TMI Blog2017 (4) TMI 1559X X X X Extracts X X X X X X X X Extracts X X X X ..... e s claim in the revised P/L Account in respect of reduction in turnover but as per the assessment order, this claim was summarily rejected by the A.O. with the observation that the assessee is following Percentage of Completion Method (POCM) and the income shown in the original return is in line with POCM without giving any specific finding about the claim of the assessee that the turnover shown in the revised return is by following correct POCM. Hence, we restore the matter back to the A.O. for a fresh decision by way of a speaking order as to what should be the turnover of the present year as per correct POCM and AS 7 if found applicable. Disallowance u/s 14A - HELD THAT:- As in the present year, Rule 8D is applicable. As per this rule, if the A.O. can show direct nexus between interest expenditure and investment in shares than entire such interest has to be disallowed. Similarly, if the assessee can show that part of whole interest is relatable to earning of taxable income than such interest expenditure cannot be considered for Rule 8D. But the remaining interest expenditure has to be proportionately disallowed as per Rule 8D. Learned CIT (A) in Para 4.6 has held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of ₹ 34,49,92,696/- in the revised ROI without appreciating the fact that whereas the expenditure debited by the assessee towards execution has been reduce only by ₹ 5.61 % but income has been reduced by around 750% and execution cost has been reduced only by around 1.8%. 3.The CIT(A) erred in directing the AO to recompute the disallowance under rule 8D(2)(iii) of the LT. rules after considering the correct figures as per the balance sheet when the AO has rightly made the disallowance after analyzing the investment portfolio as given by the assessee at para 12 of the assessment order. 4.The CIT(A) erred in holding at para 4.3 that the average value of assets will be taken as ₹ 7,040,841,959/- whereas the assessee himself has shown the net current assets of ₹ 445,99,03,91 01- as on March 31st, 2009 and ₹ 415,92,82,877/- as on March 31st 2008 in the Balance sheet which has been adopted by the AO while calculating the average assets value. 5.The CIT(A) erred in deleting the disallowance of interest u/s 36(1)(iii) amounting to ₹ 23,25,95,267/- even though the assessee had advanced interest free loans to its sister concerns out of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds, learned DR of the revenue placed reliance on the tribunal order rendered in the case of Karnataka Forest Development Corp. Ltd. vs. CIT as reported in 54 SOT 76. 5. In reply, it was submitted by the Learned AR of the assessee that even as per this tribunal order, what can be held is that the revised return filed is not a return filed u/s 139 (3) and therefore, the claim of assessee for carry forward of loss can be rejected but the revised return has to be accepted as valid if it is filed within the time available u/s 139 (5) and the original return was filed within the time available u/s 139 (1). He submitted that in the present case, the original return was filed on 30.09.2009 i.e. within the time available u/s 139 (1) and the revised return was filed on 28.12.2010 i.e. within the time available u/s 139 (5). He submitted that he is not serious about carry forward of loss because till now, there is no taxable income and the period of 8 years has expired on 31.03.2017 relevant for A. Y. 2017 18. 6. We have considered the rival submissions. We first reproduce Para 11 of the tribunal order on which reliance has been placed by learned DR of the revenue. This is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming the loss for the relevant assessment year and also claiming the loss to be carried forward of the loss of 2003-04 and 2004-05 respectively, then the assessee was required to file the return u/s 139(3) of the Income-tax Act, therefore, the revised return filed u/s 139(5) cannot be accepted and has to be treated as null and void. In view of the same, we uphold the findings of the CIT (A) and assessee s appeal is accordingly dismissed. The decisions relied upon by the learned counsel for the assessee are distinguishable on facts. In the case of Sujani Textile Pvt. Ltd., the Tribunal has given a finding that where the assessee had filed the loss return u/s 139(3) within the time allowed by law and the revised return of income showing higher amount of loss was also filed within the time allowed by law then the revised return replaces the original return. But in the case before us, the assessee has not filed the return u/s 139(3) of the Act within the time allowed by law but has filed the revised return claiming the loss u/s 139(5) of the Act, therefore, it cannot be said that the revised return of income replaced the original return of income and, therefore, the ratio of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is not serious about carry forward of loss because the same is of academic interest, we do not enter into this aspect as to whether carry forward of loss is allowable or not and we hold that revised return is valid but carry forward of loss is rejected in view of the submission of the learned AR of the assessee. Additional grounds stand partly allowed. 8. Regarding the ground no. 2 raised by the revenue in this appeal, learned DR of the revenue supported the assessment order and learned AR of the assessee supported the order of CIT (A). He also submitted that as per this ground, it is stated that the income in the revised return was reduced by 750% as against reduction in expenses by around 1.8% but this is factually not correct. He drawn our attention to page 4 of the paper book being the original P/L Account and pointed out that as per the same, the turnover reported is ₹ 416.67 Crores which has been reduced to Rs, 387.67 Crores as per revised P/L Account available on page 18 of paper book and therefore, the reduction in turnover is only 6.96% and not 750% as stated in the ground. He fairly conceded that the claim in the revised P/L Account in respect of red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the A.O. is restored. Ground No. 3 is allowed. Regarding Ground No. 4, we find that in Para 4.7 of his order, learned CIT (A) has asked the A.O. to recomputed the disallowance under Rule 8 D (2) (iii) after considering the correct figures as per balance Sheet. In our considered opinion, there is no infirmity in this direction of CIT (A). Therefore, Ground 4 is rejected. 12. Regarding Grounds 5 to 9 in respect of deletion of disallowance of interest of ₹ 23,25,95,267/- u/s 36 (1) (iii), learned DR of the revenue supported the assessment order and learned AR of the assessee supported the order of CIT (A). He also submitted that as per the revised Balance Sheet on page 17 of the paper book, the own interest free funds are to the extent of ₹ 151.44 Crores on 31.03.2009 and ₹ 179.63 Crores on 31.03.2008. Then he drawn our attention to page 11 of the assessment order and pointed out that as per the A.O., the interest free advances to sister concern a on 31.03.2009 is only ₹ 128.89 Crores and on 31.03.2008 only ₹ 136.12 Crores. He submitted that own interest free funds on both these dates i.e. 31.03.2009 and 31.03.2008 is in excess of interest free ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
