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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the Revenue pertaining to assessment year 2010-11 is directed against an order passed by CIT(A)- 14, Mumbai dated 30/03/2015, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 18/03/2013.
(Assessment Year : 2010-11) 2. In this appeal, Revenue has raised the following Grounds of appeal:-
1. "The Ld. CIT(A) has erred on facts and in law in deleting addition u/ s. 14A r.w. Rule 8D without appreciating the fact that Rule 8D prescribes the method of determining amount of expenditure in relation to income not includible in total income and was inserted by Income Tax 5th Amendment Rule, 2008 w.e.f. 24.03.2018.
The Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 92,27,642/ - under section 145A of the Act made on account of non inclusion of excise duty in the valuation of closing stock by ignoring the provisions of section 145A of the Act which states that all taxes and duties paid are to be included for the purpose of valuation under section 145A of the Act.” 3. At the outset, it may be stated that at the time of hearing, it was a common point between the parties that both the issues raised herein had been decided by the CIT(A) in favour of the assessee by invoking the precedents in the assessee’s own case by way of the orders of the Tribunal for earlier assessment years. It was also noticed that so far as issue raised in Ground of appeal No.2 is concerned, the CIT(A) followed the earlier precedent for assessment year 2006-07, and the said issue has also been affirmed by the Hon'ble Bombay High Court in favour of the assessee vide of 2012 dated 19th September, 2014. In this background, in order to impart completeness to the order, the following discussion is relevant.
4. In so far as, Ground No.1 is concerned, the same arises from the action of the Assessing Officer in making a disallowance under section 14A of the Act of Rs.7,97,817/- by applying the formula contained in Rule 8D(2) of the Income Tax Rules, 1962 ( in short ‘the Rules’). The CIT(A) noticed that similar issue in assessment year 2011-12 in the case of the assessee came up before the Tribunal and vide dated 4/7/2016, the disallowance made out of (Assessment Year : 2010-11) interest expenditure by applying Rule 8D(2)(ii) of the Rules has been deleted. The Tribunal had deleted the disallowance by noticing that the interest-free funds owned by the assessee were in excess of the investments, which had generated tax free dividend income and, therefore, no disallowance out of interest is permissible under section 14A of the Act. In this manner, the CIT(A) deleted the additional disallowance made by the Assessing Officer while retaining the suo- motu disallowance made by the assessee in the return of income.
5. Before us, there is no material to say that there is change in the facts and circumstances in this year as compared to the assessment year 2011-12, which was the subject matter of consideration by the Tribunal. As a consequence, we find no reason to interfere with the decision of the CIT(A), which is based on the precedent in the assessee’s own case which continues to hold the field. Thus, on this aspect Revenue fails.
In so far as, the issue in Ground of appeal No.2 is concerned, the same relates to the working of adjustments under section 145A of the Act. As per the assessee, the working specified in section 145A of the Act does not result in any adjustment of income, whereas the Assessing Officer determined a negative adjustment of Rs.92,27,642/- in the current year because of the increased value of closing stock taken in the earlier years. The Assessing Officer noted that the earlier year’s assessment were the subject matter of appeal and that the instant assessment would be suitably rectified in accordance with the decision of the appellate authorities in the earlier assessment years. The CIT(A) noted that the action of the Assessing Officer was not justified
(Assessment Year : 2010-11) inasmuch as the adjustments worked out by the assessee in the earlier years in terms of section 145A of the Act have been affirmed. In this context, our attention was also invited to the judgment of the Hon'ble Bombay High Court in assessee’s own case for assessment year 2006-07 dated 19/9/2014, wherein the stand of the assessee has been upheld. Following the aforesaid precedent and also the decision of the Tribunal in assessee’s own case for assessment years 2011-12(supra) and assessment year 2007-08 vide dated 18/09/2013, the decision of the CIT(A) cannot be faulted and Revenue has to fail. Thus, on this Ground also Revenue fails.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 10/08/2016