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TMI Blog2023 (5) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... aling with the facts in the case of the department's appeal for Asst.Year 2012-13 in ITA No.970/Ahd/2018 and our decisions rendered therein will apply pari passu in other appeal of the Department for Asst.Year 2013-14,in ITA No.971/Ahd/18 where facts and issues are stated to be identical. ITA No.970/Ahd/2018 : A.Y 2012-13 (Revenues appeal) 3. Ground No.1 raised by the Revenue is as under: "1. That the ld.CIT(A) has erred in law and on facts in deleting the addition amounting to Rs.20,45,90,906/- made on account of disallowance u/s.14A of the Income Tax Act, 1961 in book profits u/s.115JB of the Act. 4. As is evident from the above, the issue relates to the adjustment made to the book profits of the assessee calculated as per the provisions of section 115JB of the Act. The adjustment made relates to addition made to the Book Profits of the expenses incurred for the purpose of earning exempt income which were disallowed asper the provisions of section 14A of the Act. The assessee had made a suo moto disallowance of a sumof Rs.20,45,90,406/- under section 14A of the Act calculated as per the formula prescribed in Rule 8D of the Income Tax Rules, 1962. However, the same was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to distinguish the case of the assessee from the decision of Hon'ble Gujarat High Court in thecase of case of Alembic Ltd. in ITANo.1249 of 2014, which followed by the ITAT in the preceding year while deleting identical adjustment of expenses disallowed under section 14A of the Act to the book profits of the assessee. 6. The ld.counsel for the assessee, on the other hand, filed submissions before us pointing out that the ITAThad not only deleted the identical disallowance in the case of the assessment in Asst.Year 2010-11, but it had consistently taken this view in Asst.Year 2009-10, 2011-12 and even Asst.Year 2015-16. Copies of all the orders of the ITAT in the case of the assessee for the said years were placed before us. It was also contended that the issue of adjustment to bookprofits on account of disallowance of expenses under section 14A of the Act is settled in view of the decision of Hon'ble jurisdictional High Court in the case of Alembic Ltd. (supra) and by the decision of the Special Bench of the ITAT in the case of ACIT Vs. Vireet Investment P.Ltd., (2017) 165 ITD 27 (Delhi-Trib) (SB). 7. In view of the above, since ITAThas been consistently deleting the adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO made upward adjustment on account of the amounts, totaling to Rs.4,15,67,693/-. The addition was agitated by the assessee before the ld.CIT(A) who noted from the TPO's order that the assessee had given corporate guarantees to various banks on behalf of its AEs. As per the TPO this tantamounted to risk taken on behalf of the AEs with respect to loan value and he noted that the assessee had charged no guarantee fee for the same. The TPO asserted that had the guarantee been given on behalf of unrelated persons, the assessee would certainly have charged guarantee fee, and finding that commercial bank charged guarantee fees ranging from 0.75% to 2% on the collateral security provided by the client, and noting that in the present case AEs had not provided any collateral securities to the assessee, the TPO suggested ALP of guarantee fee at the rate of 2% of the guarantees expenditure, and accordingly, an upward adjustment of Rs.4,15,67,693/- was made. The ld.CIT(A) however deleted the adjustment noting that the issue was squarely covered in favour of the assessee by the decision of the ITAT in the case of the assessee itself in the preceding year i.e.Asst.Year 2008-09, 2009-10 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross objection filed by the assessee. 15. CO No.100/Ahd/2019 16. The grounds raised in the CO are as under: "1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of the AO of disallowing employee's contribution towards PF and ESIC amounting to Rs.29,94,862/- u/s 36(l)(va) r.w.s.2(24)(x) of the Act. 2. The learned CIT(A) has failed to appreciate that the entire sum in respect of employees contribution to PF/ESIC has been deposited prior to the due date of filing return of income and hence, the appellant is entitled for deduction as per s.43B of the Act. 3. Alternatively and without prejudice to the above, the matter should be remanded to the AO to verify whether the sum was deposited within 21 days from the end of the month of payment of salary as contemplated under the provisions of Employees Provident Funds & Miscellaneous Provisions Act, 1952 and Employees State Insurance Act, 1948. 17. The only issue raised by the assessee in its CO is relating to confirmationof addition made by the AO under section 36(1)(va) of the Act on account of delayed payment of employees' contribution to PF and ESI funds; the total amount dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component as provided in formula under Rule 8D of Income Tax Rule's, 1962 (the Rules) cannot be attributed to earning of exempt income and also since it has claimed exempt income only to the extent of Rs.2,16,251/-, the disallowance u/s 14A of the Act could not have exceeded the amount of exempt income as per the ratio of judgment of Hon'ble Gujarat High Court in the case of Corrtech energy Ltd. (supra) as well as, as per the judgment of Hon'ble Ahmedabad Tribunal in the case of Jivraj Tea (Supra), (b) since it has wrongly disallowed a sum of Rs.31,40,76,6537- in the computation of income u/s.14A. AO should have acceded to their claim of withdrawal of the disallowance and (c) disallowance computed u/s.14A r.w.r. 8D cannot be added to the book profits computed as per provisions of section 115JB(2). 4.1.1. As regards the ground that disallowance u/s.14A r.w.r. 8D cannot exceed the exempt income, I find that the issue is squarely covered by the ratio of this judgment of the jurisdictional High Court in the case of M/s. Corrtech Energy Ltd. (supra). Now, the issue is whether appellant having made the disallowance suo-motu can claim reduction in the returned income to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned learned counsel for the parties and having perused the orders on record, we see no reason to interfere. The issue of tenability of a claim though not raised in the original return is examined by the Courts in various decisions. This Court in case of CIT v. Miteshlmpex[2014l 46 taxmann.com 30/225 Taxman 168 (Mag.) (Guj.) Preferred to and relied on several judgements of the Supreme Court and High Courts including the judgement of Bombay High Court in case of Pruthvi Brokers & Shareholders P. Ltd. (sura) and observed as under: "38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. v. Commissioner of Income-tax (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. v. Commissioner of Income-tax (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. v. Commissioner of Income-tax (supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of expenditure under section 14A of the Act to the extent of exempt income earned by the assessee amounting to Rs.2,16,251/-. Thus, ground no.1 and 2 raised by the Revenue are dismissed. 24. Ground No.3 reads as under: "that the ld.CIT(A) has erred in law and on facts in deleting the addition amounting to Rs.31,40,76,653/- made on account of disallowance u/s.14A of the Income Tax Act, 1961 in book profit u/s.115JB of the Income Tax Act, 1961." The issue raised in Ground No.3, it was common ground, was identical to that raised in ground no.1 of Revenues appeal for the preceding year, A.Y 2012-13, in ITA No.970/Ahd/2018 , relating to addition made to book profits of the assessee, as per section 115JB of the Act, of expenses disallowed under section 14A of the Act amounting to Rs.31,40,76,653/-. 25. We have dealt with this issue in para-7 of our order above, dismissing the ground raised by the Revenue. Following the same, this ground of appeal No.3is dismissed. 26. Ground No.4 reads as under: "that the ld.CIT(A) has erred in law and on facts in deleting the addition amounting to Rs.6,77,95,312/- made on account of upward adjustment u/s.92CA(4) of the of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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