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Income Tax Appellate Tribunal, DELHI BENCHES : C : NEW DELHI
Before: SHRI R.S. SYAL & SMT. BEENA A. PILLAI
Date of Hearing : 17.09.2018 Date of Pronouncement : 18.09.2018 ORDER PER R.S. SYAL, VP: These two appeals filed by the assessee relate to the assessment years 2006-07 and 2011-12. Since common issues are involved in these appeals, of convenience.
Assessment Year 2006-07
The first issue raised in these appeal through ground No.2 is against the confirmation of action of the Assessing Officer in disallowing Rs.1,00,43,676/- claimed by the assessee as deferred revenue expenditure.
Having heard both the sides and perused the relevant material on record, it is observed that similar issue came up for consideration before the Tribunal in its order for the assessment years 2005-06, 2008-09 and 2010-
11. A copy of such order has been placed on record. The ld. AR candidly admitted that this issue has been decided against the assessee by the Tribunal in such an order. In the absence of any distinguishing feature brought to our notice by the ld. AR on this issue, we uphold the impugned order. This ground is not allowed.
The next ground is against the alternative submission of the assessee vis-à-vis the deferred revenue expenditure. Here again, the ld. AR submitted that this issue has been decided by the Tribunal against the 2 & 2612/Del/2015 assessee in the aforenoted order. Respectfully following the precedent, we uphold the impugned order on this score. This ground fails.
The next ground is against disallowance of depreciation on water pump, electrical fittings, water treatment plant, etc. The ld. AR submitted that except for holding that water pumps and electrical fittings are part of building cost, the Tribunal treated water treatment plant etc. as not forming part of `Building cost’ in its order for the preceding year. The ld. AR candidly admitted that the facts and circumstances of this ground are mutatis mutandis similar to the preceding year. Respectfully following the precedent, we adopt the findings recorded by the Tribunal in its order in paras 15 and 15.1. Accordingly, it is held that water pump and electrical fittings are part of `Building cost’, whereas the water treatment plant, etc. are not part of `Building cost’.
In the result, the appeal is partly allowed for statistical purposes.
Assessment year 2011-12
Ground No.2 raised by the assessee is against the sustenance of disallowance of Rs.59,66,807/- on account of deferred revenue expenditure. 3 ground are mutatis mutandis similar to ground No.2 of assessment year 2006-07. Following the view taken hereinabove, we dismiss this ground.
Similar is the position for ground No.3 which is stated to be similar to ground No.3 for the assessment year 2006-07. Following the view taken for the assessment year 2006-07, we dismiss this ground of appeal.
9. Ground No.4 is against confirmation of addition of Rs.75,857/- made by the Assessing Officer u/s 14A of the Act.
10. Briefly stated, the facts of this ground are that the assessee received exempt dividend income of Rs.15,245/-. The Assessing Officer computed disallowance u/s 14A read with Rule 8D at Rs.8,47,034/-. The ld. CIT(A) reduced the disallowance to Rs.75,857/-. The assessee is aggrieved against the sustenance of addition to this extent.
We have heard both the sides and perused the relevant material on record. It is found that the assessee earned dividend income of Rs.15,245/-, which was claimed as exempt. The Hon'ble Delhi High Court in the case Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) has held that if there is 4 u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. (2014) 90CCH 081-Del-HC.
The net effect of these decisions is that the disallowance u/s 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted. In view of the above precedents, which are squarely applicable to the facts of the instant case, we limit the disallowance to the extent of exempt income of Rs.15,245/-. The impugned order is modified pro tanto.
In the result, the appeal is partly allowed.
The order pronounced in the open court on 18.09.2018.