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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
These two appeals by the assessee are directed against two separate orders, both dated 21.12.2022, passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16 and 2017-18 respectively. Both these appeals being connected to single assessee, same were heard together and disposed off by way of this order for convenience.
Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 2 525/Mum/2023 ITA No.
The grounds of appeal raised in The grounds of appeal raised in are The grounds of appeal raised in ITA No. 524/Mum/2023 are reproduced as under: reproduced as under:
1. On the facts and circumstances of the case and in On the facts and circumstances of the case and in On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the law the Ld. CIT (A) erred in confirming the law the Ld. CIT (A) erred in confirming the additions in respect o additions in respect of bad debts written off f bad debts written off (irrecoverable portion of loan along with interest) of (irrecoverable portion of loan along with interest) of (irrecoverable portion of loan along with interest) of Rs. 21,38,381 without appreciating the facts and Rs. 21,38,381 without appreciating the facts and Rs. 21,38,381 without appreciating the facts and merits of the case and erroneously considering it of merits of the case and erroneously considering it of merits of the case and erroneously considering it of capital nature even capital nature even though the interest earned from hough the interest earned from the loan was offered to the loan was offered to tax and the loan was tax and the loan was provided in the normal course of business. provided in the normal course of business.
2. On the facts and circumstances of the case and in On the facts and circumstances of the case and in On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the law the Ld. CIT (A) erred in confirming the law the Ld. CIT (A) erred in confirming the disallowance of repairs expenses incurred in disallowance of repairs expenses incurred in disallowance of repairs expenses incurred in respect of Plant and Machinery and building respect of Plant and Machinery and building respect of Plant and Machinery and building written written off off (including (including restoration restoration expenses) expenses) aggregating aggregating aggregating to to to Rs.63,16,537 Rs.63,16,537 Rs.63,16,537 by by by wrongly wrongly wrongly considering it as capital in nature. considering it as capital in nature. 3. Before us, the Ld. Counsel of the assessee submitted that the Before us, the Ld. Counsel of the assessee submitted that the Before us, the Ld. Counsel of the assessee submitted that the appeal was decided decided ex-parte by the Ld. CIT(A). Regarding the A). Regarding the ground No. 1, the Ld. Counsel of the assessee submitted that ground No. 1, the Ld. Counsel of the assessee submitted that ground No. 1, the Ld. Counsel of the assessee submitted that assessee is not interested in pursuing this ground and accordingly assessee is not interested in pursuing this ground and accordingly assessee is not interested in pursuing this ground and accordingly it withdrawn this ground. withdrawn this ground. Thus, this ground of appeal of the ground of appeal of the assessee is accordingly dismissed as withdrawn. assessee is accordingly dismissed as withdrawn.
4. As far as ground No. 2 of the appeal is concerned As far as ground No. 2 of the appeal is concerned As far as ground No. 2 of the appeal is concerned, the Ld. Counsel of the assessee submitted that this addition has been Counsel of the assessee submitted that this addition has been Counsel of the assessee submitted that this addition has been made by the Assessing Officer in the assessment order passed in made by the Assessing Officer in the assessment order passed in made by the Assessing Officer in the assessment order passed in consequent to order u/s 263 passed by the Ld. PCIT. He further consequent to order u/s 263 passed by the Ld. PCIT. He further consequent to order u/s 263 passed by the Ld. PCIT. He further submitted that on further appeal by the assessee against the order ted that on further appeal by the assessee against the order ted that on further appeal by the assessee against the order u/s 263 before the ITAT, the issue raised in ground No. 2 has been u/s 263 before the ITAT, the issue raised in ground No. 2 has been u/s 263 before the ITAT, the issue raised in ground No. 2 has been Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 3 525/Mum/2023 ITA No.
cancelled by the ITAT in and therefore, the cancelled by the ITAT in ITA No. 624/Mum/2021 and therefore, the cancelled by the ITAT in ITA No. 624/Mum/2021 and therefore, the addition made by the Assessing Officer cannot survive. addition made by the Assessing Officer cannot survive. addition made by the Assessing Officer cannot survive.
We have heard rival submission of the parities on the issue ve heard rival submission of the parities on the issue ve heard rival submission of the parities on the issue-in- dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that in consequent order u/s 263 of the Act passed by the Ld. PCIT, the in consequent order u/s 263 of the Act passed by the Ld. PCIT, the in consequent order u/s 263 of the Act passed by the Ld. PCIT, the Assessing Officer has passed the impugned assessment order Assessing Officer has passed the impugned assessment order Assessing Officer has passed the impugned assessment order passed u/s 144 r.w.s. 263 of the Act dated 2 u/s 144 r.w.s. 263 of the Act dated 25.03.2022 5.03.2022 and made additions including the disallowance of repair expense in respect of including the disallowance of repair expense in respect of including the disallowance of repair expense in respect of plant and machinery plant and machinery( Rs.16,34,786/- ) and building written off and building written off (Rs.46,81,751/-. ) totalling . ) totalling to Rs.61,60,537/-. The Ld. CIT(A) i The Ld. CIT(A) in the ex-partee order upheld the finding of the Assessing Officer without order upheld the finding of the Assessing Officer without order upheld the finding of the Assessing Officer without taking into consideration submission of the assessee. We find that taking into consideration submission of the assessee. We find that taking into consideration submission of the assessee. We find that the assessee challenged the finding of the Ld. PCIT on the issues the assessee challenged the finding of the Ld. PCIT on the issues the assessee challenged the finding of the Ld. PCIT on the issues including the issue of disallowance in respect of plant and including the issue of disallowance in respect of including the issue of disallowance in respect of machinery and building written off. The ITAT vide its order dated machinery and building written off. The ITAT vide its order dated machinery and building written off. The ITAT vide its order dated 10.03.2023 in the case of the assessee has set aside the order of 10.03.2023 in the case of the assessee has set aside the order of 10.03.2023 in the case of the assessee has set aside the order of the Ld. PCIT to the extent of addition in dispute. The relevant the Ld. PCIT to the extent of addition in dispute. The relevant the Ld. PCIT to the extent of addition in dispute. The relevant finding of the Tribunal is reproduced as under: finding of the Tribunal is reproduced as under: “18. On these given facts, we find merit in the plea of the On these given facts, we find merit in the plea of the On these given facts, we find merit in the plea of the assessee that, not only did the AO make enquiries on this assessee that, not only did the AO make enquiries on this assessee that, not only did the AO make enquiries on this issue but even the view taken by the AO in accepting the issue but even the view taken by the AO in accepting the issue but even the view taken by the AO in accepting the allowability of expenditure was a plausible view in law. allowability of expenditure was a plausible view in law. allowability of expenditure was a plausible view in law. 19. The Ld. AR further po The Ld. AR further pointed out to us that, the reliance inted out to us that, the reliance placed by the Ld. PCIT on Section 45(1A) of the Act was placed by the Ld. PCIT on Section 45(1A) of the Act was placed by the Ld. PCIT on Section 45(1A) of the Act was misplaced and distinguishable in the given facts of the misplaced and distinguishable in the given facts of the misplaced and distinguishable in the given facts of the present case. Taking us through the legislative history, he present case. Taking us through the legislative history, he present case. Taking us through the legislative history, he brought to our notice that, the Hon’ble Supreme C brought to our notice that, the Hon’ble Supreme C brought to our notice that, the Hon’ble Supreme Court in the Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 4 525/Mum/2023 ITA No.
case of Vania Silk Mills (P.) Ltd. v. CIT (191 ITR 647) had case of Vania Silk Mills (P.) Ltd. v. CIT (191 ITR 647) had case of Vania Silk Mills (P.) Ltd. v. CIT (191 ITR 647) had earlier held that the destruction of right on account of the earlier held that the destruction of right on account of the earlier held that the destruction of right on account of the destruction of an asset cannot be equated with the destruction of an asset cannot be equated with the destruction of an asset cannot be equated with the extinguishment of the right on account of its ‘transfer’ and extinguishment of the right on account of its ‘transfer’ and extinguishment of the right on account of its ‘transfer’ and that therefore, the receipt of insurance proceeds was held to ore, the receipt of insurance proceeds was held to ore, the receipt of insurance proceeds was held to be in the nature of capital receipt not liable to tax. In order be in the nature of capital receipt not liable to tax. In order be in the nature of capital receipt not liable to tax. In order to overcome the decision in Vania Silk Mills (supra), Section to overcome the decision in Vania Silk Mills (supra), Section to overcome the decision in Vania Silk Mills (supra), Section 45(1A) was inserted vide Finance Act, 1999 with effect from 45(1A) was inserted vide Finance Act, 1999 with effect from 45(1A) was inserted vide Finance Act, 1999 with effect from 01.04.2000. It is n 01.04.2000. It is noted that the Memorandum to the oted that the Memorandum to the Finance Bill, 1999 provided that, the said Section was Finance Bill, 1999 provided that, the said Section was Finance Bill, 1999 provided that, the said Section was inserted as various Courts had held that, there is no inserted as various Courts had held that, there is no inserted as various Courts had held that, there is no transfer when the asset is destroyed and that the money transfer when the asset is destroyed and that the money transfer when the asset is destroyed and that the money received under insurance policy is a compensation by virtue received under insurance policy is a compensation by virtue received under insurance policy is a compensation by virtue of contract of insurance and not a consideration for transfer. of contract of insurance and not a consideration for transfer. of contract of insurance and not a consideration for transfer. Section 45(1A) of the Act therefore provided a deeming Section 45(1A) of the Act therefore provided a deeming Section 45(1A) of the Act therefore provided a deeming fiction, that profits and gains arising from insurance fiction, that profits and gains arising from insurance fiction, that profits and gains arising from insurance compensation shall be taxed under the head 'capital gains.' compensation shall be taxed under the head 'capital gains.' compensation shall be taxed under the head 'capital gains.' The Ld. AR explained t The Ld. AR explained that, by insertion of section 45(1A), hat, by insertion of section 45(1A), the Legislature only sought to undo the ratio laid down in the Legislature only sought to undo the ratio laid down in the Legislature only sought to undo the ratio laid down in Vania Silk Mills (supra) in so far as the proposition that Vania Silk Mills (supra) in so far as the proposition that Vania Silk Mills (supra) in so far as the proposition that insurance compensation was not liable to tax. The Ld. AR, insurance compensation was not liable to tax. The Ld. AR, insurance compensation was not liable to tax. The Ld. AR, however, pointed out that, in the present c however, pointed out that, in the present case, the assessee ase, the assessee had received insurance proceeds of Rs.36,71,198/ had received insurance proceeds of Rs.36,71,198/ had received insurance proceeds of Rs.36,71,198/-, which in its entirety, had been offered to tax as business income, in its entirety, had been offered to tax as business income, in its entirety, had been offered to tax as business income, and therefore the provisions of Section 45(1A) of the Act had and therefore the provisions of Section 45(1A) of the Act had and therefore the provisions of Section 45(1A) of the Act had no application. no application.
In this regard, the Ld. AR invited ou In this regard, the Ld. AR invited our attention to the r attention to the final survey report of M/s AB Phadake & Co, CA in which final survey report of M/s AB Phadake & Co, CA in which final survey report of M/s AB Phadake & Co, CA in which the auditor had reported the expenses incurred by the the auditor had reported the expenses incurred by the the auditor had reported the expenses incurred by the company and the final claim settled against it, which are as company and the final claim settled against it, which are as company and the final claim settled against it, which are as under: - Details Expenses Final claim settled Final claim settled incurred by by insurance insuranc company Plant & Machinery Plant & Machinery 3026190 1391404 1391404 Building 4793819 112068 Stock 2828382 2333347 2333347 Fire fighting expenses Fire fighting expenses 27600 27600 Total 10675991 3864419 3864419 Policy expenses Policy expenses - 193221 Net claim received Net claim received 10675991 3671198 3671198
Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 5 525/Mum/2023 ITA No.
The Ld. AR pointed out that, the insurance proceeds The Ld. AR pointed out that, the insurance proceeds The Ld. AR pointed out that, the insurance proceeds of Rs.36,71,198/ of Rs.36,71,198/- was never claimed as capital receipt not was never claimed as capital receipt not liable to tax. Instead, the entire proceeds were offered to tax liable to tax. Instead, the entire proceeds were offered to tax liable to tax. Instead, the entire proceeds were offered to tax by way of ‘business income’. Rather than crediting it by way of ‘business income’. Rather than crediting it by way of ‘business income’. Rather than crediting it separately in the accounts, separately in the accounts, the assessee netted off the the assessee netted off the insurance proceeds against the loss/expenses incurred in insurance proceeds against the loss/expenses incurred in insurance proceeds against the loss/expenses incurred in connection therewith [(1,06,75,991 connection therewith [(1,06,75,991-36,71,198)=70,04,793]. 36,71,198)=70,04,793]. Alternatively, the assessee could have claimed deduction Alternatively, the assessee could have claimed deduction Alternatively, the assessee could have claimed deduction for the expenses of Rs.1,06,75,991/ for the expenses of Rs.1,06,75,991/- and separately off and separately offered the insurance proceeds of Rs.36,71,198/ the insurance proceeds of Rs.36,71,198/- to tax. Any which to tax. Any which ways, the net result/ impact on the computation of business ways, the net result/ impact on the computation of business ways, the net result/ impact on the computation of business profits was the same. profits was the same.
Referring to the above table, the Ld. AR showed us Referring to the above table, the Ld. AR showed us Referring to the above table, the Ld. AR showed us that out of the total insurance proceeds of Rs.36,71,1 that out of the total insurance proceeds of Rs.36,71,1 that out of the total insurance proceeds of Rs.36,71,198/-, a sum to the extent of Rs.25,54,168/ sum to the extent of Rs.25,54,168/- was towards damaged was towards damaged stock, fire-fighting expenses & policy expenses, which fighting expenses & policy expenses, which fighting expenses & policy expenses, which admittedly was in the revenue field and therefore was admittedly was in the revenue field and therefore was admittedly was in the revenue field and therefore was rightly offered and assessed to tax by way of ‘business rightly offered and assessed to tax by way of ‘business rightly offered and assessed to tax by way of ‘business income’. In so far as the r income’. In so far as the remaining sum of Rs.11,17,030/ emaining sum of Rs.11,17,030/- is concerned, it is noted that the same pertained to plant & is concerned, it is noted that the same pertained to plant & is concerned, it is noted that the same pertained to plant & machinery and building. The Ld. AR rightly pointed out that, machinery and building. The Ld. AR rightly pointed out that, machinery and building. The Ld. AR rightly pointed out that, the assessee had indeed offered the remaining sum of the assessee had indeed offered the remaining sum of the assessee had indeed offered the remaining sum of Rs.11,17,030/ Rs.11,17,030/- by way of ‘business income’ and the by way of ‘business income’ and therefore the allegation of the Ld. PCIT that there was dual benefit the allegation of the Ld. PCIT that there was dual benefit the allegation of the Ld. PCIT that there was dual benefit claimed by the assessee is found to be patently erroneous. claimed by the assessee is found to be patently erroneous. claimed by the assessee is found to be patently erroneous. It is noted that, the insurance claim was lodged by the It is noted that, the insurance claim was lodged by the It is noted that, the insurance claim was lodged by the assessee having regard to the expenses incurred for assessee having regard to the expenses incurred for assessee having regard to the expenses incurred for restoration of the asse restoration of the assets. Hence, we find merit in the ts. Hence, we find merit in the contention of the assessee that the proceeds received from contention of the assessee that the proceeds received from contention of the assessee that the proceeds received from the insurance company had intimate nexus with the the insurance company had intimate nexus with the the insurance company had intimate nexus with the repairs/expenses incurred by the assessee. Accordingly, repairs/expenses incurred by the assessee. Accordingly, repairs/expenses incurred by the assessee. Accordingly, the action of the AO in allowing the assessee’s treatment o the action of the AO in allowing the assessee’s treatment o the action of the AO in allowing the assessee’s treatment of the insurance proceeds as a business receipt and thereby the insurance proceeds as a business receipt and thereby the insurance proceeds as a business receipt and thereby netting it off against the expenses incurred cannot be said netting it off against the expenses incurred cannot be said netting it off against the expenses incurred cannot be said to be an unsustainable view in law. to be an unsustainable view in law. 23. The Ld. PCIT however, observed that, this sum ought Ld. PCIT however, observed that, this sum ought Ld. PCIT however, observed that, this sum ought to have been adjusted from the block of assets in terms of to have been adjusted from the block of assets in terms of to have been adjusted from the block of assets in terms of Section 45(1A) read with Section 50 of the Act. Accordingly, Section 45(1A) read with Section 50 of the Act. Accordingly, Section 45(1A) read with Section 50 of the Act. Accordingly, the depreciation claim to that extent ought to be reduced the depreciation claim to that extent ought to be reduced the depreciation claim to that extent ought to be reduced u/s 32 of the Act. By not doi u/s 32 of the Act. By not doing so, according to Ld. PCIT, ng so, according to Ld. PCIT, the assessee had claimed dual benefit viz., excess claim of the assessee had claimed dual benefit viz., excess claim of the assessee had claimed dual benefit viz., excess claim of depreciation, which was impermissible in law. In this depreciation, which was impermissible in law. In this depreciation, which was impermissible in law. In this Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 6 525/Mum/2023 ITA No.
regard, the Ld. AR alternatively argued that, even if the Ld. regard, the Ld. AR alternatively argued that, even if the Ld. regard, the Ld. AR alternatively argued that, even if the Ld. PCIT’s proposition is taken to its logical conclus PCIT’s proposition is taken to its logical conclusion and the ion and the provisions of Section 45(1A) read with Section 50 of the Act provisions of Section 45(1A) read with Section 50 of the Act provisions of Section 45(1A) read with Section 50 of the Act is held to be applicable, then also there is no prejudice is held to be applicable, then also there is no prejudice is held to be applicable, then also there is no prejudice being caused to the interests of the Revenue. He pointed out being caused to the interests of the Revenue. He pointed out being caused to the interests of the Revenue. He pointed out that, the sum of Rs.11,17,030/ that, the sum of Rs.11,17,030/- which was offered to tax as which was offered to tax as ‘business income’ would then have to be otherwise reduced iness income’ would then have to be otherwise reduced iness income’ would then have to be otherwise reduced from the computation of income under the head ‘Profits & from the computation of income under the head ‘Profits & from the computation of income under the head ‘Profits & Gains of Business’. Correspondingly, it would have been Gains of Business’. Correspondingly, it would have been Gains of Business’. Correspondingly, it would have been adjusted from block of assets in terms of Section 45(1A) adjusted from block of assets in terms of Section 45(1A) adjusted from block of assets in terms of Section 45(1A) read with Section 50 of the Act read with Section 50 of the Act and offered as ‘Capital and offered as ‘Capital Gains, if any, or there would be a resultant decrease in the Gains, if any, or there would be a resultant decrease in the Gains, if any, or there would be a resultant decrease in the claim of depreciation. The Ld. AR demonstrated that, by claim of depreciation. The Ld. AR demonstrated that, by claim of depreciation. The Ld. AR demonstrated that, by doing so, the resultant decrease in claim of depreciation doing so, the resultant decrease in claim of depreciation doing so, the resultant decrease in claim of depreciation would be comparatively lesser than the exclusion/ would be comparatively lesser than the exclusion/ would be comparatively lesser than the exclusion/ deduction of the sum of Rs.11,17,030/ on of the sum of Rs.11,17,030/- from the ‘business from the ‘business income’. Consequently, the taxable income/loss for the income’. Consequently, the taxable income/loss for the income’. Consequently, the taxable income/loss for the relevant year would in fact stand further reduced. Having relevant year would in fact stand further reduced. Having relevant year would in fact stand further reduced. Having regard to the aforesaid explanation, we find merit in the Ld. regard to the aforesaid explanation, we find merit in the Ld. regard to the aforesaid explanation, we find merit in the Ld. AR’s alternative plea as well, AR’s alternative plea as well, that there is no prejudice that there is no prejudice caused to the interests of the Revenue by the AO’s action of caused to the interests of the Revenue by the AO’s action of caused to the interests of the Revenue by the AO’s action of assessing the insurance proceeds under the head ‘Business assessing the insurance proceeds under the head ‘Business assessing the insurance proceeds under the head ‘Business Income’.
Overall, therefore, we note that, not only the AO had Overall, therefore, we note that, not only the AO had Overall, therefore, we note that, not only the AO had enquired into this particular issue but he enquired into this particular issue but he had adopted one had adopted one of the views permissible in law. As noted above, the of the views permissible in law. As noted above, the of the views permissible in law. As noted above, the premise of the Ld. PCIT was based on the incorrect premise of the Ld. PCIT was based on the incorrect premise of the Ld. PCIT was based on the incorrect assumption of fact, and also the reasoning given by the Ld. assumption of fact, and also the reasoning given by the Ld. assumption of fact, and also the reasoning given by the Ld. PCIT for restoring this issue for fresh examination, is held to PCIT for restoring this issue for fresh examination, is held to PCIT for restoring this issue for fresh examination, is held to be unjustified. Accordingly, the order of the Ld. PCIT with ied. Accordingly, the order of the Ld. PCIT with ied. Accordingly, the order of the Ld. PCIT with reference to the second (2nd) issue is therefore set aside reference to the second (2nd) issue is therefore set aside reference to the second (2nd) issue is therefore set aside and accordingly cancelled. and accordingly cancelled.”
5.1 Since, the revision of the assessment order u/s 263 of the Act Since, the revision of the assessment order u/s 263 of the Act Since, the revision of the assessment order u/s 263 of the Act to the extent of plant and machinery and building written off has to the extent of plant and machinery and building wr to the extent of plant and machinery and building wr been cancelled by the ITAT (supra), the addition made in the by the ITAT (supra), the addition made in the by the ITAT (supra), the addition made in the consequent assessment order passed by the Assessing Officer consequent assessment order passed by the Assessing Officer consequent assessment order passed by the Assessing Officer
Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 7 525/Mum/2023 ITA No. cannot survive. Accordingly, the addition made by the Assessing cannot survive. Accordingly, the addition made by the Assessing cannot survive. Accordingly, the addition made by the Assessing Officer and upheld by the Ld. CIT(A) is deleted. The order of the Ld. Officer and upheld by the Ld. CIT(A) is deleted. The orde Officer and upheld by the Ld. CIT(A) is deleted. The orde PCIT on the issue-in in-dispute is accordingly set aside. The ground dispute is accordingly set aside. The ground No. 2 of the appeal of the assessee is accordingly allowed. No. 2 of the appeal of the assessee is accordingly allowed. No. 2 of the appeal of the assessee is accordingly allowed.
Now we take up the appeal of the assessee for assessment Now we take up the appeal of the assessee for assessment Now we take up the appeal of the assessee for assessment year 2017-18. The grounds raised
by the assessee are rep 18. The grounds raised by the assessee are rep 18. The grounds raised by the assessee are reproduced as under:
On the facts and circumstances of the case and in law the 1. On the facts and circumstances of the case and in law the 1. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the additions u/s 14A Ld. CIT (A) erred in confirming the additions u/s 14A Ld. CIT (A) erred in confirming the additions u/s 14A amounting to § 4,25,610 without appreciating that the amounting to § 4,25,610 without appreciating that the amounting to § 4,25,610 without appreciating that the Appellant has voluntary made the disallowance u/s 14A Appellant has voluntary made the disallowance u/s 14A Appellant has voluntary made the disallowance u/s 14A r.w.r. 8D amoun r.w.r. 8D amounting to Rs. 3,71,661 and thereby there is a ting to Rs. 3,71,661 and thereby there is a double addition which is not permitted. double addition which is not permitted. 7. Briefly stated, facts of the case are that the Assessing Officer Briefly stated, facts of the case are that the Assessing Officer Briefly stated, facts of the case are that the Assessing Officer made disallowance amounting to Rs.4,25,610/ made disallowance amounting to Rs.4,25,610/- u/s 14A of the Act u/s 14A of the Act in the assessment order passed u/s 143(3 in the assessment order passed u/s 143(3) of the Act dated ) of the Act dated 30.11.2019. On further appeal, the assessee requested that the 30.11.2019. On further appeal, the assessee requested that the 30.11.2019. On further appeal, the assessee requested that the amount of suo motu disallowance of Rs.3,71,661/ amount of suo motu disallowance of Rs.3,71,661/- may be allowed, may be allowed, which was added in the revised return of income and not been added in the revised return of income and not been added in the revised return of income and not been considered by the Assessing Officer. The Ld. CIT considered by the Assessing Officer. The Ld. CIT(A) however decided (A) however decided the appeal observing as under: the appeal observing as under:
“7. The facts of the case as noted above are that the 7. The facts of the case as noted above are that the 7. The facts of the case as noted above are that the appellant has not pursued the appeal despite being granted appellant has not pursued the appeal despite being granted appellant has not pursued the appeal despite being granted several opportunities. No details, documents or submissions several opportunities. No details, documents or submissions several opportunities. No details, documents or submissions have been provided to come to an have been provided to come to any conclusion other than y conclusion other than those arrived at by the assessing officer in the assessment those arrived at by the assessing officer in the assessment those arrived at by the assessing officer in the assessment order. Being quite aware of these facts and the possible order. Being quite aware of these facts and the possible order. Being quite aware of these facts and the possible conclusions that may be drawn the assessee did not file any conclusions that may be drawn the assessee did not file any conclusions that may be drawn the assessee did not file any written submissions. That clearly connotes that the ass written submissions. That clearly connotes that the ass written submissions. That clearly connotes that the assessee
Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 8 525/Mum/2023 ITA No. deems itself to be on weak footing and thus remained deems itself to be on weak footing and thus remained deems itself to be on weak footing and thus remained incommunicado. The non incommunicado. The non-chalance of the assessee, despite chalance of the assessee, despite what what what it it it claims claims claims in in in the the the appellate appellate appellate form, form, form, is is is quite quite quite incomprehensible. The department in the absence of any incomprehensible. The department in the absence of any incomprehensible. The department in the absence of any pursuance in the matter of any sort ev pursuance in the matter of any sort even till the date of en till the date of passing order is left with no choice but to finalize the case passing order is left with no choice but to finalize the case passing order is left with no choice but to finalize the case against the assessee. There is no evidence propounded in against the assessee. There is no evidence propounded in against the assessee. There is no evidence propounded in respect of what was claimed in the "Statement of Facts" respect of what was claimed in the "Statement of Facts" respect of what was claimed in the "Statement of Facts" namely disallowance of Rs. 3,71,661/ namely disallowance of Rs. 3,71,661/- us 14A of the Act. us 14A of the Act. Merely stating, to that effect, does not suffice. That has to be ly stating, to that effect, does not suffice. That has to be ly stating, to that effect, does not suffice. That has to be backed by suitable evidences and judicial precedents, if any, backed by suitable evidences and judicial precedents, if any, backed by suitable evidences and judicial precedents, if any, in support. This has not been done by the assessee. The in support. This has not been done by the assessee. The in support. This has not been done by the assessee. The AO's order needs no intervention. There is nothing to rebut AO's order needs no intervention. There is nothing to rebut AO's order needs no intervention. There is nothing to rebut what had been arr what had been arrived at by the AO after diligent enquiries ived at by the AO after diligent enquiries and sufficient opportunities. The findings, in respect of all the and sufficient opportunities. The findings, in respect of all the and sufficient opportunities. The findings, in respect of all the above issues, clearly require no intervention. above issues, clearly require no intervention.”
Before us, the Ld. Counsel of the assessee Before us, the Ld. Counsel of the assessee filed a copy of the filed a copy of the revised computation of the total income and submitted that suo revised computation of the total income and submitted that suo revised computation of the total income and submitted that suo motu disallowance of Rs.3,71,661/ motu disallowance of Rs.3,71,661/- was already added while was already added while computing the taxable income and therefore, relief to that extent computing the taxable income and therefore, relief to that extent computing the taxable income and therefore, relief to that extent may be allowed.
We have heard rival submiss We have heard rival submission of the parties on the issue ion of the parties on the issue-in- dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the assessee is only seeking exclusion of the amount which was already assessee is only seeking exclusion of the amount which was already assessee is only seeking exclusion of the amount which was already added suo motu towards disallowance u/s 14A of the Act added suo motu towards disallowance u/s 14A of the Act added suo motu towards disallowance u/s 14A of the Act amounting to Rs.3,71,661/ amounting to Rs.3,71,661/-. From the documents filed before us , m the documents filed before us , we have verified that the amount of Rs. Rs.3,71,661/- is included we have verified that the amount of Rs. Rs.3,71,661/ we have verified that the amount of Rs. Rs.3,71,661/ in the computation of the taxable income and therefore the addition in the computation of the taxable income and therefore the addition in the computation of the taxable income and therefore the addition made by the Assessing Officer made by the Assessing Officer u/s 14A of the Act has to be reduced has to be reduced to the extent of Rs.3,71,661/ 3,71,661/-. We direct the Assessing Officer to . We direct the Assessing Officer to give benefit of Rs.3,71,661/ give benefit of Rs.3,71,661/- already included by the assessee in already included by the assessee in Sunbeam Monochem (P) Ltd. Sunbeam Monochem (P) Ltd. 9 525/Mum/2023 ITA No.
the revised return filed for the purpose of the computation of the the revised return filed for the purpose of the computation of the the revised return filed for the purpose of the computation of the total income after verification after verification. The ground of appeal of the assessee . The ground of appeal of the assessee is accordingly allowed for statistical purposes. ordingly allowed for statistical purposes.