TMI Blog2021 (11) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... we deem it appropriate to restore this issue to the file of the CIT(A) for considering the issue afresh and, thereafter, adjudicate on the issue by passing a speaking order after giving proper opportunity to the assessee. Accordingly, the Department succeeds on ground No.1 and the same stands allowed for statistical purpose. Disallowance U/s 14A r.w.r. 8D - HELD THAT:- AO has simply applied the procedure prescribed in Rule 8D of the Income Tax Rules to compute the amount disallowable u/s 14A of the Act without appreciating that in the present case, no part of interest could have been said to have been incurred in relation to exempt income. In the assessment order, the Assessing Officer has not pointed out even a single expenditure having been incurred by the assessee during the year which was having proximate nexus with the exempt dividend income earned during the year. Assessing Officer, while computing the disallowance u/s 14A, considered the entire investments whereas the disallowance u/s 14A read with Rule 8D is in relation to the income which does not form part of the total income and this can only be done by taking into consideration the investment which has given ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (hereinafter called the Act ) amounting to ₹ 2,73,665/- (iii) disallowance of Club expenses amounting to ₹ 55,226/- and completed the assessment at an income of ₹ 21,15,22,960/-. 2.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) challenging the additions/disallowances and the Ld. CIT(A) was pleased to delete the addition of ₹ 4,69,39,754/- on account of provision for warranty. The Ld. CIT(A) also restricted the disallowance made u/s 14A from ₹ 2,73,665/- to ₹ 1,01,352/-. 2.2 Now, aggrieved, the Department has approached the Tribunal and has challenged the deletion made by the Ld. CIT(A) by raising the following grounds of appeal:- 1. On the facts and in the circumstances of the case the Ld CIT(A) erred in law in deleting the disallowance of Rs. ₹ 4,69,39,754/- made by the Assessing officer on account of warranty provision made by the assessee in the profit and loss account, which is not proved to be computed on any scientific basis on past records. The CIT(A) has not dealt at all the inconsistencies in creation of provision from year to year pointed out in detail in the Assessment order in para 8 of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the estimates made by the assessee were not reliable. The Ld. Sr. DR argued that the estimates made by the assessee for making the impugned provision were neither on a scientific basis nor reliable and, therefore, the Assessing Officer had rightly made the disallowance. 3.1 With reference to the disallowance U/s 14A of the Act, she supported the order of the Assessing Officer. 4.0 Per contra, the Ld. Authorized Representative (AR) placed reliance on the findings of the Ld. CIT(A) and while vehemently supporting them submitted that the Ld. CIT(A) had rightly deleted the additions/disallowances. 5.0 We have heard rival submissions and have also perused the records. As far as the issue of disallowance of provision for warranty is concerned, it is seen that the Assessing Officer has made the addition after observing that the estimates made by the assessee for making the impugned provisions were neither on a scientific basis nor were reliable. The Assessing Officer, while making the disallowance, has placed reliance on the judgment of the Hon ble Apex Court in Rotork Controls India Pvt. Ltd. reported in 314 ITR 62(SC) on the ground that the assessee company did not fulfill th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the submissions of the assessee. The Ld. CIT(A) has simply accepted the submissions provided by the assessee and after duly reproducing the submissions in the impugned order has noted that in view of the submissions made by the assessee and the case laws cited and in view of the facts and circumstances of the case, the impugned disallowance is deleted. However, while making the deletion, the Ld. CIT(A) has not given any reasoning as to why the submissions of the assessee were found to be satisfactory for the purpose of making provision of warranties. The Ld. CIT(A) has not adjudicated the issue before him by examining the various details and documents submitted by the assessee and has simply accepted the contentions of the assessee without returning a finding on fact. In such a situation, we deem it appropriate to restore this issue to the file of the Ld. CIT(A) for considering the issue afresh and, thereafter, adjudicate on the issue by passing a speaking order after giving proper opportunity to the assessee. Accordingly, the Department succeeds on ground No.1 and the same stands allowed for statistical purpose. 5.3 As far as the issue of deletion of deletion u/s 14A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
