of the assessee is allowed for statistical purposes. - ITA No.5794/Del./2016 - - - Dated:- 27-7-2020 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Neeraj Jain, Advocate, Mrs. Shaily Gupta, CA, Shri Akshay Uppal, CA For the Revenue : Ms. Sunita Singh, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied without recording satisfaction about the correctness of the claim of the appellant in respect of the expenditure incurred for earning the said income. 1.8 Without prejudice, that the CIT(A) erred on facts and in law in not appreciating that the assessing officer had erroneously computed ₹ 12,24,497 as expenses disallowable under section 14A of the Act by applying Rule 8D of the Rules by considering the aggregate value of fixed assets and gross current assets instead of aggregate of fixed assets and net current assets. 1.9 Without prejudice, that the CIT(A) erred on facts and in law in not appreciating that the assessing officer had erroneously computed ₹ 12,24,497 as expenses disallowable under section 14A of the Act by applying sub-rule (2)(ii) of Rule 8D of the Rules as against ₹ 10,05,522 as expenses disallowance under sub-rule (2)(ii) of Rule 8D. 1.10 Without prejudice, that the CIT(A) erred on facts and in law in not appreciating that the appellant had recorded dividend income in the books of accounts net of administrative charges levied by the mutual funds. 2. That the CIT(A) erred on facts and in law in confirming the action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1 TO 1.10 5. Undisputedly, ld. CIT (A) confirmed the addition/ disallowance by following his own order passed for AY 2010-11 in assessee s own case. Assessee has earned dividend income of ₹ 15,44,59,467/- by making investment of ₹ 1,06,62,402/- and made suo motu disallowance of ₹ 4,86,374/- towards 25% of the salary of one accounting person along with 5% remuneration of Finance Director. It is also not in dispute that assessee has made investment in the debt mutual fund. It is also not in dispute that assessee is having interest free surplus funds of ₹ 4,54,99,30,057/- 6. In the light of the aforesaid undisputed facts, the ld. AR for the assessee contended that the issue in controversy is covered by the order dated 16.089.2018 passed by the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed a sum of ₹ 4,86,374/- towards 25% of the salary of one accounting person along with 5% remuneration of the Finance Director having been incurred for earning such dividend income. 12. So, we are of the considered view that when AO has failed to comply with the mandatory requirement of section 14A(2) read with Rule 8D (ia) to record his satisfaction, question of applying Rule 8D(2)(iii) does not arise. 13. Hon ble Apex Court in Godrej Boyce Manufacturing Company Ltd. vs. DCIT 394 ITR 449 (SC) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of the Rules by observing as under :- 37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee u/s 80IA to the tune of ₹ 21,57,22,785/- which has been confirmed by the ld. CIT(A) on the ground that no books of account were maintained nor requirement of audit as contained u/s 80IA (7) was fulfilled in the present case. 19. Ld. AR for the assessee challenging the impugned order passed by the ld. CIT (A) contended inter alia that ld. CIT (A) has proceeded on the wrong facts and law that the Chartered Accountant who has issued the audit report and Form 10CCB had not audited the accounts of undertaking because there is no such requirement of law; that the issue in controversy is covered by the order passed by the Tribunal in assessee s own case for AY 2010-11 in ITA No.973/Del/2015 setting aside this issue back to the file of the AO with specific direction to grant deduction u/s 80IA of the Act after verifying the assessee s claim on examination of the audited accounts of the eligible undertaking. 20. Undisputedly, this is not first year of the assessee claiming deduction u/s 80IA and otherwise eligibility of assessee claiming deduction u/s 80IA has also not been disputed by the AO. It is also not in dispute that pursuant to the order passed by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are shown. Based on that the assessee shows the revenue and further the respective expenditure incurred for the windmill are also recorded in the books of accounts. The assessee has claimed that it is maintaining separate books of accounts with respect to both the windmill undertakings and such books of accounts are duly been audited by an independent auditor and such report of the auditor has been filed before the Ld. assessing officer. The main reason for the rejection of the deduction of the assessee by the Ld. assessing officer is that that assessee is booking revenue based on the credit notes. Looking at the nature of the activities carried out by the assessee wherein it has set up industrial undertaking for the purpose of captive consumption of power. For its major requirement, it buys the power from Gujarat electricity board. However to get the benefit of its different industrial undertaking which generates the power, the assessee entered into an agreement with a power transmission company which gives the credit of units generated by the windmill project against the electricity bill of the manufacturing unit of the assessee. Therefore, the assessee is recordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has been rejected at the threshold itself without verifying that what is the amount of profits that is derived by the industrial undertaking during the year. The assessee has submitted that these details were placed before the Ld. assessing officer, which is also placed before us at page No. 78 onwards of the paper book. In view of this we set aside this ground of appeal back to the file of the Ld. assessing officer with a direction to verify the claim of the assessee on examination of the audited accounts of the industrial undertaking and then grant deduction under section 80 IA of the income tax act in accordance with the law. In the result ground No. 4 of the appeal of the assessee is allowed with above direction. 22. Keeping in view the fact that the identical issue has already been decided by the coordinate Bench of the Tribunal in assessee s own case for AY 2010-11 (supra), Grounds No.2 to 2.3 raised by the assessee are remitted back to the AO to verify the claim of the assessee made on the basis of the audited accounts and accordingly grant the deduction u/s 80IA in accordance with law. 23. Resultantly, the appeal of the assessee is allowed for statistic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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