Assistant Commissioner of Income-tax,, v. M/s. Khadkeshwar Hatcheries Pvt. Ltd.,, Aurangabad

ITA 1454/PUN/2015 | 2012-2013
Pronouncement Date: 10-11-2017 | Result: Dismissed

Appeal Details

RSA Number 145424514 RSA 2015
Assessee PAN AAACK9837G
Bench Pune
Appeal Number ITA 1454/PUN/2015
Duration Of Justice 2 year(s) 7 day(s)
Appellant Assistant Commissioner of Income-tax,,
Respondent M/s. Khadkeshwar Hatcheries Pvt. Ltd.,, Aurangabad
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 10-11-2017
Date Of Final Hearing 02-11-2017
Next Hearing Date 02-11-2017
Last Hearing Date 31-10-2017
First Hearing Date 31-10-2017
Assessment Year 2012-2013
Appeal Filed On 03-11-2015
Judgment Text
] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NO.1454/PUN/2015 / ASSESSMENT YEAR : 2012-13 ASST.COMMISSIONER OF IN COME TAX CIRCLE -1 AURANGABAD. . / APPELLANT V/S M/S. KHADKESHWAR HATCHERIES PVT. LTD. 2 ND FLOOR SIDDHARTH ARCADE STATION ROAD AURANGABAD PAN : AAACK9837G. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI JCIT. / ORDER PER ANIL CHATURVEDI AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF T HE ORDER OF COMMISSIONER OF INCOME TAX (A) 1 AURANGABAD DT.26.08.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF POULTRY AND PRODUCTION OF BROILER DAY OLD CHICKS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y.2012-13 ON / DATE OF HEARING : 02.11.2017 / DATE OF PRONOUNCEMENT: 10.11.2017 2 28.09.2012 DECLARING TOTAL INCOME OF RS.1 40 98 460/-. THE CA SE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.31.10.2014 AND THE TOTAL INC OME WAS DETERMINED AT RS.1 72 14 538/-. AGGRIEVED BY THE ORDER O F AO ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE O RDER DT.26.08.2015 (IN APPEAL NO.ABD/CIT(A)/1/03/2014-15) DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE. AGGRIEVED BY THE O RDER OF LD.CIT(A) REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISE D THE FOLLOWING GROUNDS : 1. WHETHER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) WAS CORRECT IN INTERPRETING THE PROVISIO N OF SECTION 14A R.W.R. 8D IN THE LIGHT OF DECISION OF JURISDICTIONA L HIGH COURT RENDERED IN THE CASE OF CIT VS. HDFC BANK LTD. (20 14) 366 ITR 505 (BOM) AND IN THE CASE OF GODREJ & BOYCE MFG. CO . LTD. VS. DY. CIT REPORTED IN (2010) 43 DTK (BOM) 328 ITR 81 (BOM). 2. WHETHER THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LD.CIT(A) WAS CORRECT IN TREATING AS THE INVESTMENT MADE OUT OF OWN FUNDS IN THE LIGHT OF DECISION OF JURISDICTIONA L HIGH COURT RENDERED IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) 221 CTR (BOM) 435 (2009) 313 ITR 340 (2009) 178 TAXMAN 135 AND CIT VS. RELIANCE INDUSTRIES LTD. (2 011) 339 ITR 632 (BOM) 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE LD.CIT(A) BE VACATED. 3. THE CASE FILE REVEALS THAT ON EARLIER OCCASION I.E. ON 31.10.2017 THE CASE WAS ADJOURNED TO THE PRESENT DATE AT THE REQUEST OF THE ASSESSEE. ON THE PRESENT DATE OF HEARIN G NONE APPEARED ON BEHALF OF THE ASSESSEE OR ANY ADJOURNMENT APPLICATION WAS FILED AND WE THEREFORE PROCEED TO DISPOSE OF THE APPE AL EX-PARTE- QUA THE ASSESSEE. 4. BEFORE US AT THE OUTSET LD.D.R. SUBMITTED THAT THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTRO VERSY IS WITH RESPECT TO DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. 3 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTIC ED THAT ASSESSEE HAD MADE TOTAL INVESTMENTS OF RS.26 677 500/- IN SHARES OF VARIOUS COMPANIES THE DIVIDEND FROM WHICH WOULD BE EXEMP T FROM TAX. THE ASSESSEE WAS ASKED TO FURNISH COMPUTATION O F DISALLOWANCE U/S 14A R.W.R. 8D OF THE ACT. AO NOTED THAT NO SUCH COMPUTATION WAS FILED BY THE ASSESSEE BUT HOWEVER IT WAS SUBMITTED THAT THE INVESTMENTS IN SHARES ARE MADE WITH BUSINESS P URPOSE AND NO BORROWED FUNDS HAVE BEEN UTILIZED FOR MAKING INVESTMEN TS AND THEREFORE NO DISALLOWANCE U/S 14A IS CALLED FOR. THE SUBMIS SION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. HE THEREAFTER FOLLOWING THE METHODOLOGY PRESCRIBED UNDER RULE 8D OF THE I NCOME TAX RULES WORKED OUT THE DISALLOWANCE U/S 14A OF THE ACT AT RS.18 27 710/-. AGGRIEVED BY THE ORDER OF AO ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A) WHO RELYING ON THE ORDER OF PUNE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 5.1 I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT . THE ISSU E UND E R CONSIDERATION IS COVERED BY THE ORD E R OF HON'BL E ITAT (IT A N O 8 9 / P N / 20 1 4 DAT E D 0 9. 1 2 . 2 01 4 ) IN TH E A SSESSE E' S O W N CASE FOR A Y 20 0 9 -10 . TH E REL EV ANT P A RA G RAPHS 5 & 5 .1 OF TH E O R D ER DAT E D 09 .1 2 . 2 01 4 ARE R E PRODU CE D A S UND E R: 'WE HA VE C ONSID E R E D THE RIVAL ARGUM E NT S MADE BY BOTH THE SIDES P E RU SE D TH E ORD E R S OF TH E ASSESS ING OFFIC E R A ND TH E C IT (A) A ND TH E P A P ER BO O K F IL E D ON B E H A LF OF TH E ASSES S EE . WE H AVE A L SO CO N S ID E R E D TH E V ARIOU S DECI S IONS CITED B E FORE US. TH E FINDING GIVEN BY THE LD. C I T ( A) THAT TH E IN VE STM E NT IN S H A R ES OF INDIAN C OMPANI ES AT R S . 2 78 70 000 / - IS MUCH LESS THAN THE O W N FUNDS ON ACCOUNT OF SHAR E CAPITAL AND FREE R E S E R V ES AND SURPLUS OF THE ASSESSE E COMPAN Y AT RS.8 0 6 84 707 / - AS ON 3 1-03 -2 008 AND RS.18 5 3 70 868 / - A S ON 3 1 - 0 3- 2009 COULD NOT B E C ONTRO V ERTED B Y TH E LD. D E PARTMENT R E PR E S E NTATI V E. WE FIND AN ID E NTI C AL I S SUE HAD C OM E UP BEFORE THE HON'BL E BOMBA Y HI G H COURT IN THE CAS E OF CIT VS. HDFC BANK L TD REPORTED IN 4 9 TAXMANN.COM 335 (BOMBAY) . IN THAT CASE DISALLO W ANC E U / S .1 4A W A S MADE B Y THE A O WHICH WAS 4 DELETED B Y THE CIT( A ) AND ON F URTHER APP E AL TH E TRIBUNAL A LSO DI S MI SSE D TH E APP EA L FIL E D B Y TH E R EV ENU E . TH E TRIBUNAL W HILE UPHOLDING THE ORD E R OF TH E C IT( A) H A D NOT E D TH A T ASSES S EE OWN FUNDS AND OTH E R NON-INT E R E ST B E ARING F UND S WE R E MOR E TH A N TH E IN VES TM E NT IN TAX FR EE SEC URITI ES AND TH E R E FOR E TH E R E WA S NO BASIS FOR D EE MIN G THAT THE ASSESS EE H A D US E D THE BORROW E D FUNDS FOR IN VE STM E NT IN TAX FREE SECURITI E S. ON FURTHER APP E AL B Y TH E REVE NU E AGAINST THE ORD E R OF THE TRIBUNAL THE HON'BLE HIGH C OUR T DI S MI S SED TH E APP E AL FILED BY THE REVENUE BY OBSERVING AN UNDER: 'WE FIND THAT TH E FA C TS OF THE PRESENT C ASE AR E S QUAREL Y COV E R E D B Y THE JUDGMENT IN THE CAS E OF RELIANCE U TILITI E S & PO W ER LTD. (S UPRA) . TH E FINDING OF FACT GI V EN B Y THE IT A T IN TH E PRES E NT C A SE I S TH A T TH E ASSESSE E 'S OWN FUND S AND OTH E R NON- INT E R E ST B EAR ING FUND S WE RE MOR E THAN TH E IN V ESTM E NT IN TH E T AX- FR EE SEC URI T I ES . T HI S F A CTUAL PO S ITION I S NOT ON E TH A T IS DISPUTED . IN TH E PR E SENT CAS E UNDISPUT E DL Y TH E A S S ESSEE ' S CAPIT A L P R OFIT R ESE R VE S S URPLU S A ND C URRENT ACCOUNT D E POSIT S WE R E HI G H E R THAN THE IN VES TM E NT IN TH E T AX -FRE E SE CURITIES . IN V I EW OF THI S FA C TU A L PO S ITION A S PER TH E J UDGM E NT OF THI S C OU R T IN TH E CA S E OF RELI A N CE U TILITI ES & POW E R LTD. ( S UPRA ) IT WO ULD H AVE T O B E PR E SUMED THAT TH E IN V ESTM E NT MAD E B Y TH E A SS ESS E E W OULD B E OUT OF TH E INT E R ES T-FR EE FUNDS A V AILABLE W ITH TH E A SSESS E E. WE TH E R EF OR E ARE UNABL E TO AGRE E W ITH TH E SUBMISSION OF MR S UR E SH KUMAR TH A T THE T R IBUNAL HAD ER RE D IN DISMISSING THE A PP E AL OF TH E RE V ENUE ON THIS G ROUND WE DO N O T FIND THAT QUESTION (A ) GI V E S RI SE TO A N Y SUB S T A NTI A L QU E STION OF LAW AND IS THEREFORE REJECT E D'. R E SP E CTFULL Y FOLLOWING TH E DECISION OF THE HON'BL E BOMB AY HIGH C OURT IN TH E CASE OF HDFC BANK LTD. ( S UPRA) WE DO NOT FIND AN Y IN F IRMIT Y IN TH E ORDER OF TH E C IT ( A) WHO HAD D E L E T E D TH E DI S ALLO WA N CE M ADE BY T HE A O O N TH E G ROUND TH A T TH E CA PITAL A ND FR EE R ESE R VES OF TH E ASSESSEE C OMP A N Y A R E MU C H MOR E TH E I NVE S TM E NT IN S H A R ES O F INDIAN C OMPANI ES TH E C OMPAN Y HAS NOT E ARN E D A N Y DI V ID E ND INCOM E AND C LAIM E D TH E SAM E AS E X E MPT AND THAT TH E C OMPAN Y H AS M A DE IN VE STMENT IN SHARE S OF R E LAT E D COMPANI E S HA V IN G S IMIL A R BU S IN ESS FOR HAVING SOME C ONTROL ON TH E SAID BU S IN ESS G ROUND RAI SE D B Y TH E R EVE NU E I S AC C ORDINGLY DISMI S S E D'. THERE IS NO CHAN GE IN TH E FACTS AND CIRCUMSTANC E S OF TH E ASSESSM E NT YE AR UND E R REFERENC E AS COMPARED TO A Y 2 009-10. RESPECTFULL Y F OLLOWING THE A BO V E DE C ISION I DIR E CT TH E A O TO D E L E T E TH E A DDITION OF RS 18 27 710 / - MADE B Y HIM. T HIS G ROUND O F APPEAL IS ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A) REVENUE IS NOW IN APPE AL BEFORE US. 5 6. BEFORE US LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. 7. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE U/S 14A OF THE ACT. THE AO HAD DISALLOWED THE EXPENSES BY FOLLOWING THE METHODOLOGY PRESCRIBED UNDER RULE 8D OF THE INCOME- TAX RULES. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE IN FA VOUR OF THE ASSESSEE HAD RELIED ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 AND HAD FURTHER NOTED THAT T HE FACTS IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF A.Y. 2009-10. WE FIND THAT WHILE DECIDING THE ISSUE IN A.Y. 2009-10 THE CO- ORDINATE BENCH HAD INTER-ALIA NOTED THAT THE AVAILABILITY OF INTEREST FREE FUNDS WERE MORE THAN THE INVESTMENTS AND FURTHER T HE ASSESSEE HAD NOT EARNED ANY TAX FREE DIVIDEND INCOME. BEFORE US REVENUE HAS NOT POINTED OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THAT OF A.Y. 2 009-10. IN SUCH A SITUATION WE FIND NO REASON TO INTERFERE WITH THE O RDER OF LD.CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 10 TH DAY OF NOVEMBER 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 10 TH NOVEMBER 2017. YAMINI 6 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-1 AURANGABAD. PRL.CIT-1 AURANGABAD. '#$ %%&' ) &' / DR ITAT A PUNE; $+ -/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &' / ITAT PUNE.