Nahar Capital and Financial Services Ltd., Ludhiana v. Addl. CIT, Ludhiana

ITA 1120/CHANDI/2011 | 2008-2009
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 112021514 RSA 2011
Assessee PAN AACCN2866Q
Bench Chandigarh
Appeal Number ITA 1120/CHANDI/2011
Duration Of Justice 8 month(s) 5 day(s)
Appellant Nahar Capital and Financial Services Ltd., Ludhiana
Respondent Addl. CIT, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-07-2012
Date Of Final Hearing 30-12-2014
Next Hearing Date 30-12-2014
Assessment Year 2008-2009
Appeal Filed On 22-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO.1120/CHD/2011 (ASSESSMENT YEAR:2008-09) NAHAR CAPITAL AND FINANCIAL SERVICES LTD. VS. TH E ADDL.C.I.T. 375 INDUSTRIAL AREA A RANGE VII LUDHIANA. LUDHIANA. PAN: AACCN2866Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVDEEP SHARMA RESPONDENT BY : SMT.JYOTI KUMARI CIT DR DATE OF HEARING : 19.07.2012 DATE OF PRONOUNCEMENT : 27.07.2012 O R D E R PER SUSHMA CHOWLA J.M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-II LUDHIANA D ATED 15.09.2011 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORD ER PASSED U/S 143(3) OF INCOME TAX ACT 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAD RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN N OT DELETING THE ADDITION OF RS.1 24 36 589/- U/S 14A OF THE ACT MADE BY THE ASSESSING OFFICER BY APPLYING RULE 8D OF THE INCOME TAX RULES WITHOUT A SSUMING THE PROPER JURISDICTION AND IN VIEW OF THE FACT THAT APPELLANT ITSELF HAD DISALLOWED RS.33 21 347/- IN ITS RETURN ON PROPORTIONATE BASIS . DIRECTIONS MAY BE GIVEN TO RESTRICT THE DISALLOWANCE U/S 14A AT RS.33 21 347/- AS COMPUTED BY THE APPELLANT COMPANY IN VIEW OF THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD V/S DCIT WHER EIN THE METHOD OF APPORTIONMENT HAS BEEN HELD TO BE RECOGNISED METHOD FOR DISALLOWANCE U/S 14A OF THE ACT. DIRECTIONS MAY BE GIVEN NOT T O APPLY RULE 8D TO WORKOUT EXPENDITURE U/S 14A OF THE ACT MERELY ON SU RMISES & CONJECTURES AND IN THE ABSENCE OF ANY NEXUS PROVED BY ASSESSING OFFICER AND IN VIEW OF HON'BLE JURISDICTIONAL HIGH COURT'S DECISION IN THE CASE OF CIT VS HERO CYCLES LTD REPORTED IN 323 ITR 518 (PB.). 2 2. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND ALT ER MODIFY OR SUBSTITUTE ALL OR ANY OF THE ABOVE MENTIONED GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OFF. 3. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THOUGH THE ASSESSEE HAS RAISED GROUNDS OF APPEAL IN RESPECT OF COMPUTATION OF DISALLOWANCE UNDER SECTION 14A THE SAID IS RELATAB LE TO THE COMPUTATION OF BOOK PROFITS AS THE ASSESSING OFFICER HAS LEVIED THE TAXES ON THE BOOK PROFITS OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION. THE LEARNED A.R. FOR THE ASSESSEE FURTHER POINTED OUT T HAT WHILE DETERMINING THE SAID BOOK PROFITS UNDER SECTION 115JB OF THE AC T THE ASSESSING OFFICER HAD ADDED BACK THE DISALLOWANCE UNDER SECTI ON 14A OF THE ACT AND COMPUTED THE TAX LIABILITY OF THE ASSESSEE COMP ANY. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND-SW IFT LTD. IN ITA NO.729/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 DATE OF ORDER 30.11.2009. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS IN RESP ECT OF COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT. THE A SSESSING OFFICER WHILE COMPUTING THE SAID BOOK PROFITS HAD ADDED BAC K THE DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE ACT OF THE NET PROFITS OF THE BUSINESS AND COMPUTED THE TAX LIABILITY OF THE ASSE SSEE COMPANY THEREAFTER. WE FIND THAT THE ISSUE IN THE PRESENT CASE IS COVERED BY THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN DC IT VS. IND-SWIFT LTD. (SUPRA) WHERE VIDE ORDER DATED 30.11.2009 VIDE PARA 8 IT WAS HELD AS UNDER: 8. THE GROUND 1(IV) RAISED BY THE REVENUE IS AGAIN ST THE COMPUTATION OF BOOK PROFITS U/S 115 JB OF THE A CT. THE ASSESSING OFFICER WHILE COMPUTING THE BOOK PROF IT 3 U/S 115 JB OF THE ACT HAD ADDED BACK THE DISALLOWAN CE WORKED U/S 14A OF THE I.T. ACT TO THE NET PROFIT SH OWN IN THE PROFIT AND LOSS ACCOUNT AND COMPUTED THE PROFIT S FOR THE YEAR. THE CIT (A) REWORKED THE BOOK PROFITS BY EXCLUDING THE SAID NOTIONAL DISALLOWANCE U/S 115 JB OF THE ACT IN TURN FOLLOWING THE RATIO LAID DOWN BY T HE APEX COURT IN APOLLO TYRES LTD. 255 ITR 273 (SC). WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A). THE ADJUSTMENTS IF ANY TO BE MADE TO THE PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT ARE PROVIDED IN THE SE CTION 115 JB OF THE ACT ITSELF. THERE IS NO PROVISION IN THE ACT TO MAKE ADJUSTMENT ON ACCOUNT OF NOTIONAL DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE AC T. THE HON'BLE SUPREME COURT IN APOLLO TYRES LTD. (SUPRA) HELD THAT THE PROFITS OF THE BUSINESS ARE N OT TO BE DISTURBED FOR COMPUTING THE BOOK PROFITS EXCEPT IN THE CIRCUMSTANCES PROVIDED UNDER THE SAID ACT. WE CONFIRM THE ORDER OF CIT IN THIS REGARD AND DISMISS THE GROUND NO.1(IV) RAISED BY THE REVENUE. 6. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND-SWIFT LTD. (SUPRA) AND FOLLOWING THE SAME WE DIRECT THE ASSESS ING OFFICER TO ADOPT THE BOOK PROFITS AS PER THE PROFIT & LOSS ACCOUNT A ND DO NOT MAKE ADDITION ON ACCOUNT OF DISALLOWANCE WORKED OUT UNDE R SECTION 14A OF THE ACT AS SUCH DISALLOWANCE IS COMPUTED UNDER THE NOR MAL PROVISION OF THE ACT WHICH ARE NOT APPLICABLE FOR DETERMINING BOOK PROFITS UNDER SECTION 115JB OF THE ACT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JULY 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 27 TH JULY 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR ITAT CHANDIGARH 4