TMI Blog2021 (10) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of the prior period expenditure to an amount of ₹ 11.97 crores. Accordingly, finding no infirmity in the view taken by the CIT(A) qua the aforesaid issue in question, we uphold his order to the said extent. The Ground of appeal No. 2 is dismissed. Disallowance u/s 14A r.w Rule 8D - claim of the ld. A.R that as the assessee during the year under consideration had not received any exempt income, therefore, no disallowance u/s 14A was called for in its hands - HELD THAT:- As is discernible from the order of the CIT(A), it is a matter of fact borne from the record that the assessee company had not received any exempt income during the year under consideration. Backed by the aforesaid facts, we concur with the claim of the ld. A.R that now when the assessee had not received any exempt income during the year under consideration, therefore, no disallowance u/s 14A could have been made in its hands - No infirmity with the view taken by the CIT(A) who had rightly vacated the disallowance - Decided in favour of assessee. Bogus purchases -CIT-A deleted the addition - HELD THAT:- We find that the assessee in the course of the proceedings before the CIT(A) had duly subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting stipulated in section 145 of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred m deleting the disallowance made u/s. 14A r.w. Rule 8D of the IT Rules. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of purchases made from hawala operators amounting to ₹ 4,97,432/-. 5. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal. 6. The appellant prays that the order of CIT(A) on the above ground be set-aside and that of the assessing officer be restored. 2. Briefly stated, the assessee company which is engaged in the business of electricity generation in the State of Maharashtra had filed its return of income for A.Y 2010-11 on 14.10.2010, declaring an income of Rs.nil under the normal provisions of the Act and book profit of ₹ 394,34,16,857/- u/s 115JB of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. 3. Assessment was framed by the A.O vide his order passed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) observed that now when RGTIL i.e the deductee/payee had already paid the taxes on the amounts so received from the assessee company, therefore, the latter could not be held as an assessee in default qua the said amount. The CIT(A) while concluding as hereinabove had held as under: 3.3 I have carefully considered appellant's submissions. The appellant had paid ₹ 82,65,57,704/- on account of transportation charges to Reliance Gas Transportation Infrastructure Ltd. (RGTIL). The A.O. had disallowed this amount on the ground that the appellant had failed to deduct tax. The appellant had furnished letter during appellate proceedings from RGTIL that they have offered amount of ₹ 82,65,57,704/- in the return of income and tax was duly paid on it. As the deductee had paid the tax on the payment made by the appellant for ₹ 82,65,57,704/- in view of Supreme Court decision in the case of Hindustan Coco Cola Beverage (P) Ltd. vs. CIT (2007) 293 ITR 226 wherein it has been held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact borne from the record that RGTIL had recognized the sum of ₹ 82.65 crores that was received by it towards transportation charges from the assessee company as part of its turnover for the year under consideration i.e A.Y.2010-11, and had duly considered/offered the same for tax in its return of income for the year in question. As observed by the CIT(A), and rightly so, as held by the Hon ble Supreme Court in case of Hindustan Coca Cola Beverages (P) Ld. Vs. CIT (2007) 293 ITR 226 (SC) where the deductee/recipient of income had already paid taxes on the amounts received from the deductor, then, the department once again cannot recover the tax from the deductor by treating the latter as an assessee in default for shortfall in the amount of tax deducted at source. As per the 2nd proviso as had been made available on the statute vide the Finance Act, 2012 w.e.f 01.04.2013, where an assessee fails to deduct the whole or any part of the taxes in accordance with the provisions of Chapter XVII-B of the Act on any such sum, but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Sec. 201, then, for the purpose of Sec. 40(a)(ia) it shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inserted w.e.f 1.4.2013 and in essence, it provides that where an assessee fails to deduct whole or any part of the tax at source but is not deemed to be an assessee in default under the first proviso to Section 201(1), then for the purpose of clause 40(a)(ia), it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee. The Revenue would content that the benefit of this proviso would be available to the assessee only prospectively w.e.f. 1.4.2013. Various Courts, however, have seen this proviso as beneficial to the assessee and curative in nature. The leading judgment on this point was of the Division Bench of Delhi Court in the case of CIT Vs. Ansal Land Mark Township P Ltd, [2015] 377 ITR 635 (Delhi). The Court held that Section 40(a)(ia) is not a penalty and insertion of second proviso is declaratory and curative in nature and would have retrospective effect form 1.4.2005 i.e the date from the main proviso 40(a)(ia) itself was inserted. Several High Courts have adopted the same lines. We may also note that the Supreme Court in the case of Hindustan Coca Cola Beverages P Ltd Vs. CIT, [2007] 293 ITR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady offered by the assessee, and restrict the disallowance to an amount of ₹ 11,97,32,391/-. The CIT(A) while concluding as hereinabove had held as under : 4.1 The facts of the case were that the A.O had disallowed prior period expense of ₹ 19,15,87,803/-. 4.2 During the appellate proceedings the appellant states that appellant had suo motto disallowed ₹ 7,18,55,412/-. The A.O had again disallowed the same amount in the assessmet order. As appellant had already disallowed ₹ 7,18,55,412/- the net amount to be disallowed is ₹ 11,97,32,391/-. 4.3 This issue had come into consideration of CIT(A)-2. Mumbai from A.Yrs. 2001-02 to 2005-06. The CIT(A) in A.Y.2005-06 in para no.3 held as under: 3. The second ground of appeal is against disallowance of prior period expenses amounting to ₹ 4,50,77,60,167/-. In the course of appellate proceedings appellant has also preferred an additional ground of appeal on this issue ushers it has -been contended that out of the total amount disallowed by Assessing Officer mentioned above, an amount of ₹ 50,96,59,163/- being depreciation for earlier years had already been disallowed by appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them in respect of the aforesaid issue in hand. As is discernible from the order of the CIT(A), it is a matter of fact borne from the record that the assessee company had not received any exempt income during the year under consideration. Backed by the aforesaid facts, we concur with the claim of the ld. A.R that now when the assessee had not received any exempt income during the year under consideration, therefore, no disallowance u/s 14A could have been made in its hands. Our aforesaid view is fortified by a host of judicial pronouncements as under: i. CIT Vs. Delite Enterprises, ITA No.110 of 2009 (Bom). ii. CIT Vs. Sivam Motors , ITA No. 88 of 2014 (All). iii. CIT Vs Corrtech Energy Pvt. Ltd .reported (2014) 223 Taxman 130 (Guj) iv. DCIT Vs. JSW, 116 taxmann.com 565 v. Inox Leisure Ltd vs. DCIT, ITA No. 3475/Ahd/2016 (Ahd) vi. CIT Vs. Chettinad Logistics (P) Ltd. reported in [2017] 80 taxmann.com 221 (Mad HC) [SLP dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her party, viz. M/s Apple Index Manufacturing Company Ltd., therefore, the CIT(A) upheld the stamping of the purchases claimed by the assessee to have been made from the said party as bogus by the A.O. 15. The revenue being aggrieved with the order of the CIT(A) to the extent he had vacated the disallowance of the purchases made by the assessee from M/s Forum Traders, had carried the matter in appeal before us. On a perusal of the orders of the lower authorities, we find that the assessee in the course of the proceedings before the CIT(A) had duly substantiated the genuineness and veracity of the purchases that were claimed to have been made from one of the supplier party, viz. M/s Forum Traders. As the assessee had submitted the purchase bills, documents relating to the transportation and receipt of goods, copy of the bank statements evidencing the payments made to the aforementioned party, therefore, we find no infirmity in the view taken by the CIT(A), who had rightly held that the assessee had made genuine purchases from the aforementioned party. Neither is anything discernible from the records nor has been placed on our record which would point out any perversity in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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