TAKE SOLUTIONS LIMITED,CHENNAI vs. ACIT CORPORATE CIRCLE 3(1), CHENNAI

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)- 11, Chennai, in dated 21.02.2019 for assessment year 2016-17.

M/s. Take Solutions Limited, the assessee, is engaged in the business of software development and service sector. Its assessment for the assessment year 2016-17 was completed u/s. 143(3) on 23.12.2018, wherein, the Assessing Officer invoked the provisions of section 14A r.w.r. 8D and made a disallowance of Rs. 13,72,828/- under Rule 8D(i), Rs. 1,32,48,900/- under Rule 8D(iii) and thus, arrived a total disallowance at Rs. 1,46,21,428/-. However, applying the Apex court decision in the case of PCIT, Patiala vs State Bank of Patiala (2018)

The Ld. AR submitted that aggrieved against the disallowance made by the AO, the assessee filed an appeal before the Ld. CIT(A) pleading, inter alia, that the assessee has not incurred any expenditure for earning exempt income, the Ld. AO erred in applying Rule 8D without having regard to the accounts of the assessee as to why he was not satisfied with assessee’s claim that no expenditure was incurred in relation to exempt income, that the interest expenses of Rs. 19,09,178/- was incurred exclusively for the business carried on by the assessee etc and relying on specific case laws of the tribunal on such issues. Further, the assessee also claimed that the depreciation allowance claimed by it was not allowed by the AO. The Ld.AR submitted that the Ld. CIT(A) without considering the facts and the associated case laws relied on by the assessee, overruled the decision of the AO which is based on the application of the Apex Court decision in the case of PCIT, Patiala vs State Bank of Patiala, (2018) 99 Taxmann.286 (SC) dated 08.11.2018, enhanced the assessment and hence the Ld. AR pleaded to allow the assessee’s appeal. He further brought to our notice that the Ld. CIT(A) in the assessee’s own case in ITA 65(T)/CIT(A)- 7/17-18 dated 15.11.2018 has considered these issues in favour of the assessee.

We heard the rival submissions. It is clear from the order of the Ld. AO that he has applied the Apex Court decision in the case of PCIT, Patiala vs State Bank of Patiala, (2018) 99 Taxmann.286 (SC) dated 08.11.2018 in the assessee’s case, and restricted the disallowance u/s. 14A r.w.r 8D to the extent of exempt income only. Aggrieved against that order, the assessee filed an appeal raising specific issues relying on the specific case laws. It is seen from the order of the Ld. CIT(A) that he has not considered the specific points raised by the assessee, however, disposed the appeal by enhancing the assessment. It is also seen that the Ld. CIT(A) has not dealt the ground raised by the assessee with regard to the depreciation issue. In view of these facts and circumstances, we deem it fit to remit the issues back to the Ld. CIT(A). The assessee shall lay all material in support of its contentions and comply with the requirements of the Ld. CIT(A) in accordance with law. The Ld. CIT(A) after examining the specific issues raised by the assessee and after affording effective opportunity to the assessee, shall pass appropriate order in accordance with law.

In the result, the assessee’s appeal is treated as partly allowed for statistical purposes.