9911796707
TMI Blog2023 (12) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... sented disallowance offered by way of direct expenditure u/s 14A read with Rule 8D(2)(i) and thereby wrongly computed further disallowance of Rs. 13,32,000/- in terms of Rule 8D(2)(ii). 2. For that on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in restricting the disallowance u/s 14A of the Act to Rs. 8,93,606/- and instead he ought to have directed the AO to delete the entire disallowance of Rs. 23,12,615/- made u/s 14A of the Act by the NFAC. 3. For that on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was unjustified on facts and in law in confirming the disallowance of weighted component of deduction claimed u/s 35(2AB) of the Act to the extent of Rs. 8,90,72,303/-. 4. For that on the facts and in the circumstances of the case and in law, the appellant having furnished the requisite Form 3CM and 3CLA in support of the expenditure incurred at the in-house R& D facility, Ld. CIT(A) ought to have directed the AO/NFAC to also allow the weighted component of the deduction claimed u/s 35(2AB) of the Act i.e. Rs. 8,90,72,303/-. 5. For that on the facts and in the circumstances of the case and in law and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 12. For that the appellant craves leave to submit additional grounds and/or amend or alter the grounds already taken either at the time of hearing of the appeal or before." 3. Ground Nos. 1 & 2 of the appeal are against the disallowance of Rs. 8,93,606/- confirmed by the Ld. CIT(A). Brief facts of the case, as noted, are that, the appellant had originally disallowed sum of Rs. 14,19,009/- under Section 14A of the Act in the return of income. The AO however had mistakenly inferred the suo moto disallowance made by the appellant to be Rs. 9,80,615/- instead of Rs. 14,19,009/-, which it held to be in the nature of 'Direct Expenses' disallowed under Rule 8D(2)(i) of the Income tax Rules, 1962 ('the Rules'). The AO also computed further disallowance in terms of Rule 8D(2)(ii) at Rs. 13,32,000/-. Accordingly, it is noted that the AO disallowed further sum of Rs. 13,32,000/- [9,80,615 + 13,32,000 - 9,80,615]. Aggrieved by this action of the AO, the appellant preferred an appeal before the Ld. CIT(A). 4. Before the Ld. CIT(A), the appellant explained that it had originally disallowed sum of Rs. 14,19,009/- and not Rs. 9,80,615/-. It was further brought to the notice of the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowable u/s 14A read with Rule 8D for the relevant year was Rs. 14,19,009/- [8,399 + 14,10,610] which is noted to have already been offered by the appellant in the return of income. Hence, the plea of the assessee that no further disallowance u/s 14A is warranted on these given facts, is accepted. Accordingly, the excess disallowance of Rs. 8,93,606/- retained by Ld. CIT(A) is directed to be deleted. Ground Nos. 1 & 2 of the appeal are therefore allowed. 7. Now we take up Ground Nos. 3 to 5 which relate to the disallowance of the deduction claimed u/s 35(2AB) of the Act. The facts as discernible from the records are that the appellant had incurred scientific research expenditure, both revenue and capital, at their approved in-house R&D facility at Bengaluru, aggregating to Rs. 17,81,44,605/-. The appellant is noted to have claimed weighted deduction @ 150% of the aforesaid expenditure being Rs. 26,72,16,908/- (Rs. 17,81,44,605 x 150%) u/s 35(2AB) of the Act. In the course of the assessment, the AO had required the appellant to furnish copy of Form 3CL, issued by the DSIR in terms of Rule 6(7A) of the Income Tax Rules, 1962, in support of the weighted deduction claimed u/s 35 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 35(2AB) of the Act. The balance sum of Rs. 55,00,605/- [17,81,44,605 - 17,26,44,000] however is only eligible for normal deduction, as rightly held by the Ld. CIT(A). Accordingly, the total deduction allowable u/s 35(2AB) and 35(1)(i)/(iv) of the Act works out to Rs. 26,44,66,605/- [25,89,66,000 + 55,00,605] as opposed to the deduction of Rs. 26,72,16,908/- claimed by the appellant in the return of income. Accordingly, the disallowance of Rs. 8,90,72,303/- confirmed by the Ld. CIT(A) stands restricted to Rs. 27,50,303/- [26,72,16,908 - 26,44,66,605]. These grounds are therefore partly allowed. 11. Ground No. 6 of the appeal relates to computation of short term capital on sale of listed investments following FIFO Method. Briefly stated, the facts of the case are that, the appellant had computed and offered short term capital gain on sale of listed investments held in demat form following the weighted average cost method. Before the AO, the appellant is noted to have submitted that the calculation methodology followed by it was incorrect, as the provisions of Section 45(2A) of the Act mandated that the profit/gain arising on sale of listed investments shall be determined on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation in support of its claim. To this, the Ld. AR showed us that the complete statement giving scrip-wise break-up was furnished before the AO vide letter dated 05.02.2021, copy of which was placed at Page 43 to 57 of the Paperbook-I. Having regard to the same, we set aside this issue to the file of the AO to verify the calculation/computation submitted by the assessee and accordingly re-compute/quantify the correct taxable short term capital gain in terms of Section 45(2A) of the Act. This ground is therefore allowed for statistical purposes. 14. Now we take up Ground Nos. 7 & 8 of the appeal, which are against the Ld. CIT(A)'s action confirming the disallowance of deduction claimed u/s 80G of the Act. The facts of the case as noted by us are that, during the year the appellant had contributed sum of Rs. 22.13 crores towards its CSR obligations to Nowrosjee Wadia Maternity Hospital and Sir Ness Wadia Foundation. It is not in dispute that, the appellant had disallowed and added back the aforesaid expenditure in terms of Explanation 2 to Section 37(1) of the Act, while computing the taxable business income. However, as the sum contributed qualified for specific deduction u/s 80G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 37 of the Act, which deals with allowability of expenses incurred in the course of and for the purposes of business, is applicable only to the extent of computation of 'Business Income' under Chapter IV-C of the Act. In our view, therefore, the Explanation (2) to Section 37 of the Act which denies deduction for the expenses incurred on CSR initiative by way of deduction from computation of 'Business Income' cannot be read into Chapter VI of the Act, which is applicable for arriving at taxable income from the Gross Total Income. It is also noted that wherever the Legislature intended that CSR contributions to any specific charitable trusts should be denied deduction, necessary provisions were incorporated in the specified subclauses, viz. sub-clauses (iiihk) and (iiihi). It is noted that no such debar has been set out by the Legislature in any other sub-clauses of Section 80G of the Act. As far as the reasoning given by the AO to deny the deduction is concerned, we find the same to be of no relevance as the same is not borne out from the provisions contained in Section 80G of the Act. Rather, we find the reliance placed by the Ld. AR of the appellant on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m page 18 of PB which is received by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of Rs. 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 & 23 and the approval u/s 80G (5)(vi) of the Act in respect of Pt. Jashraj Music Academy Trust is found placed at page 19 of PB dated 30.03.2012 given by Director of Income Tax (Exemption). Therefore, since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee's claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view and is in line with the ratio of the decision of Tribunal cited (supra). Therefore we find that the Ld. PCIT has not been able to make out a case that on this issue raised by him, the AO's order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. Therefore, the usurpation of jurisdiction by Ld. PCIT u/s 263 of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
