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TMI Blog2019 (5) TMI 1960X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance u/s. 14A of the Income Tax Act, 1961 voluntarily made by the assessee at the time of filing of return of income based on observation of auditors, who, themselves on close perusal of the books and investments of the assessee were convinced that disallowance u/s. 14A is called for the tune of Rs. 3.55 crore? 3. Whether upon facts and circumstances of the case, the Ld. CIT(A) was justified in law and on facts in allowing the voluntary disallowance u/s. 14A of the Income Tax Act, 1961 made by the assessee at the time of filing of return of income, ignoring the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd., Vs. CIT [2006; 284 ITR 323], wherein it was categorically held that the AO cannot entertain claim of deduction otherwise than by filing of the revised return by the appellant? 4. Whether upon facts and circumstances of the case, the Ld. CIT(A) was justified in law and on facts in allowing relief on account of capitalization of interest as per proviso to section 36(l)(iii) of the Income Tax Act, 1961 on investment in shares of domestic companies and capital advance for purchase of land and other advances despite the fact that Share Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mixed use of borrowed funds, apportionment of interest expenditure is mandated as per the provisions of Rule 8D, which stands substituted by the IT (14th Amdt.) Rules, 2016, w.e.f. 02/06/2016. The said Rule provides that the expenditure in relation to income which does not form part of the total income shall be the aggregate following amounts, namely: (i) the amount of expenditure directly relating to income which does not form part of total income; and (ii) an amount equal to one percent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income, provided that the amount referred to in clause (i) & clause (ii) shall not exceed the total expenditure claimed by the assessee. This amendment to the mechanism of calculating disallowance under the provisions of section 14A, particularly the merger of the erstwhile Rule 8D (2) (ii) & (iii) into Rule 8D (ii) specifying the proportionate disallowance @ 1%, is undoubtedly, meant for taking care of a situation where there is a mixed use of borrowed funds and non-interest-bearing funds and consequently apportionment of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.3,35,66,806/- as disallowance under the provisions of section 14A. However, it was claimed before the AO that such voluntary disallowance was inadvertently made and that there was no requirement of the said disallowance in view of the judicial precedents which are unanimous in holding that if investments have been made out of own and non-interest-bearing funds, disallowance would not be necessary. The AO refused to entertain the said plea of the assessee at the assessment stage by relying upon the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT [2006; 284 ITR 323] wherein it was categorically held that the AO cannot entertain claim of deduction otherwise than by filing of the revised return by the assessee. In the appellate proceedings, the assessee placed reliance on the decision of the Hon'ble Supreme Court in the case of Jute Corporation of India Limited [1991; 187 ITR 688] in which it has been held that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. Support for this proposition was also sought from the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961. There shall be no order as to costs. Further in the case of Prithvi Brokers & Share Holders 349 ITR 336 the Hon'ble Bombay High Court held that : It is well settled that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. That they may choose not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The crux of the judgments referred above is that a) The appellate authorities are entitled to exercise their jurisdiction to consider the additional claim. b) The assessee cannot be made to suffer inadvertent mistake made at the time of filing of the return i.e; in case the assessee pays the tax which is not required to pay as per the Act, he can always reclaim the amount. Owing to the above interpretation, we hold that the Ld. CIT(A) acted in a judicious manner and hence we decline to interfere with the order of the Ld.CIT(A) on these issues. 6. Regarding issue no.(3)above- the applicability of amendment to Section 14A from 02/06/2016,we are the view that due to the fact that there is a specific date mentioned regarding the applicability of the amended provisions hence the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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