Bharat Bijilee Ltd. v. Addl. CIT

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2013 TaxPub(DT) 0001 (Mum-Trib) : (2012) 054 SOT 0571 INCOME TAX ACT, 1961 --Income --AdditionAddition based on AIR not reconciled--assessing officer made an addition of Rs.4,36,700 as Income as per AIR not reconciledÃ¢â‚¬ without discussing anything in that behalf in the assessment order and without giving adequate opportunity to assessee for explaining the alleged difference. CIT(A) confirmed the order of assessing officer. *Held:* assessing officer had not given any basis on which this addition was made. CIT(A) did not adjudicate on this aspect. Therefore, the order of CIT(A) was set aside on this addition and assessing officer was directed to furnish the basis on which the impugned addition was sought to be made by assessing officer. Assessee will, thereafter explain the discrepancy and assessing officer will consider and decide the issue in accordance with law. Assessee will be given an opportunity of being heard before the decision is arrived at by assessing officer. Income Tax Act, 1961 Section 4 INCOME TAX ACT, 1961 --Income Addition Addition on basis of AIR--assessing officer based on the Annual Information Report (AIR) database noticed that on the following income-tax has been deducted at source by the person making payment to the assessee but assessee had not offered such receipts to tax. The details may be summarized as follows: (i) Fees for profession & technical services : Rs. 16,46,102; (ii) dividend : Rs. 55,620; (iii) interest : Rs. 12,500 and (iv) Total : Rs. 17,14,222 Out of the above, assessee had actually reconciled and explained the amount of Rs.12,27,826 vide its letter to assessing officer dated 30-11-2007. The reconciliation so provided was completely ignored by the assessing officer and the addition was made on the whole amount of Rs.17,14,222. *Held:* The reconciliation provided by assessee before assessing officer is at page 287 of assessee's paper book. Neither assessing officer nor CIT(A) considered this reconciliation. In these circumstances the order of CIT(A) was set aside on this issue and remand the issue was remanded for fresh consideration by assessing officer in the light of the reconciliation provided by assessee. assessing officer will afford opportunity of being heard to assessee, consider the reconciliation filed by assessee and decide the issue afresh in accordance with law. [Para 55] Income Tax Act, 1961 Section 4 INCOME TAX ACT, 1961 --Business expenditure--Business disallowance under section 14AEarning of dividend income--The assessee was a company. It was engaged in the business of manufacture and marketing of Motors, Pumps, Transformers, Lifts, Industrial Electronic Products, CRC and execution of turnkey projects. Assessee earned dividend income. The dividend income did not form part of the total income of assessee and in view of the provisions of section 14A assessing officer was of the view that expenditure incurred for earning dividend income should be disallowed and added to the total income of assessee. Assessee submitted before assessing officer that no expenses were incurred in making investment in shares which yielded the dividend income and, therefore, no disallowance could be made under section 14A. Assessee also pointed out that in assessment year 2004-05 the ITAT in 1999-00 in ITA No.6017/M/03 had decided similar issue in favour of assessee and that decision has also been followed by CIT(A) in assessment year 2004-05. assessing officer however, held that assessee did not identify the source of funds used for making investment and he held that part of the borrowed funds can be attributed to the making of investment in shares which yielded the dividend income. assessing officer accordingly disallowed proportionate interest of Rs. 12.89 lakhs and the same was added to the total income of assessee. On appeal by the assessee CIT(A) directed assessing officer to apply the provisions of rule 8D of the Income Tax Rules 1962 and make suitable disallowance under section 14A. *Held:* The contentions put forth by the assessee are acceptable in view of the order of Tribunal in earlier years. In these circumstances the disallowance made by assessing officer should be deleted. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0001 (Mum-Trib) : (2012) 054 SOT 0571

INCOME TAX ACT, 1961

--Income --AdditionAddition based on AIR not reconciled--assessing officer made an addition of Rs.4,36,700 as Income as per AIR not reconciledÃ¢â‚¬ without discussing anything in that behalf in the assessment order and without giving adequate opportunity to assessee for explaining the alleged difference. CIT(A) confirmed the order of assessing officer. Held: assessing officer had not given any basis on which this addition was made. CIT(A) did not adjudicate on this aspect. Therefore, the order of CIT(A) was set aside on this addition and assessing officer was directed to furnish the basis on which the impugned addition was sought to be made by assessing officer. Assessee will, thereafter explain the discrepancy and assessing officer will consider and decide the issue in accordance with law. Assessee will be given an opportunity of being heard before the decision is arrived at by assessing officer.

Income Tax Act, 1961 Section 4

INCOME TAX ACT, 1961

--Income Addition Addition on basis of AIR--assessing officer based on the Annual Information Report (AIR) database noticed that on the following income-tax has been deducted at source by the person making payment to the assessee but assessee had not offered such receipts to tax. The details may be summarized as follows: (i) Fees for profession & technical services : Rs. 16,46,102; (ii) dividend : Rs. 55,620; (iii) interest : Rs. 12,500 and (iv) Total : Rs. 17,14,222 Out of the above, assessee had actually reconciled and explained the amount of Rs.12,27,826 vide its letter to assessing officer dated 30-11-2007. The reconciliation so provided was completely ignored by the assessing officer and the addition was made on the whole amount of Rs.17,14,222. Held: The reconciliation provided by assessee before assessing officer is at page 287 of assessee's paper book. Neither assessing officer nor CIT(A) considered this reconciliation. In these circumstances the order of CIT(A) was set aside on this issue and remand the issue was remanded for fresh consideration by assessing officer in the light of the reconciliation provided by assessee. assessing officer will afford opportunity of being heard to assessee, consider the reconciliation filed by assessee and decide the issue afresh in accordance with law. [Para 55]

Income Tax Act, 1961 Section 4

INCOME TAX ACT, 1961

--Business expenditure--Business disallowance under section 14AEarning of dividend income--The assessee was a company. It was engaged in the business of manufacture and marketing of Motors, Pumps, Transformers, Lifts, Industrial Electronic Products, CRC and execution of turnkey projects. Assessee earned dividend income. The dividend income did not form part of the total income of assessee and in view of the provisions of section 14A assessing officer was of the view that expenditure incurred for earning dividend income should be disallowed and added to the total income of assessee. Assessee submitted before assessing officer that no expenses were incurred in making investment in shares which yielded the dividend income and, therefore, no disallowance could be made under section 14A. Assessee also pointed out that in assessment year 2004-05 the ITAT in 1999-00 in ITA No.6017/M/03 had decided similar issue in favour of assessee and that decision has also been followed by CIT(A) in assessment year 2004-05. assessing officer however, held that assessee did not identify the source of funds used for making investment and he held that part of the borrowed funds can be attributed to the making of investment in shares which yielded the dividend income. assessing officer accordingly disallowed proportionate interest of Rs. 12.89 lakhs and the same was added to the total income of assessee. On appeal by the assessee CIT(A) directed assessing officer to apply the provisions of rule 8D of the Income Tax Rules 1962 and make suitable disallowance under section 14A. Held: The contentions put forth by the assessee are acceptable in view of the order of Tribunal in earlier years. In these circumstances the disallowance made by assessing officer should be deleted.