TMI Blog2022 (6) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to retain the disallowance offered by the assessee under Section 14A of the Act. Accordingly, ground no. 1 (a) of the appeal is allowed. Claim of TDS credit - HELD THAT:- The assessee has shown a tax deduction at source made by tax deductor which has been paid to the credit of Central Government by the various parties. However, assessee has submitted the list of 16 such parties where the amount of income has been offered by the assessee as income however, consequent TDS was not granted as credit to the assessee. The reason being that it did not appear in form no. 26AS of the assessee. If the assessee proves that such tax has been deducted by the parties but it has not been reflected in the form no. 26AS, this issue has been considered by CBDT in office memo dated 11th March 2016. In paragraph no. 3, the CBDT has directed the officers not to enforce demand arising in such circumstances. Further, merely because the tax deductor has not filed the TDS return there is enough mechanism available to catch hold of such defaulting tax deductor. No doubt, it is the duty of the assessee to show that tax has been deducted. This issue is squarely covered in favour of the assessee by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts that own fund of the Appellant are far in excess of investments of the Appellant. (d) The CIT(A) erred in making the enhancement of disallowance made u/s 14A of the Act by applying the amended Rule 8D of the Rules amended vide notification dated 02/06/2016 without appreciating that the amended rule is applicable from the assessment year 2017-18 onwards and not for the subjected assessment year. 2. The CIT (A) erred in confirming the action of the AO in not allowing the TDS credit of Rs. 2,93,74,400/- tabulated below: Particulars Amount Income offered and TDS claimed by the Appellant in subjected year whereas TDS has been deposited by the payer in next year 71,50,215 TDS deduced by the payer but not deposited to the credit of Central Government 54,59,764 Foreign Tax Credit 1,43,60,662 The Appellant submits that it has offered the related income from which TDS has been deducted in the year under consideration; hence, it shall be allowed to claim the TDS credit in the subjected year. The Appellant also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts should be considered for working out disallowance. Therefore, he rejected contention of assessee that only exempt income yielding assets should be considered for disallowance. He therefore upheld the disallowance of ₹7,31,84,746/-. The learned CIT (A) further noted that the learned Assessing Officer has failed to consider the amount disallowable under Rule 8D(2) of the Rules in the final computation of disallowance and therefore, he enhanced the disallowance by ₹28,12,000/- to be included. He further analyzed the annual accounts of the assessee and held that assessee has used mixed funds. He also invoked the new amended Rule where 1% of the annual average investment is required to be disallowed. Therefore, he computed 1% of such amount at ₹14,87,81,629/- and enhanced the disallowance by ₹7,31,84,745/-. He held that new amended rules of computation under Rule 8D of the Rules will apply as assessing officer has passed an order on 22nd January 2020 after amendment. Therefore, aggrieved with that order assessee is in appeal before us. 07. The learned Authorized Representative submitted that:- (i) The learned Assessing Officer has failed to record satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative vehemently supported the order of the learned Assessing Officer. He also supported the order of the learned CIT (A) vide Para no. 9.2. He submitted that the learned CIT (A) extracting Para 5 of the assessment order has categorically held that there is a satisfaction recorded with respect to disallowance computed by the assessee. On the issue of quantum of disallowance, he supported the orders of the lower authorities. 09. We have carefully considered the rival contentions and perused the orders of the lower authorities. The ground no. 1 is with respect to the disallowance confirmed and enhanced by the learned CIT (A) under Section 14A read with rule 8D of the Rules. Admittedly, the assessee has earned exempt income of ₹80,75,88,086/-. The assessee has made suo motto disallowance under Section 14A of the Act of ₹12,06,069/-. As per Para no. 5, the learned Assessing Officer has noted that assessee was specifically asked vide notice dated 5th November 2018 that why the disallowance under Section 14A of the Act should not be made as per Rule 8D of the Rules. Assessee submitted reply on 2nd January 2019, stating that no further disallowance was warranted. The wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D of the Rules. Thus, recording of the satisfaction about the incorrectness of the claim of the assessee is Sine qua non before and making in disallowance under Rule 8D of the Rules. 011. Section 14A (2) (3) provides as under :- [(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 of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act :] 012. The Hon'ble Bombay High Court in PCIT vs. Bombay Stock Exchange Limited (supra) in Para no. 11 it is held that non satisfaction with the disallowance offered by the assessee has to be arrived at on the basis of accounts submitted by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the AO. 014. So is also held by Hon'ble Bombay High Court in case of PCIT Vs. Bajaj finance Limited 309 CTR 28 (Bom). In Para no. 9 Hon'ble High Court deleted the disallowance under Rule 8D of the Rules for the reason that the assessee offered voluntarily and made detail representation with no other expenditure is incurred by assessee, the learned Assessing Officer rejected the explanation of the assessee but merely proceeded to make disallowance by invoking Rule 8D of the rules. 015. Undoubtedly, similar view has been taken in assessee s own case for A.Y. 2010-11. 016. Circular No 14/2006 dated 28/12/2006 also provides that :- 11.2 In view of the above, a new sub-section (2) has been inser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oto worked adhoc disallowance u/s 14A amounting to Rs. 12,06,069/ However, as stated above, the disallowance is required to be calculated as per Rule 8D. Following the ruling of the Apex court in the case of Maxopp Investments [(2018) 402. ITR 0640 (SC) the disallowance in the instant case is computed as under. Rule 8D Nil Rule 8D(ii) ₹28,63,486/- Investments as on 31/03/2015 1444,55,14,263 Investments as on 31/03/2016 1531,08,11,698 Average investments 1487,81,62,980 Average total assets 4543,56,61,827 Interest 85,88,016X1487,81,62,980/4543,56,61,827= Rule 8D(iii) 0.5% of 14878162980 =Rs.7,43,90,815/- Disallowance u/s 14A as per rule 8D = 7,43,90,815/- Less: Adhoc Disallowance already made= 12,06,069/- Total disallowance under Section 14A=7,31,84,746/- 018. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63/-, the learned Assessing Officer restricted at the time of assessment order it to ₹48,90,44,563/-. Thus, there was a short credit of ₹2,93,74,400/-. The matter was agitated before the learned CIT (A), the TDS credit was rejected. He noted that TDS paid to the credit of Central Government in next year would be reflected in form no. 26AS for next year and therefore, a sum of ₹71,50,215/- out of the above credit can be granted to the assessee only in the year in which it is reflected in form no. 26AS. Therefore, he confirmed the non granting of TDS of ₹71,50,215/-. With respect to sum of ₹54,59,764/- CIT (A) noted that the claim of the assessee with respect to the TDS deducted cannot be entertained as deductors have not deposited the above sum. He therefore, stated that assessee should approached its deductors to upload revised TDS returns and then only the assessee can be granted credit for this. He also confirmed the action of the learned Assessing Officer in not granting credit for ₹54,59,764/-. He also noted that assessee has claimed Foreign Tax Credit of ₹1,43,60,662/-. He noted that no details are available and therefore, no such tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Accordingly, we direct the learned Assessing Officer to grant assessee the credit of ₹32,04,902/-. Another sum of ₹39,45,315/-, where the TDS is shown in form no. 26AS for A.Y. 2015-16 however, the assessee offered the income in A.Y. 2016-17. Therefore, the credit of the above TDS should also be granted to the assessee in A.Y. 2016-17. Naturally, it was stated before us that assessee did not claim the credit for such sum in A.Y. 2015-16. Therefore, AO is directed to grant credit of sum of ₹39,45,315/-. Another is a foreign tax credit of ₹1,43,60,662/- for which assessee submitted the detail working. However, the learned CIT (A) stated that no information is provided by the assessee. Assessee has given such working at page no. 65 to 66 of the Paper Book. Therefore, we set aside this issue back to the file of the learned Assessing Officer with a direction to grant credit of foreign tax amounting to ₹1,43,66,662/- after verification. The assessee has shown a tax deduction at source made by tax deductor amounting to ₹54,59,764/-, which has been paid to the credit of Central Government by the various parties. However, assessee has submitted the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules as against only those investment on which Appellant has actually earned the exempt income and excluding the investment on which no exempt income is earned during subjected year. 2. The CIT(A) erred in confirming the action of the AO in not allowing credit for (a) TDS deducted and paid in subsequent years by the deductor and (b) TDS deducted but not paid to the credit of Central Government by the deductor. 3. The CIT(A) erred in not allowing deduction of education cess under section 28/37 of the Act. 025. The assessee filed return of income on 29th November, 2017 at ₹52,92,86,530/-. It was revised on 23rd March 2018 at ₹53,3841,210/-. It was further revised on 28th March 2019 at ₹40,60,90,400/-. The assessee has earned a dividend income of ₹101,01,54,794/- and has offered suo motto disallowance under Section 14A of the Act of ₹8,78,190/-. The learned Assessing Officer similar to the facts for A.Y. 2016-17 invoked the provisions of Rule 8D of the Rules and made a disallowance of ₹15,78,402/-. Thus, the net addition / disallowance of ₹15,70,212/- was made and assessment order under Section 143(3) of the Act was passed on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee against the order passed by the National Faceless Appeal Centre, Delhi (NFAC) [the learned CIT(A)] for A.Y. 2017 18 on 12th November, 2021 raising following grounds of appeal: 1. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as 'CIT(A)' for the sake of brevity] erred in dismissing the appeal filed by Edelweiss Securities Limited [hereinafter referred as Appellant' for the sake of brevity] against the assessment order dated 23 December 2019 passed by the Assistant Commissioner of Income Tax, Circle 4(1)(1), Mumbai (hereinafter referred to as 'the AO' for the sake of brevity) under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for the sake of brevity) by holding that the Appellant had opted to settle the dispute by filing an application under the Direct Tax Vivad se Vishwas Act, 2020. The Appellant submits that it had not filed any application under the Direct Tax Vivad se Vishwas Act, 2020 in respect of its appeal filed challenging the disallowances made by the AO in the assessment order passed under section 143(3) of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as never filed any application under the Direct Tax Vivad se Vishwas Scheme and therefore, the appeal filed by the assessee dismissed by the NFAC is incorrect. Even otherwise, assessee submitted that addition made by the learned Assessing Officer of disallowance under Section 14A of the Act is devoid of any merit. The main reason for saying so is that assessee has submitted that it has earned an exempt dividend income of ₹ 7,87,624/ and against which it has offered disallowance under Section 14A of the Act of ₹ 12,81,156/ . Therefore, any further disallowance is unwarranted, as the disallowance cannot exceed the exempt income earned by the assessee. Even otherwise, it is submitted that the learned Assessing Officer without recording any satisfaction in terms of Section 14A of the Act that how the disallowance offered by the assessee is incorrect, the learned Assessing Officer has proceeded to compute disallowance under Rule 8D of the Rules. He submitted that this action of the learned Assessing Officer is contrary to the decision of Hon'ble Supreme Court in case of Maxopp Investment Limited as well as the decision of Hon'ble Jurisdictional High Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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