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TMI Blog2021 (12) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Pr. Commissioner of Income Tax Vs. Reliance Capital Asset Management Ltd. reported as 86 taxmann.com 200. 4. The CIT(A) erred in allowing the claim of the assessee u/s.80IC on income earned from sale of scarp when it was not derived from the activities of the eligible business. 5. The CIT(A) erred in allowing the claim of the assessee u/s.80IB/80IC on sale of scrap, relying on the decision of the Hon'ble Madras High Court in the case of M/s. Fenner India Ltd. (241 ITR 893) which has been rendered without taking into consideration various decisions of Hon'ble Apex Court on this issue like CIT Vs. Sterling food (1999) 237 ITR 579 when it was not derived from the activities of the eligible business. 6. The CIT(A) erred in ignoring the decision of Hon'ble Supreme Court in the case of Liberty India Vs. CIT (2009) 317 ITR 218 (SC) wherein the words derived from as used in Sec.80IB of the Income Tax Act, 1961. 7. For these and such other reasons as may be urged at the time of hearing the order of the CIT(A) may be vacated and that of the Assessing Officer be restored. 8. The Appellant craves, leave to add, amend, alter or delete any of the above grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable. In this connection, we also invite your attention to the orders of the Hon'ble ITAT for the AY. 2003-04, AY 2004-05, AY 2005-06, AY 2006-07, AY 2007-08, AY 2008-09, AY 2009-10, AY 2010-11, AY 2011-12 wherein the Hon'ble ITAT deleted the disallowance. In these years also the appellant had suo-motu disallowed the amounts under section 14A. Further we invite your attention to the following case laws: * CIT Vs. Ultra Tech Cement Ltd. (2018) 407 ITR 500 ( Bom.) (HC) * Godrej and Boyce Manufacturing Co. Ltd. Vs. DCIT, 328 ITR 81 * H.T Media Ltd. Vs. PCIT (Del.) (HC) * Pr. CIT Vs. Reliance Capital Asset Management Ltd. (Bom.) (HC) It is therefore prayed that the addition made may kindly be deleted and this ground of appeal be allowed." 6. The Ld. CIT(Appeals) after considering the submissions of the assessee and the assessment order has held and observed as follows: "FINDINGS : 2.3. I have carefully considered the facts of the case and submission filed by the appellant. It is seen that this issue is covered in favour of the appellant in its own case by honourable ITAT Pune's order in ITA Nos.327 to 330/PUN/2016 dated 28.11.2017 for AY 2008-09 to AY 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer made disallowance u/s. 14A by invoking the provisions of Rule 8D(2)(ii) and 8D(2)(iii). In first appeal the Commissioner of Income Tax (Appeals) deleted disallowance made under the provisions of Rule 8D(2)(ii) and confirmed disallowance under Rule 8D(2)(iii). The assessee in appeal before Tribunal has assailed the Assessing Officer's action of invoking the provisions of Rule 8D without recording satisfaction. 7. Before proceedings to decide this issue it would be relevant to first refer the relevant provisions of section 14A of the Act. "Expenditure incurred in relation to income not includible in total income. 14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions reproduced in the asst order. It appears from the asst order that before the AO the appellant assessee had claimed that no expenditure was incurred to earn the dividend income. The AO has discussed the issue of applicability of Rule 8D in great detail in his order. Thus the satisfaction of the AO regarding applying Rule 8D is there." To support his reasoning, the Commissioner of Income Tax (Appeals) placed reliance on the decision of Pune Bench of Tribunal in the 7 ITA Nos. 327 to 330/PUN/2016, A.Ys. 2008-09 to 2011-12 case of Lap Finance & Consultancy Pvt. Ltd. in ITA Nos. 1522 to 1525/PN/2013 decided on 06-11-2015. 10. We find that the Commissioner of Income Tax (Appeals) has erred in coming to conclusion that the Assessing Officer has recorded satisfaction regarding applying Rule 8D. We further observe that reliance placed by the Commissioner of Income Tax (Appeals) on the decision of Co-ordinate Bench of the Tribunal in the case of Lap Finance & Consultancy Pvt. Ltd. (supra) is misplaced, as the facts of aforesaid case are distinguishable. In the said case, the assessee had not made any self disallowance of expenditure against exempt income earned. The assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation of disallowance done by the respondent-assessee. Thus, there is no reason to discard the disallowance done by the respondent-assessee." 13. The Hon'ble Jurisdictional High Court in a recent decision in the case of Pr. Commissioner of Income Tax Vs. Reliance Capital Asset Management Ltd. reported as 86 taxmann.com 200 has held that where Assessing Officer has not commented upon the correctness or otherwise of the assessee's working of expenditure, formula prescribed in Rule 8D(2)(iii) could not have been applied to work out disallowance u/s. 14A. 14. Thus, in view of the facts of the case and the ratio laid down by Hon'ble Jurisdictional High Court, we are of considered view that the Assessing Officer has made disallowance u/s. 14 r.w. Rule 8D in violation of the provisions of sub-section (2) to section 14A. Hence, the disallowance made by Assessing Officer is not sustainable. Accordingly, ground Nos. 2 9 ITA Nos. 327 to 330/PUN/2016, A.Ys. 2008-09 to 2011-12 and 3 raised in the appeal by the assessee in all the assessment years under appeal are allowed. 15. The ld. AR of the assessee has stated at the Bar that he is not pressing ground No. 1 raised in the appeals fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: "6. We have heard the rival contentions and perused the record. Briefly in the facts of the case the assessee had claimed deduction u/s. 80IB of the Act for Goa Unit in respect of sale of scrap. We find that similar issue of claim of deduction u/s. 80IB of the Act on sale of scrap generated out of manufacturing process was treated as business income and the deduction u/s. 80IB of the Act was allowed. The Tribunal in ITA Nos.564 & 565/PN/2014 relating to assessment years 2005-06 & 2007-08 in the appeal filed by the Revenue, with lead order in ITA No.360/PN/2014 relating to assessment year 2007-08 in the appeal filed by the assessee, vide order dated 31.08.2015 had held as under : "6. We have heard the submissions made by the representatives of both the sides and have examined the orders of the authorities below. We have also perused the orders of Co-ordinate Bench of Tribunal in ITA No. 105/PN/2007 for assessment year 2002-03 decided on15-07-2011 and ITA No. 1975/PN/2013 for assessment year 2004-05 decided on 29-09-2014. We find that the Tribunal has accepted the claim of assessee by placing reliance on the decision of Hon'ble Madras High Court in the case of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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