TMI Blog2024 (2) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has made any suo motu disallowance, which could have shifted the burden to the AO to record satisfaction to establish that the disallowance made by the assessee is incorrect, having regard to the entries made in the books of account. Therefore, decision in case of Coforge Ltd [ 2021 (7) TMI 346 - DELHI HIGH COURT] would not be apply to the facts of the present appeal. Thus, we are unable to accept assessee s contention that the AO has not recorded any satisfaction, which invalidates the disallowance u/s 14A read with Rule 8D. We find substantial merit in the alternative contention of learned counsel for the assessee that the disallowance under Rule 8D(2)(iii) should be computed with reference to investments giving rise to exempt income during the year and not the entire investment, which might give rise to exempt income in further. AO is directed to recompute the disallowance under Rule 8D(2)(ii) accordingly. Grounds are partly allowed. Disallowance of depreciation on leasehold property claimed as amortization - HELD THAT:- We find, while deciding identical issue in assessee s case in as held as unable to appreciate arguments advanced by that these advances pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely covered against the assessee in view of the decision of Hon ble Supreme Court in case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] - Thus, following the ratio laid down by Hon ble Supreme Court in the aforesaid decision, we uphold the disallowance made by the Assessing Officer. - Shri Saktijit Dey, Vice-President And Shri M. Balaganesh, Accountant Member For the Assessee : Sh. Salil Aggarwal, Sr. Advocate, Sh. Shailesh Gupta, CA, Sh. Madhur Aggarwal, Advocate For the Department : Sh. Sandeep Mishra, Sr. DR ORDER PER SAKTIJIT DEY, VICE-PRESIDENT Captioned cross appeals arise out of two separate orders of learned Commissioner (Appeals) pertaining to assessment years 2013-14 and 2014-15. ITA No.5834/Del/2017 (Assessee s Appeal) AY: 2013-14 2. In ground nos. 1 to 3, the assessee has challenged disallowance of Rs. 35,66,390/- under section 14A of the Income tax Act, 1961 (in short the Act ) read with Rule 8D of the Income tax Rules, 1962. 2. Briefly the facts are, the assessee is a resident corporate entity stated to be engaged in the business of manufacturing of tools, dyes and sheet metal components, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. We have considered rival submissions and perused the materials on record. We have also applied our mind to the decisions relied upon. It is evident, in the year under consideration the assessee has earned exempt income by way of dividend amounting to Rs. 3.67 crores. Whereas, the assessee did not make any suo motu disallowance under section 14A read with Rule 8D. When the Assessing Officer called upon the assessee to explain, why the disallowance under section 14A read with Rule 8D should not be made, the submissions of the assessee was that the investments made in subsidiaries and joint ventures are in the nature of strategic investments and not with an intendment to earn exempt income. On a perusal of assessment order, it is very much clear that the Assessing Officer has recorded reasons/satisfaction, why assessee s explanation is not acceptable and disallowance has to be made under section 14A read with Rule 8D. It is now fairly well settled that strategic investment in group entities cannot escape the rigours of section 14A read with Rule 8D. Furthermore, it is not a case where the assessee has made any suo motu disallowance, which could have shifted the burden to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations: 8. In Ground No.2, the assessee has challenged the disallowance of depreciation on leasehold property claimed as amortization to the extent of Rs. 9,83,222/-. We find that similar issue had come up for consideration before the Tribunal in assessee s own case for the Assessment Year 2010-11 in ITA No.3922/Del/2014, wherein the Tribunal on following ground:- 2. On the facts and in the circumstances of the case, the CIT(A) had erred in confirming disallowance of Rs. 9,80,090/- in respect of expenditure on amortization of leasehold land by holding it to be a capital expenditure whereas the amount is clearly admissible as revenue expenditure u/s. 37(1) of the Income Tax Act. The Tribunal has set aside the issue to the file of the Assessing Officer for fresh adjudication and in accordance with law after relying upon the assessee's own case for the earlier years. The relevant observations of the Tribunal read as under:- Ground No.2 of the assessee is covered by the decision of the Co-ordinate Bench of the Tribunal in the assessee's own case in ITA No.3805/Del/2011 and ITA No.1641 1779/Del/2013 vide order dated 13.04.2017 wherein the issue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d first appellate authority on the issue of disallowance made under section 14A read with Rule 8D. 14. While considering assessee s appeal, being ITA No. 5834/Del/2017 in the earlier part of the order, we have discussed this issue at length. Though, the Assessing Officer had disallowed the interest expenses under Rule 8D(2)(ii) for an amount of Rs. 4,58,91,348/-, however, learned first appellate authority deleted such disallowance and recorded a categorical factual finding that investments giving rise to the exempt income were made out of the interest free funds and no borrowed fund was utilized. The Revenue has failed to bring any material on record to controvert the aforesaid factual finding of learned first appellate authority. That being the factual position on record, we do not find any infirmity in the decision of learned first appellate authority qua the disallowance under Rule 8D(2)(ii). The grounds are dismissed. 15. In ground no. 3, the Revenue has challenged the disallowance of Rs. 85,612/- towards static creditors. 16. We have considered rival submissions and perused the materials on record. As could be seen from the facts on record, in course of assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical, respectfully following the decision of the Coordinate Bench, we uphold the decision of learned first appellate authority. Ground raised is dismissed. 22. In the result, appeal is dismissed. ITA No. 5835/Del/2017 (Assessee s Appeal) AY: 2014-15 23. Ground nos. 1 to 3 are on the issue of disallowance under section 14A read with Rule 8D. These grounds are identical to ground nos. 1 to 3 of ITA No.5834/Del/2017 decided by us in the earlier part of the order. Following our decision therein, we direct the Assessing Officer to re-compute the disallowance under Rule 8D(2)(iii) by considering only those investments, which have yielded exempt income during the year under consideration. Grounds are partly allowed. 24. Ground nos. 4 and 5 are identical to ground nos. 4 and 5 of ITA No. 5834/Del/2017 decided by us in the earlier part of the order. Following our decision therein, we restore the issue to the Assessing Officer with similar directions. Grounds are allowed for statistical purposes. 25. In the result, appeal is partly allowed. ITA No.5021/Del/2017 (Revenue s Appeal) AY: 2014-15 26. In ground nos. 1 and 2, the Revenue has cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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