9911796707
TMI Blog2022 (1) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income on 26.09.2012 showing loss of Rs. 62,47,36,376/-. Assessment under section 143(3) of the Income Tax Act, 1961 (for short "the Act") was however, completed by order dated 28.03.2016 with the additions by way of disallowance under section 14A of the Act read with Rule 8D of the Income Tax Rules 1962 ("the Rules"), in respect of amortization of lease rent and the dividend amount received from OMIFCO. 4. Aggrieved by such an action of the learned Assessing Officer, assessee preferred appeal before the Ld. CIT(A) and the Ld. CIT(A), by way of impugned order deleted the addition made on account of the dividend income received by the assessee from OMIFCO, Oman and also allowed the consequential demo tax credit relief under the Indo Oman Double Taxation Avoidance Agreement (DTAA), upheld the disallowance of amortization of lease payment to the tune of Rs. 45,75,672/- claimed as business expenditure and granted relief in part in respect of the disallowance under section 14A of the I.T. Act, 1961 read with Rule 8D of the Rules. 5. Assessee preferred appeal in ITA No. 5711/del/2017 challenging the addition of Rs. 45,75,672/- as upheld by the Ld. CIT(A) in respect of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f lease from Noida Authority; that the principle on the issue whether the rent in question is to be allowed as Revenue expenditure or not, is laid down by the Hon'ble High Court in assessee's own case for earlier assessment years and this depends on the facts of each case; that the issue was to be examined in the interest of Justice; that no prejudice would be caused to the Revenue in examining the matter once again; and therefore, the issue was set aside to the file of the learned Assessing Officer for considering the arguments of the assessee de novo in accordance with law. 9. Ld. AR, in all fairness, submits that the same course as adopted for the assessment year 2008-09 may also be followed for this assessment year in restoring the issue to the file of the learned Assessing Officer for considering the facts and circumstances relevant for this particular assessment year and to take a call de novo. Ld. DR reports no objection for sending it back to the learned Assessing Officer. Recording the same, we allow this ground for statistical purpose, by restoring the issue to the file of the learned Assessing Officer to take a view de novo for this particular assessment year af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particularly he observed that inasmuch as the assessee claims to have incurred no expenditure at all to earn the exempt income, it is not necessary to pinpoint the expenditure, and he, therefore, while recording that the contentions of the assessee are not acceptable in view of his discussion made on the various investments made by the assessee and illegal consequences thereof, learned Assessing Officer went on to determine the disallowance under the provisions of section 14A of the Act read with Rule 8D of the Rules. He therefore submits that, merely because the learned Assessing Officer did not advert to various expenditure mentioned in the P & L Account of the assessee to say that he is not satisfied that the assessee incurred no expenditure whatsoever in earning the exempt income. 15. We have gone through the orders of the authorities below in the light of the submissions made on either side. It could be seen from the assessment order that the learned Assessing Officer called upon the assessee to furnish the details of income claimed as exempt and expenditure incurred for earning thereof in order to ascertain the allowability of expenses under section 14A of the Act read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the claim of the assessee that no expenditure was incurred for earning the exempt income, he proceeded to determine the proportionate expenses attributable to the earning of the exempt income. We are, therefore, of the considered opinion that it is not a case of where the reasons are not recorded but is only a case where the dissatisfaction of the learned Assessing Officer inevitably follows. 17. Coming to the alternative plea of the assessee, insofar as the interest component under rule 8D(2)(ii) of the Rules is concerned, the plea taken by the assessee is that the assessee invested their own funds and, therefore, no interest expense could be disallowed. On this aspect no material is produced before us to establish that the assessee invested out of its own funds comprising of share capital and reserves and no interest-bearing funds were invested during the year, or to show that there is no nexus between the deployment of the interest-bearing loans and investments. It is a verifiable fact. We, therefore, direct the learned Assessing Officer to verify whether the own funds of the assessee exceed the investments during the year, and whether the borrowed funds were utilised for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnected with the investment of Kribhco-Muscat. The dividend income is, however, exempt from tax in accordance with Article 8 (bis) (1) of the Company Income Tax Law. The tax exemption on dividend is granted with the objective of promoting economic development within Oman by attracting investments." That order first included dividend income (in the total income determined) and thereafter granted deduction. For later years as well, assessments were made similarly. The ITAT also noticed as follows: "Up to the tax year 2011 dividend has been first included in the total income and thereafter deduction has been granted. The facts mentioned above clearly establish that the Assessee Society is entitled to getting credit for the deemed dividend tax by virtue of the provisions of DTAA read with Section 90 of the Income Tax Act, 1961 together with the clarifications issued by the Sultanate of Oman and the assessment made under the Omani Laws. In view of the above it is respectfully submitted that on merits also Assessee Society is entitled for the tax credit which has been rightly allowed by the Assessing Officer and, therefore, the Ld. PCIT has completely erred in giving directions to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
