TMI Blog2015 (1) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. In the present case the basic facts necessary for adjudication of additional ground are already on record and at best the AO is to verify those facts and apply the correct provisions of DTAA to the facts. We, therefore, admit the ground raised by the assessee and restore the matter to the file of the AO for allowing the credit of taxes paid in Singapore on the dividend income as per the provisions of DTAA in accordance with law. Additional ground raised by the assessee is admitted and allowed for statistical purposes. Disallowance u/s 14A r.w.r. 8D - Necessity of recording AO's satisfaction regarding expenditure being incurred for the earning of exempt income on reasonable basis - HELD THAT:- AO as well as Ld. CIT(A), both have confirmed the disallowance applying Rule 8D. Therefore, the order of Ld. CIT(A) cannot be sustained. The issue, therefore, is restored back to the file of the AO for deciding the issue denovo in accordance with the decision in the case of Maxopp Investment Ltd. [ 2011 (11) TMI 267 - DELHI HIGH COURT] and also after taking into consideration the decision in its own case for asstt. Year 1993-94. Addition on account of non crediting of sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER S.V. MEHROTRA, ACCOUNTANT MEMBER The revenue and assessee are in cross appeals against the common order of Ld. CIT (A) dated 5th August, 2010 passed for the asstt. Years 2006-07, 2007-08. Since the common issues are involved in these appeals we heard them together and deem it appropriate to dispose off them by this common order. ITA No. 4265/Del/2010 and ITA No. 4495/Del/2010 Asstt. Year 2006-07 2. Brief facts of the case are that the assessee company is a public limited company and deals with various metals/minerals, non ferrous metals, fertilizers, agro products, general trading and other commodities in bulk. Its main activities are import and export of various bulk commodities such as minerals , iron, ore, gold, agro, fertilizers, coal and Hydrocarbons, non ferrous metals. The assesese filed its return of income declaring total income of Rs. 1,56,41,84,500/- which was revised to Rs. 1,52,83,87,626/-. The assessment was completed at total income of Rs. 1,58,39,19,146/- after making disallowance u/s 14A, Rs. 2,86,93,520/- , disallowance of licence fee Rs. 5 lacs, Addition on account of duty entitlement passbook credit Rs. 2,63,38,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (1992) 193 ITR 6241 (Ker.) wherein it has been held by the Kerala High Court that in the event relevant facts are not on record, the Tribunal can always remand the matter to the file of the Assessing Officer to investigate and determine the facts. It is submitted that the Tribunal ought to have remanded the matter to the file of the Assessing Officer rather than decline to permit the assessee to raise the additional ground. 10. Following the view expressed by the Kerala High Court, with which we have no reason to disagree, particularly since it relies upon a decision of the Madras High Court in CED v. P Brahadeeswaran (1987) 163 ITR 6802, which in turn relies upon three decisions of the Supreme Court in CIT vs. McMilan and Co. (1958) 33 ITR 182: Hukumchand Mills Ltd. vs. CIT (1967) 63 ITR 232 and CIT vs. Mahalakshmi Textile Mills Ltd. (1967) 66 ITR 710, we answer the question of law in the affirmative, in favour of the assessee and against the revenue and remand the matter to the file of the Assessing Officer to determine the claim of the assessee on merits. 5. Ld. Counsel also relied on the decision of Hon ble Kerala High Court in the case of CIT vs. Kerala State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor before Ld. CIT(A). Ld. CIT (DR) submitted that there is no date on the petition for admission of additional evidence. He further pointed out that Ld. CIT(DR) had written a letter to AO on 20th October, 2011 seeking a report on this petition and, therefore, it is clear that the petition for admission of additional ground had been filed after about one year of the filing of appeal. Ld. CIT(DR) referred to section 253(4) and pointed out that only 30 days time has been allowed for fling a cross objection after the receipt of appeal memo. Ld. CIT(DR) further referred to the decision of Hon ble P H High Court in the case of CIT vs. SA Builders 93 DTR 256 and pointed out that scope of section 254 has been considered in para 12 of this decision. He pointed out that in the present case factual foundation has not been laid down before the AO and relevant facts are not on record. Therefore, this ground should not be admitted. Ld. Counsel in the rejoinder submitted that there is no malafide in filing the ground . Ld. Counsel referred to paper book page No. 17 wherein the details of investments made in subsidiary company are contained to demonstrate that assessee was holding 1461502 equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That the Ld. CIT(A) erred on facts and in law in confirming the disallowance the Rs. 1,01,98,457/- completely ignoring his predecessor s order dated 19.3.2009 for asstt. Year 1995-96 in Appeal No. 207/-4-05 in which such disallowance was restricted to Rs. 1 lakh only. Grounds raised by Department reads as under :- 2. On the facts and in the circumstances of the case and in law, the Learned CIT(Appeals), has erred in restricting the addition of Rs. 1,01,98,458/- as against Rs. 2,86,93,520/- made by the AO u/s 14A of the I.T. Act. 2.1 The Ld. CIT(A) ignored the fact that the disallowance u/s 14A was correctly made by the AO in accordance with the provisions of Rules 1962. 3. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in deleting the addition of Rs. 2,63,38,000/- made by the AO on account of non crediting of sum received as DEPB credit. 3.1 The Ld. CIT(A) ignored the fact that the addition has been correctly made by the AO in accordance with provisions of section 28(iii)(d) of the I.T. Act. 4. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Tribunal in assessee s own case for asstt. year 1993-94 to submit that Tribunal has considered this issue with reference to section 80M and, therefore, no disallowance is called for in regard to interest expenditure. Be that as it may, AO as well as Ld. CIT(A), both have confirmed the disallowance applying Rule 8D. Therefore, the order of Ld. CIT(A) cannot be sustained. The issue, therefore, is restored back to the file of the AO for deciding the issue denovo in accordance with the decision of Hon ble Delhi High Court in the case of Maxopp Investment Ltd. vs. CIT (supra) and also after taking into consideration the decision in its own case for asstt. Year 1993-94. 11. In the result this ground of assessee as well as grounds raised by department on this issue are allowed for statistical purposes. Ground No. 3 of Departmental Appeal reads as under :- 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs. 2,63,38,000/- made by the AO on account of non crediting of sum received as DEPB credit. 12. Brief facts apropos ground No. 3 are that AO noticed that during the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the body of order talks of addition of Rs. 2,73,56,574/- whereas in computation makes addition of Rs. 2,63,38,000/-. Both these additions have different import. Therefore, he needs to clarify the correct amount which he intends to add. We further notice that assesee has returned 3% profit in the year in which the DEPB is sold/auctioned and 97% of the profit is transferred to NINL as per agreement. This was rightly done in view of overriding title in favour of NINL over proceeds of sale/auction of DEPB. 15. With these observations the matter is restored back to the file of the AO for reconsideration of this issue. 16. Facts apropos Ground No. 4 are that assessee had claimed an amount of Rs. 5 lacs as expenditure towards annual fees of license issued by Central Electricity Regulatory Commission (CERC) for the period 1.4.2005 to 31.3. 2006. The AO required the assessee to explain as to why the said expenses be not disallowed. The assessee replied as under :- the submissions of the assessee on this issue has been considered and since the license expenditure incurred by the assessee is actually an expenditure of a capital in nature and moreover, it relates to an activity whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,92,58,404/- on account of reversal of income tax liability. Ld. CIT(A) noticed that assessee had made a claim for deduction of RS. 19258404/- being waiver of penalty u/s 273(2)(a) pertaining to asstt. year 1989-90 and asstt. year 2001-02. The assessee s case was that penalty in question was disallowed and added back to the computation for asstt. year 2001-02 and 2002-03 at the time of imposition of penalty for asstt. years 1988-89 and 2001-02. The penalty for the aforesaid asstt. years were deleted by the ITAT in terms of order dated 14th December, 2004 and, therefore, the total amount of Rs. 1,92,58,404/- was credited to the profit and loss account for financial year 2005-06 as miscellaneous receipts . Ld. CIT(A) noted that inadvertently the assessee company did not claim it as deduction in the computation of total income for the asstt. year under consideration. Ld. CTI(A), after considering the assessee s submissions and taking note of the decision of Hon ble Supreme Court in the case of M/s. Goetze (India) Ltd. vs. CIT wherein it was, interalia , observed that the said decision did not impinge on the power of Tribunal in entertaining the claim for deduction advanced be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act, 1961. 2.1 Without prejudice that no disallowance u/s 14A is called for, the disallowance at 10% of the exempt income as sustained by the ld. CIT(A) is highly excessive, unjust and unreasonable. ITA No. 4187/Del/2011 Asstt. Year 2007-08 2. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has erred in restricting the addition to 10% of the exempted income disclosed by the assessee as against the addition of Rs. 2,83,19,079/- made by the AO u/s 14A of the I.T. Act. 2.1 The Ld. CIT(A) ignored the fact that the disallowance u/s 14A was correctly made by the AO in accordance with the provisions of Rule 8D of IT Rules 1962 and given the fact that on date of making assessment when the proceedings formula of computing disallowance is there in the form of rule 8D the action of the AO was justified in relying on Rule 8D for computing disallowance. 3. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has erred in deleting the addition of Rs. 88,90,000/- made by the AO on account of crediting of sum received as DEPB credit. 24. This issue is identical to groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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