TMI Blog2022 (11) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bench of Delhi Tribunal in case of Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI] AO can only consider the amount of disallowance made by the assessee under section 14A qua the exempt income earned during the years under consideration under section 115JB of the Act. In other words disallowance made under section 14A under the normal provisions of the Act can only be considered for computing book profit under section 115JB of the Act. This issue was also decided in favour of the assessee in its own case in A.Y. 2012-13, 2013-14 2014-15 by the Tribunal. So the AO is to verify the facts if the disallowance made by the assessee under section 14A under the normal provisions of the Act is considered while computing the book profit under section 115JB of the Act. However, the disallowance made by the AO by invoking the provisions contained under section 14A read with rule 8D while computing the book profit under section 115JB of the Act is not sustainable in the eyes of law, hence ordered to be deleted. Short TDS credit - case of the assessee that because of delay in deposit/non deposit of the TDS by the deductor the assessee failed to take the benefit of TDS as the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance as per rule 8D(2) of the Rules as against only those investment on which Appellant has actually earned the exempt income. (iii) The CIT(A) erred in upholding the action of AO in making the disallowance u/s 14A of the Act while computing the book profit u/s 115JB of the Act. 2. The CIT(A) erred in not adjudicating the ground pertaining to the TDS credit as to when the income has been offered in the subjected year, TDS thereon has been claimed in the subjected year; however, the TDS is reflected in Form 26AS of the immediate next year then the Appellant shall be allowed the TDS credit in the year in which income is offered to tax (i.e. subjected year). The Appellant craves leave to add, amend, modify, substitute the above grounds of appeal. 3. Briefly stated facts necessary for adjudication of the issues at hand are : assessee a public limited company is into the business of advisory transactional services and its books of accounts are audited under section 44AB of the Income Tax Act, 1961 (for short the Act ) and under the Company Act, 2013. During the scrutiny proceedings the Assessing Officer (AO) noticed that the assessee has received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Services Lid. Vs DCIT in ITA No. 1283/Mum/2021, ITO vs. Centrum Capital Limited in ITA No.497/Mum/2019 and ECL Finance Limited vs. ACIT in ITA No.899/M/2018. 6. However, on the other hand, the Ld. D.R. for the Revenue in order to repel the argument addressed by the Ld. A.R. for the assessee contended that the disallowance has been made by the AO after recording valid satisfaction in accordance with the provisions contained under section 14A rule 8D of the Act and relied upon the order passed by the Ld. CIT(A). 7. In all the aforesaid appeals we have perused the dissatisfaction recorded by the AO qua the expenditure/no expenditure claimed by the assessee which is identical in all the appeals. 8. For ready perusal dissatisfaction recorded by the AO while rejecting the expenditure claimed to have been incurred by the assessee in order to make disallowances under section 14A read with rule 8D (para 4.3 from ITA No.2467/M/2022 is taken) are as under: 4.3 The case records and the replies submitted by the assessee have been perused. It is a fact that the assessee cannot earn Dividend income to the tune of Rs. 85,08,38,041/- without any systematic management of its in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of employee cost Insurance 2,35,76,740 78,292 % of employee cost Postage and Courier 14,11,848 4,688 % of employee cost Printing and Stationery 89,73,493 29,799 % of employee cost Repairs and Maintenance 14,48,404 4,810 % of employee cost Travelling and Conveyance 7,16,63,613 2,37,976 % of employee cost Rent 8,10,60,681 2,69,181 % of employee cost Total 37,00,514 10. Perusal of the working of suo-moto disallowance made by the assessee under section 14A goes to prove that every minute details have been brought on record by the assessee as to how he has attributed the proportionate expenses towards employee s cost, communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile upholding the view of the Delhi High Court has held that the Assessing Officer needs to record his non-satisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise. 13. In the present facts, the Tribunal has correctly come to the conclusion that non-satisfaction as recorded by the Assessing Officer for rejecting the sou motu disallowances claimed by the assessee is not done as required under section 14A(2) of the Act. On facts, the view taken by the Tribunal is a possible view and calls for no interference. 12. Hon ble Supreme Court has also held in Maxopp Investment Ltd. vs. CIT 301 CTR 489 that only after recording satisfaction under section 14A(2) the provisions contained under rule 8D of the Rules for apportionment of expenses can be applied by returning following findings: 41. Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This issue was also decided in favour of the assessee in its own case in A.Y. 2012-13, 2013-14 2014-15 by the Tribunal. So the AO is to verify the facts if the disallowance made by the assessee under section 14A under the normal provisions of the Act is considered while computing the book profit under section 115JB of the Act. However, the disallowance made by the AO by invoking the provisions contained under section 14A read with rule 8D while computing the book profit under section 115JB of the Act is not sustainable in the eyes of law, hence ordered to be deleted. So Ground No.1(iii), 1(iv), 1(iii) in ITA No.2467, 2468 2478/M/2022 for A.Y. 2018-19, 2020-21 2018-19 respectively are decided in favour of the assessee. Ground No.2 of ITA No.2467 for A.Y. 2018-19 17. The assessee has specifically raised ground No.4 before the Ld. CIT(A) that the AO erred in allowing the TDS credit of Rs.23,02,03,759/- only as against revised TDS credit claim of Rs.25,30,24,296/- by the Appellant during the course of assessment proceedings resulting into short TDS credit of Rs.2,28,20,537/-, but has not been decided by the Ld. CIT(A). The Ld. A.R. for the assessee contended that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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