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TMI Blog2021 (6) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... Act only to the extent of income from business and profession and thereby not allowing deduction to the extent of Rs. 15,07,380/- from the gross total income. The Appellant therefore prays that the Ld. AO be directed to allow the claim of deduction under section 80IA of the Act against the gross total income. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance of expenditure of Rs. 3,02,91,857/- made be the Ld. AO under section 14A of the Act ~ read with Rule 8D of the Income tax Rules, 1962 (" the Rules"). The Appellant therefore prays that the Ld. AO be directed to delete the disallowance of expenditure made under section 14A of the Act. 3. Without prejudice to Ground no. 2, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in making disallowance of Rs. 2,66,66,650/~ under section 14A of the expenditure incurred in relation to investment in its subsidiaries without appreciating the fact that investment in subsidiaries was for the purpose of acquiring controlling take in the companies and not for the purpose of earning exempt income . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22/04/2021 vide inward receipt No. 2094, dated 22/04/2021, stating that it does not want to press this ground, the contents of which are as under for ready reference: " NSL Renewable Power Private Limited 22 April, 2021 Registered Office: NSL ICON PO WE R 4th Floor, 8-2-684/2/A , Road No.12, Banjara Hills Hyderabad _ 500 034, Telangana www.nslpower.com ClN: U40 I09TG I 985PTC I 14078 Hon'ble Income Tax Appellate Tribunal- Hyderabad Dear Sir, Re: NSL Renewable Power Private Limited ('NSL' or 'We') AY 2011-12 - ITA No. 1024/Hyd/2017 (Assessee Appeal) Sub: Note on Ground No. 1 We refer to the captioned appeal which was heard before the Hon'ble 'A' Bench of the Income-tax Appellate Tribunal, Hyderabad on 22 April, 2021 for AY 2011-12. During the course of hearing, the authorized representative CAR') argued that Ground NO.1 raised by NSL in the captioned case is covered on merits by the ITAT order for AY 2010-11 in ITA No. 2146/Hyd/2017 and AY 2012-13 in ITA No. 988/Hyd/2017 and hence prayed that the addition should be deleted. However, your Honour's asked the AR to file a note / clarification on certain points r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing statutes are subject to the rule of strict interpretation, leaving no room for any intendment; and the benefit of ambiguity in case of an exemption notification or an exemption clause must go in favour of the revenue, as exemptions from taxation have a tendency to increase the burden on the unexempted class of tax payers. The same principles, according to the learned counsel, shall apply to Section 80-O of the Act and, for the law declared by the Constitution Bench, the decision relied upon by the learned counsel for the appellant in Baby Marine Exports (supra), which even otherwise dealt with Section 80HHC of the Act and not Section 80-O, is of no help to the appellant." 2.2 Accordingly, the assessee is not eligible to claim deduction u/s 80IA from the income from house property as claimed. Thus, we dismiss the ground no. 1 raised by the assessee on this issue. 3. Ground Nos. 2 to 4 are pertaining to disallowance u/s 14A of the Act. Ground No. 5 is relating to initiation of penalty proceedings u/s 271(1)(c), which is premature in nature and assessee does not want to press this ground also. 4. Briefly, the facts of the case are that the assessee filed its return of income fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue: 8. This appeal filed by the revenue for AY 2012-13 is directed against the CIT(A) - 4, Hyderabad's order, dated 20/07/2018 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short "the Act" on the following grounds of appeal: 1. The Ld. CIT(A) erred in restricting the disallowance u/s 14A from Rs. 12,73,86,991/- to Rs. 57/60/120/- i.e to the dividend income earned by the assessee which is in contravention to the CBDT Circular No. 5/2014 in this regard. 2. The Ld. CIT(A) erred in holding that the disallowance u/s 14A shall be restricted to the exempt income earned by the assessee. 3. The Ld. CIT(A) erred in deleting the addition made by the AO under the head "Income from Other Sources" to the tune of Rs. 57,60,121/-. 4. The Ld. CIT(A) erred in not remanding additional evidence, if any, with regard to claim of exempt dividend income which is in contravention to the provisions of Rule 46A of the Income Tax Rules. 5. Any other ground that may be raised at the time of hearing." 9. Briefly the facts of the case are that the assessee filed its return of income for the Asst. Year 2012-13 on 30.09.2012 admitting NIL income after claiming deduction u/s 80IA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of investments made in its subsidiaries, since it has not earned any exempt income from such investments during the year. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not giving relief to the Cross-objector while calculating the disallowance under section 14A read with rule 8D(2)(iii) made by the Ld. AO, by taking into consideration even those investments which have not yielded any exempt income during the year. The Cross-objector therefore prays that the investments made in subsidiaries which has not yielded any exempt income during the year should not be taken into consideration for calculating average investments for the purpose of disallowance under section 14A read with rule 8D(2)(iii). The Cross-objector craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing." 12. As regards the CO No. 09/Hyd/2020 filed by the assessee, we notice at the outset that assessee's CO suffers from 398 days delay in filing. To this effect, the assessee filed petition for condonation of the said del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely on the decision of the coordinate bench of this Tribunal in the case of Transport Corporation of India Ltd. in ITA No. 117/Hyd/2016, order dated 21/09/2016, wherein the coordinate bench has held as under: "11. Considered the submissions of both the counsels and perused the material facts on record. The AR submitted that the assessee has sufficient own funds which are interest free to make investment. He also relied on various decisions, in particular, Reliance Utilities & Power Ltd. (supra). We cannot take this argument further because there exist interest bearing funds and it is difficult to identify the utilization of the funds in the business unless the assessee brings proper records to show that the specific interest free funds were utilized to acquire the investment which are exempt from tax. In the present case, it is difficult to identify the funds utilization considering the complicated structure of the business. To address this issue, the legislature has introduced Rule 8D for calculation of disallowance relating to direct expenses associated with the exempt income, interest relating to the investment and administrative expenses. 11.1 While carefully reading the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,60,120/- should be treated as income from other sources is also not correct. On the one hand, the Assessing Officer himself has treated it as a dividend income which is exempt and on other hand, he has treated as daily dividend income and taxed under the income from other sources. While recalculating disallowance u/s 14A, we have restricted the disallowance to the extent of exempt earned by the assessee or less than the exempt income, whichever is lower and the same amount cannot be taxed as income from other source, which amounts double taxation in the hands of the assessee. The dividend amount received by the assessee is exempt as per section 10(35) of the IT Act. The assessee has relied on the following case law, which support the case of the assessee: "1. PCIT Vs. Caraf Builders & Constructions (P) Ltd. (ITA No. 1260 of 2018) (Delhi HC) 2. PCIT Vs. McDonalds India Pvt. Ltd., (ITA 725/2018 (Delhi HC) 3. DCIT Vs. Pitti Electrical Equipment Pvt. Ltd. ITA No. 735/Hyd/2018. 4. Vanni Potluri Vs. DCIT, ITA No. 2263/Hyd/2017 5. Mylan Laboratories Ltd. Vs. DCIT, 180 ITD 558." 13.4 Accordingly, the grounds Nos. 1 to 3 raised by the revenue and Cross Objections filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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