Income Tax Appellate Tribunal - Delhi
Mmtc Ltd., New Delhi vs Assessee on 30 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: E: NEW DELHI
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER,
AND SHRI C.M. GARG, JUDICIAL MEMBER
ITA No. 4265/Del/2010
Assessment Year 2006-07
M/s. MMTC Ltd. vs. Addl. CIT,
Scope Complex, Core-1, Range-5,
7 Institutional Area, Lodhi Road, C.R. Building,
New Delhi. New Delhi.
(PAN AAACM1433E)
(Appellant) (Respondent)
AND
ITA No. 4495/Del/2010
Assessment Year 2006-07
Asstt. CIT, vs. M/s. MMTC Ltd.
Circle-5(1), New Delhi. Scope Complex, Core-1,
7 Institutional Area, Lodhi Road,
New Delhi.
(PAN AAACM1433E)
(Appellant) (Respondent)
AND
ITA No. 3891/Del/2011
Assessment Year 2007-08
M/s. MMTC Ltd. vs. DCIT,
Scope Complex, Core-1, Range-5,
7 Institutional Area, Lodhi Road, C.R. Building,
New Delhi. New Delhi.
(PAN AAACM1433E)
(Appellant) (Respondent)
AND
2
ITA Nos. 4265,4495, /Del/2010
& ITA Nos. 3891, 4187/Del/2011
ITA No. 4187/Del/2011
Assessment Year 2007-08
DCIT, vs. M/s. MMTC Ltd.
Circle-5(1), Room No. 409A, Scope Complex, Core-1,
C.R. Building, I.P. Estate, 7 Institutional Area,
New Delhi. Lodhi Road, New Delhi.
(PAN AAACM1433E)
(Appellant) (Respondent)
Appellant by : Shri Ajay Vohra, Shri Rohit Jain, Advocate,
Ms. Deepa Shree Rao, CA
Respondent by : Shri Gunjan Prashad, CIT, DR
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 3 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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/-. The assessee preferred appeal before Ld. CIT(A) who partly allowed the assessee's appeal. Being aggrieved with the order of Ld. CIT(A) both assessee and department are in appeal before us.
3. Ld. Counsel for the assessee referred to the petition filed by assessee for admission of additional ground of appeal under rule 11 of the Income Tax Appellate Rules 1963 which reads as under :-
"1. That the assessing officer erred on facts and in law in not allowing credit for corporate taxes paid by MMTC Transnational Pte. Ltd. (MTPL), Singapore, to the extent of dividends received by appellant from MTPL in India."
4. Ld. Counsel pointed out that MMTC Transnational Pte. Ltd. (MTPL), a company incorporated under the laws of Singapore is a 100% subsidiary of the assessee. He pointed out that during the relevant previous year the assessee received dividend of Rs. 95,89,454/- from MTPL, Singapore. In terms of Article 25(2) of the India-Singapore DTAA read with section 90(2) of the Income Tax Act 1961, the assessee was entitled for credit for corporate tax paid in Singapore as Indian holding company held more than 25% of share capital of the Singapore Company. This credit is called underlying tax credit. He pointed out 4 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 that assesese treated the dividends received from MTPL, Singapore as its business income. However, no separate tax credit was taken in terms of the aforesaid Article 25 (2) of the India-Singapore DTAA. Therefore, vide the additional ground of appeal raised by assessee, the assessee is seeking a direction to the AO to allow credit of tax paid as per Article 25(2) of the India- Singapore DTAA. Ld. Counsel pointed out that the additional ground is being raised by the assessee on being advised of correct legal position and the omission to raise this ground was neither willful nor deliberate. Ld. Counsel submitted that the adjudication of the aforesaid additional ground of appeal may involve certain new facts but that does not bar in admitting and adjudicating the additional ground which goes to the root of determination of correct tax liability of the assessee. In support of his submissions he relied on the decision of Hon'ble Delhi High Court in the case of DCM Benetton India Ltd. vs. CIT : 173 taxman 283 wherein it was observed as under :-
"9. Learned counsel for the assessee relied upon CIT vs. Kerala State Co-operative Marketing Federation 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) 5 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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 Co-operative Marketing Federation Ltd. 193 ITR 624 wherein it has been held as under :-
"Following the decisions of the Supreme Court cited above and agreeing with the view expressed by the Madras High Court in Brahadeeswaran;s case (1987) 163 ITR 680, we hold that an appellant before the Tribunal could raise any new or additional point for the first time in appeal before the Tribunal even though it had not been raised in any form either before the assessing authority or before the Commissioner of Income-tax(Appeals). We further hold that when once any such new or additional ground is raised before the Tribunal, they are duty bound to entertain that ground and render a decision thereon either themselves or by remanding the matter if further investigation into the facts is necessitated.
The appellate Tribunal permitted the assessee to raise the additional ground claiming deduction of the amount accrued as per the Kerala General Sales Tax Act towards purchase tax for peper. Accepting the contention of the assessee that it was omitted to be claimed before the Income Tax Officer, the assessee was also found entitled to claim the same since that is a statutory liability which accrued during the year in question. A contention was also raised before the Tribunal that the same liability was allowed in a subsequent assessment year. It was for these reasons that the Tribunal permitted the assessee to raise the additional ground and remitted the matter to the file of the Commissioner of Income-tax (Appeals) to look into the matter afresh and decide the same according to law.
In view of the legal position enunciated above, the Tribunal was right in permitting the assessee to raise an additional ground. The jurisdiction conferred on the Tribunal has been properly exercised in the present case and no error of law has been committed by the 6 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 Tribunal. This question also has to be answered in favour of the assessee."
6. Ld. CIT(DR) vehemently opposed the admission of this additional ground. He submitted that assessee is a listed company and substantial Govt. holding is there. The company is advised by Sr. Chartered Accountants and advocates in tax matters and, therefore, it cannot be said that the omission on the part of assessee was on account of inadvertent mistake. He pointed out that claim was not advanced in the return filed and neither before the AO 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 7 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 page No. 17 wherein the details of investments made in subsidiary company are contained to demonstrate that assessee was holding 1461502 equity shares in the subsidiary company. He submitted that the details of dividend received are also on record. Therefore, only credit of taxes paid outside Indian on the dividend income of assesseee has to be allowed. He submitted that AO has to apply correct provisions to facts.
7. We have considered the rival submissions and have perused the record of appeal. It is well settled law that a legal claim can be advanced at any stage of proceeding. Therefore, we are not inclined to accept the submission of the Ld. CIT(DR) to reject the ground taken by assessee on the ground of laches. There is no quarrel with the submissions of Ld. CIT(DR) that if the relevant facts are not there on record then the additional ground should not be admitted. However, if the basic facts are there on record and those facts have only to be supplemented by obtaining some further information in that respect then in order to determine the correct tax liability of assessee and to advance the cause of substantial justice, the additional ground raised by assessee should be admitted. The Assessing Officer, as a quasi-judicial authority, is also required to determine the correct tax liability of assessee. 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 8 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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.
8. In the result the additional ground raised by the assessee is admitted and allowed for statistical purposes.
Grounds raised by the assesee in its appeal reads as under :-
2. "That the Ld. CIT(A) has erred on facts and in law in upholding the action of AO in disallowing an amount of Rs. 1,01,98,457/-
u/s 14A towards expenses for earning tax free interest income from UTI 2.1 Without prejudice, Rule 8D was inserted in the IT Rules by Income Tax (Fifth Amendment) Rules 2008, w.e.f. 24/03/2008 and as such could not be applied to AY 2006-07.
2.2 The Appellant has not made any investments in tax-free instruments during the year.
2.3.The Appellant had hardly incurred any expenditure attributable to earning tax free interest income from UTI.
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 9 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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 erred in deleting the addition of Rs. 5,00,000/- made by the AO by treating the payment to CERC as annual license fees as capital expenditure.
4.1 The Ld. CIT(A) ignored the fact that the assesee shall be deriving long term benefit by obtaining license and also the fact that the asset in question has yet to become operational.
5. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has erred in directing the AO to allow claim of the assesee of Rs. 1,92,58,404/- on account of waiver penalty for astt. Year 1988-89 and asstt. year 2000-02.
5.1 The Ld. CIT(A) - ignored the fact that the assesee did not file revised return to claim the deduction in question and also the fact that the claim was correctly rejected by the AO applying the ratio of the judgment of hon'ble Apex Court in the case of CIT vs. Goetze (India) Ltd.
9. Brief facts apropos ground Nos. 2 to 2.3 raised by assessee and Ground Nos. 2 and 2.1 raised by Department are that assessee had received tax free interest from UTI Rs. 3,56,45,467/-. The AO applied the provision of section 14A read with Rule 8D of IT Rules, 1962 and determined the disallowance u/s 14A at Rs. 2,86,93,520/-. Ld. CIT(A) after considering the assessee's submissions, confirmed the disallowance at Rs. 10198458/-, inter alia, observing that since this disallowance was made strictly in accordance with the provisions of Rule 8D (2) (iii) of the Income Tax Rules, 1962, no interference in this behalf is called for. The Department is also aggrieved with this finding of Ld. CIT(A) and has taken following ground of appeal.
10
ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011
10. We have considered the submissions of both the parties and have perused the record of the case. Admittedly for the asstt. Year under consideration Rule 8D was not applicable and the AO was required to make the disallowance u/s 14A after recording his satisfaction regarding expenditure being incurred for the earning of exempt income on reasonable basis as per the decision of Hon'ble Delhi High Court in the case of Maxopp Investment Ltd. 347 ITR 272. Ld. CIT DR pointed out that as regards the deletion of addition on the ground of interest disallowance, Ld. CIT(A) has accepted the submissions of assessee regarding investments in the tax free securities out of own/surplus fund without any remand report being called for from the AO. Ld. Counsel referred to the decision 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. 11
ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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 consideration, the assessee had received DEPB credit of Rs. 2,63,38,000/- but had not shown as its income. The AO observed that assessee in its reply submitted that the details of DEPB credit of Rs. 2,63,38,000/- as on 31.3.2006 represents duty entitlement passbook which is available for imports at cheaper / lower rates of custom duty as a consequence to export out of India. The assessee submitted that DEPB credits are sold in the open market and the receipt out of this auction is transferred to their associates NINL keeping 3% as profit. In support of its contention the assessee submitted that during financial year 2005-06 against the total DEPB credits available of Rs. 2,88,83,615/-, it had realized Rs. 2,73,56,574/- by way of sale of DEPB and 97% of the realization of DEPB was passed on to NINL. (the associate on whose behalf the exports of pig iron were made in terms of contract between MMTC Ltd. and Neetachal Ispat Nigam Ltd. The assessee referred to article 7 para 7.8 of the agreement between MMTC and NINL which has been reproduced in the assessment order. The AO in the body of the order concluded that the addition of Rs. 2,73,56,574/- is to be 12 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 made to the total income of assessee. However in the asstt. Order the addition has been made of Rs. 2,63,38,000/-. Before Ld. CIT(A) the assessee pointed out that similar addition of Rs. 11,27,43,0000/- was made in asstt. Year 2005-06 but was deleted by Ld. CIT(A) under identical facts. Accordingly, Ld. CIT(A) deleted the addition in this year also.
13. Ld. CIT (DR) submitted that 97% of DEPB credits was to be passed on to the associates on whose behalf the exports had been made. He submitted that this was primarily application of income and no overriding title was there in favour of NINL. Ld. DR pointed out that assessee is following mercantile system of accounting and therefore the income on account of DEPB credit was to be accounted for on accrual basis and could not be accounted for on cash basis. Ld. Counsel for the assessee submitted that assessee is not following cash system of accounting. The income is accounted for in the year in which profit is realized on sale/auction of DEPB credit available to assessee. No change has taken place in subsequent years in regard to recognition of DEPB credit.
14. We have considered the rival submissions and have perused the record of the case. As noted earlier, the AO in 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 13 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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 which is yet to become operational and since it also pertains to an independent activity altogether, the expenditure claimed by the assessee company as revenue expenses is not allowable. However, the assessee is allowed to capitalize the same towards the windmill project. As the licence fees paid for a new unit being windmill unit which has not become operational, the same being preoperative expenditure is disallowed and added back to the total income of the assessee. Accordingly, Rs. 5 lacs is disallowed and added back to the total income of the assessee. Accordingly, Rs. 5 lacs is disallowed and added back to the total income of the assessee".
17. AO treated this expenditure as capital expenditure on the ground that the same related to activity which was ready to become operational and pertained to an independent activity. Ld. CIT(A) deleted this disallowance taking into consideration the fact that the payment of Rs. 5 lacs was towards annual license fee for trading in electricity. He accepted the assesee;'s contention that 14 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 this payment had neither resulted into acquisition of any capital asset nor even the benefit of enduring nature had been obtained by the assessee company. He also took note of the fact that the activity of generation and sale of electricity being generated with the help of 25 windmills at Gajendragadh, Bangalore was not an independent activity as it was controlled by the same management and there was also interlacing of funds.
18. We have considered the submissions of both the parties and have perused the record. The facts as noted by Ld. CIT(A) have not been controverted by the department. It is not disputed that the activity carried out by the assessee resulted into generation and sale of electricity therefore the licence fee paid for trading in electricity was in revenue's field. We, therefore, confirm the order of the Ld. CIT(A) on this issue.
19. In the result ground No. 4 and 4.1 are dismissed.
20. Brief facts apropos ground No. 5 and 5.1 are that in course of assessment proceedings, the assesee made a claim of deduction of Rs. 1,92,58,404/-. The AO, following the decision of Hon'ble Supreme Court in the case of M/s. Goetze (I) Ltd. vs. CIT did not entertain the assessee's claim as assessee had not filed any revised return. Before Ld. CTI(A) the assessee challenged the action of the AO in not granting relief / deduction 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 15 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 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 before it, concluded in para 6.6. as under :-
"6.6. I have analyzed the facts of the present case in the light of the parameters laid down by the Hon'ble Delhi High Court in the case of CIT vs. Jai Parabolic Springs Ltd. and the observations made by the Hon'ble Apex Court in the case of Jute Corporation of India Ltd. vs. CIT and the instructions given by the Central Board of Direct Tax on matters pertaining to assessments. On consideration, I find that the deduction on account of penalty was undisputedly allowable to the appellant company as neither the payment of income tax penalty/other liability is an admissible claim nor the refund thereof is assessable. Therefore, while the payment of penalty, if debited to the profit and loss account is to be disallowed and added back to the computation of total income, the refund thereof if credited to the P&L A/c, has to be allowed as a deduction in the computation. Therefore, in my view, it will be unjustified if such apparent mistake in the assessment order is not rectified in the appeal proceedings.16
ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 As stated earlier, the penalty imposed for the asstt. year 1988-89 and 2001-02 was duly disallowed and added back in the years of payment. Therefore, the same has to be allowed as a deduction in the year of refund as the same has been offered by the appellant as miscellaneous receipts in the P & L A/c. Accordingly, the AO is directed to allow deduction of 19258404 to the appellant company."
21. We have considered the submissions of both the parties and perused the material on record. The department has not controverted the facts as recorded by the Ld. CIT(A) . There can be no quarrel with the observation of Ld. CIT(A) that while the payment of penalty, if debited to the profit and loss account is to be disallowed and added back to the computation of total income, the refund thereof, if credited to the profit and loss account, has to be allowed as a deduction in the computation. We, therefore, confirm the order of Ld. CIT(A).
22. In the result ground No. 5 and 5.1 are dismissed.
ITA No. 3891/Del/2011 Asstt. Year 2007-08
23. Grounds raised by the assessee read as under :-
2. "That the Ld. CIT(A) has erred on facts and in circumstances of the case and in law is sustaining disallowance @ 10% of the exempt income being interest on UTI Bonds of amounting to Rs.
3,56,64,468/- u/s 14A of the Income 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 17 ITA Nos. 4265,4495, /Del/2010 & ITA Nos. 3891, 4187/Del/2011 "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 grounds taken in asstt. Year 2006-07 on the issue of deduction u/s 14A by the assessee and Department and grounds raised by Department on DEPB issue. Therefore, for the reasons given in asstt. Year 2006- 07, the grounds raised by both the assessee as well as department in asstt. year 2007-08 are allowed for statistical purposes.
25. In the result the assessee's appeal for asstt. years 2006-07 is allowed for statistical purpose and Department's appeal is partly allowed for statistical purpose. For asstt. years 2007-08 the assessee's as well as Department's appeals are allowed for statistical purposes.
Order pronounced in the open court on 30/1/2015.
sd/- sd/-
(C.M. GARG) ( S.V. MEHROTRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 30th January, 2015
'veena'
18
ITA Nos. 4265,4495, /Del/2010
& ITA Nos. 3891, 4187/Del/2011
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Deputy Registrar, ITAT