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Applicability of the Provision of section 14A

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Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
That having regard to the facts and circumstances of the case ld.CIT(A) has erred in law and on facts in not giving full benefit of expenditure as claimed by the assessee and has further erred in directing to ld.AO to allow the expenditure only to the extent @ 50% along with 50% depreciation instead of 100% for the purpose of business on the basis of surmises and conjectures.

Citation :
Deputy Commissioner of Income Tax, Circle-1(1), New Delhi. (Appellant) Vs. M/s AES (India) Pvt.Ltd., A-138, First Floor, Dayanand Colony, Lajpat Nagar-IV, New Delhi.PAN: AACCA3059J. (Respondent)

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘A’: NEW DELHI

BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND

SHRI I.C.SUDHIR, JUDICIAL MEMBER

 

ITA No.592/Del/2012

Assessment Year: 2004-05

 

Deputy Commissioner of

Income Tax,

Circle-1(1),

New Delhi.

(Appellant)

 

Vs.

 

M/s AES (India) Pvt.Ltd.,

A-138, First Floor,

Dayanand Colony,

Lajpat Nagar-IV,

New Delhi.

PAN: AACCA3059J.

 (Respondent)

 

Cross-Objection No.106/Del/2012

Assessment Year : 2004-05

M/s AES (India) Pvt.Ltd.,

2/11B, Basement-Jangpura A,

New Delhi – 110 014.

PAN: AACCA3059J.

(Appellant)

 

Vs.

 

M/s AES (India) Pvt.Ltd.,

A-138, First Floor,

Dayanand Colony,

Lajpat Nagar-IV,

New Delhi.

PAN: AACCA3059J.

 (Respondent)

 

Revenue by: Ms.Y.Kakkar, Sr.DR.

Assessee by: Shri S.K. Aggarwal, CA.

 

ORDER

PER G.D.AGRAWAL, VP:

 

This appeal by the Revenue is directed against the order of learned CIT(A)-IV, New Delhi dated 18th November, 2011 for the AY 2004-05. The assessee has also filed cross-objection.

2. The only ground raised by the Revenue in its appeal reads as under:-

 

 

“The ld.CIT(A) has erred on facts and in law in directing the AO to treat 50% of the expenses to be attributed to business and 50% to earning of exempt income.”

 

3. The grounds raised in the cross-objection by the assessee read as under:-

 

“1. That having regard to the facts and circumstances of the case ld.CIT(A) has erred in law and on facts in not giving full benefit of expenditure as claimed by the assessee and has further erred in directing to ld.AO to allow the expenditure only to the extent @ 50% along with 50% depreciation instead of 100% for the purpose of business on the basis of surmises and conjectures.

 

2. That having regard to the facts and circumstances of the case ld.CIT(A) has erred in law and on facts in confirming the action of ld.AO in holding that the appellant is covered by the provisions of section 14A of the Income Tax Act, 1961.”

 

4. The facts of the case are that the Assessing Officer disallowed a sum of `1,33,90,150/- holding the same to have been incurred for earning of exempt income. On appeal, learned CIT(A) held that 50% of the expenses incurred by the assessee are to be attributed towards earning of exempt income. Aggrieved with the order of learned CIT(A), both the parties are in appeal/cross-objection.

 

5. At the time of hearing before us, the learned counsel for the assessee pointed out that in assessee’s own case for AY 2005-06, Hon'ble Jurisdictional High Court, vide order dated 10th April, 2013 in ITA No.449/2012, held as under:-

 

“Subsequent to the passing of the impugned order dated 01.08.2011, this court has also decided the issue of Section 14A as also the other related issues including the applicability of Rule 8D of the Income Tax Rules, 1962 in the case of Maxopp Investment Limited v. CIT : 347 ITR 272. We also note that the Tribunal has also followed its own order in the assessee’s own case for the assessment year 2003-04. As such, no substantial question of law arises for our consideration. However, we must add that the Assessing Officer, when he considers the matter afresh in the light of the directions given by the Tribunal, would also consider the decision of this Court in Maxopp Investment Limited (supra) and would decide in accordance with the said decision.”

 

6. The learned counsel, therefore, submitted that the order of the Assessing Officer on this point should be set aside and he should be directed to readjudicate the same as per the above direction of the Hon'ble Jurisdictional High Court in assessee’s own case.

 

7. Learned DR fairly agreed with the above submission of the learned counsel.

 

8. In view of the above, we set aside the order of the Assessing Officer on this point and restore the matter to his file with the direction that he will re-adjudicate the issue in accordance with the direction of Hon'ble Jurisdictional High Court in assessee’s own case for AY 2005-06 which has been extracted above. Needless to mention that the Assessing Officer will allow adequate opportunity of being heard to the assessee while readjudicating the issue.

 

9. In the result, the appeal of the Revenue as well as the cross objection of the assessee both are deemed to be allowed for statistical purposes.

 

Decision pronounced in the open Court on 24th May, 2013.

 

Sd/- Sd/-

(I.C.SUDHIR) (G.D.AGRAWAL)

JUDICIAL MEMBER VICE PRESIDENT

 

Dated: 24.05.2013

VK.

 

Copy forwarded to: -

 

1. Revenue: Deputy Commissioner of Income Tax, Circle-1(1), New Delhi.

2. Assessee: M/s AES (India) Pvt.Ltd., 2/11B, Basement-Jangpura A, New Delhi – 110 014.

3. CIT

4. CIT (A)

5. DR, ITAT

 

Assistant Registrar

 

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on 03 June 2013
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