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TMI Blog2022 (3) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 for A.Y. 2011-12. 4. The ground No. 1 raised by the assessee challenging the action of CIT(A) in confirming the disallowance made Rule 8D r.w.s. 14A of the Act in the facts and circumstances of the case. 5. Heard both the parties and perused the material available on record. We note that the assessee is a company engaged in the business of generation of power from non-conventional resources including wind power. During the year under consideration, the assessee earned dividend income of Rs. 21,45,22,509/- and claimed the same as exempt u/s. 10(34) of the Act. The assessee on its own disallowed expenses of Rs. 1,18,53,570/- relating to earning of the above said exempt income. The AO asked the assessee to explain why a part of administrative expenses should not be held to be incurred for earning the said exempt income. The assessee explained the expenditure disallowed by the assessee is reasonable and the said disallowance was worked out on the basis of ratio of exempt income to the total income. Most of the investments have been held for the considerable period of time and the expenses disallowed on its own were on sound and reasonable basis. The AO recorded that the method of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in why a part of administrative expenses should not be held to be incurred for earning this exempt income u/s. 14A r.w. Rule 8D. In response to which the assessee filed submission vide letter dated 06-03-2014. The AO extracted the relevant query relating to disallowance u/s. 14A in its order in Para No. 3.2. We note that it was explained the assessee has disallowed Rs. 1,18,53,570/- u/s. 14A which is considered to be reasonable. The disallowance is worked out on the basis of ratio of exempt income to total income. The Company contends that most of the investments have been held for the considerable period of time and the expenses have been worked out on sound and reasonable basis. Considering the same the AO recorded as the method of working out the disallowance on the basis of ratio of exempt income held to total income is not the appropriate method adopted. To do away with subjective elements in the calculation of the disallowance u/s. 14A, Rule 8D has been prescribed under Income Tax Rules, which is objective method in calculation of disallowance under the section 14A of the Income Tax Act, 1961. In the working of disallowance u/s. 14A, it was seen that Clause (iii) of Sub-rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation and by considering each windmill as a separate unit and deduction for the year under consideration was denied. The CIT(A) following earlier year confirmed the disallowance made by the AO. A similar issue came up before the Tribunal in assessee‟s own case for A.Y. 2010-11 in ITA No. 1722/PUN/2016 vide its order dated 30-01-2019 remanded the issue to the file of AO to decide the issue in terms of the ratio laid down by the Hon‟ble High Court of Bombay in the case of CIT Vs. Hercules Hoists Ltd. The relevant portion of the Tribunal‟s order in assessee‟s own case for A.Y. 2010-11 is reproduced here-in-below for ready reference : "8. We have heard the rival contentions and perused the orders of the authorities below on this solitary issue of deduction u/s.80IA. We find that, during the course of assessment proceedings, the AO noticed the claim of deduction u/s.80IA amounting to Rs. 3.18 crore is not allowable if the profits are set off against the brought forward losses of the earlier assessment years. Assessee claimed such deduction for the first time in the A.Y. 2009- 10. Assessee has the option to choose the initial year for 10 consecutive asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not permit the set off of notional losses by the AO for eating away the eligible profits for the year under consideration. Apart from others, the jurisdictional High Court judgment in the case of CIT Vs. Hercules Hoists Ltd. (supra) is one such judgment which is required to be regarded and applied to the facts of the present case. In our considered opinion, this issue required fresh consideration at the level of CIT(A) for applying the binding judgments on the issue. Ld. Counsel for the assessee is also directed to supply necessary judgments on the specific issue of the manner of computation of deduction u/s.80IA(4) of the Act in the second year of the block of assessment years specified in the law. With these directions, we allow Ground No.3 for statistical purposes." 9. In view of the above, following the same, we deem it proper to remand the issue to the file of AO for its fresh consideration and the AO shall pass order in accordance with the direction of this Tribunal in assessee‟s own case for A.Y. 2010-11 as reproduced above. Thus, the ground No. 2 raised by the assessee is allowed for statistical purpose. 10. The ground No. 3 raised by the assessee challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidences. We note that in the absence of such evidences as required the CIT(A) proceeded to confirm the order of AO by holding no separate deduction is allowable from house property income. The ld. AR referred to Page No. 27 of the paper book and pointed at Clause (3) in Page No. 28 of the paper book and submitted that the licensee (assessee) shall pay to the licensor a license fee of Rs. 1,50,00,000/- per month for the use and occupation of the scheduled property and submitted that it is a composite license fee and for calculation of annual letting value the security charges and gardening charges ought to be deduction to arrive at the annual value. We note that the said leave and license agreement dated 30-03-2010 at Page No. 27 of the paper book entered into Kirloskar Oil Engines Limited as licensor and Kirloskar Engines India Limited as licensee which clearly explains in Clause (B) in Page No. 2 of the said agreement that the licensor (Kirloskar Oil Engines Limited) is the owner of the premises more particularly described in Schedule A and Clause (D) describes licensee (Kirloskar Engines India Limited) has approached the licensor in leave and license of scheduled prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the appeal of assessee in ITA No. 787/PUN/2017 would mutatis mutandis apply to ITA No. 1383/PUN/2017, as well. The appeal of assessee is partly allowed for statistical purpose, accordingly. ITA Nos. 267/PUN/2018 (A.Y. 2013-14) 14. Both sides are unanimous in stating that the issue raised in the appeal and the facts in ITA No.267/PUN/2018 are identical to ITA No. 787/PUN/2017 except the variance in amount. Since, the facts in ITA No. 267/PUN/2018 are similar to ITA No. 787/PUN/2017, the findings given by us while deciding the ground Nos. 1 and 3 of the appeal of assessee in ITA No. 787/PUN/2017 would mutatis mutandis apply to ITA No. 267/PUN/2018, as well. The appeal of assessee is dismissed, accordingly. ITA Nos. 268/PUN/2018 (A.Y. 2014-15) 15. Both sides are unanimous in stating that the issue raised in the appeal and the facts in ITA No. 268/PUN/2018 are identical to ITA No. 787/PUN/2017 except the variance in amount. Since, the facts in ITA No. 268/PUN/2018 are similar to ITA No. 787/PUN/2017, the findings given by us while deciding the ground Nos. 1 to 3 of the appeal of assessee in ITA No. 787/PUN/2017 would mutatis mutandis apply to ITA No. 268/PUN/2018, as well. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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