The ACIT, Circle-1,, Bhavnagar v. Aquagel Chemicals Pvt.Ltd.,, Bhavnagar

ITA 3533/AHD/2008 | 2005-2006
Pronouncement Date: 03-09-2010 | Result: Dismissed

Appeal Details

RSA Number 353320514 RSA 2008
Assessee PAN AABCA8064G
Bench Ahmedabad
Appeal Number ITA 3533/AHD/2008
Duration Of Justice 1 year(s) 10 month(s) 10 day(s)
Appellant The ACIT, Circle-1,, Bhavnagar
Respondent Aquagel Chemicals Pvt.Ltd.,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 03-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 03-09-2010
Date Of Final Hearing 31-08-2010
Next Hearing Date 31-08-2010
Assessment Year 2005-2006
Appeal Filed On 24-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL V.P.(AZ) & HON BLE SHRI T.K. SHARMA J.M. ) I.T.A. NO. 3533/AHD./2008 ASSESSMENT YEAR : 2005-2006 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- M/S. AQUAGEL CHEMICALS PVT. LTD. CIRCLE-1 BHAVNAGAR BHAVNAGAR (PAN : AABCA 8064 G) (APPELLANT) (RESPONDENT) & C.O. NO. 288/AHD/2008 (ARISING OUT OF ITA NO. 3533/AHD/2008) ASSESSMENT YEAR : 2005-2006 M/S. AQUAGEL CHEMICALS PVT. LTD. -VS.- ASSISTANT COMMISSIONER OF INCOME TAX BHAVNAGAR CIRCLE-1 BHAVNAGAR (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI TUSHAR P. HEMAN I DEPARTMENT BY : SHRI K. MADHUSUDAN SR . D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE ARE AGAINST THE ORDER DATED 25.07.2008 OF LEARNED COMMISSIONER OF I NCOME TAX-XX AHMEDABAD FOR THE ASSESSMENT YEAR 2005-06. 2. VARIOUS GROUNDS RAISED BY THE REVENUE IN ITS APP EAL READ AS UNDER :- 1 THE LD. CIT(A) ERRED IN LOW AND ON FACTS OF TH E CASE IN DELETING ADDITION OF RS 6 92 997/- MADE BY THE A.O ON ACCOUNT OF DISALLO WANCE U/S.14A OF THE I.T. ACT. 2. FROM THE RECORDS IT IS OBSERVED THAT INTEREST BEARI NG FUNDS ARE R INVESTED IN HDFC FLOATING RATE SHORT TERM PLAN A/C. COPY OF TH E BANK SHOWS ON ALL THE DALES/DAYS OF INVESTMENT THERE WAS A DEBIT BALANCE AND BORROWED FUNDS WERE DIRECTLY INVESTED IN HDFC MUTUAL FUND. HENCE THE A. O. SHOULD HAVE DISALLOWED 12% ON THE ENTIRE AMOUNT OF RS.1 32 37 857/- INVEST ED AS ALL INVESTMENTS ARE MADE ONLY FROM THE CURRENT ACCOUNT WHICH SHOWS DEBI T BALANCE ALREADY ON THE OPENING DAY AND DURING THE ENTIRE PERIOD OF INVESTM ENT I.E. F.Y. 2003-04 & 2004- 05 THUS THE LD. CIT(A) ERRED IN DECIDING THE ISSUE IN ASSESSEE'S FAVOUR WITHOUT VERIFYING THE FACTS. 2 ITA NO. 3533 & CO-288/AHD/2008 3. THE ID. LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) HAS (WITHOUT CALLING FOR FULL FACTS AND EVIDENCE FROM ASSESSEE OR THE A. O.) ERRED IN ACCEPTING THE ASSESSEE'S PLEA THAT NON-INTEREST BEARING FUNDS WE RE ONLY INVESTED IN THE MUTUAL FUND AS THE SHARE CAPITAL OF RS. 20.05 CRORE S AND RESERVES OF RS. 2.67 CRORES WERE ALL INVESTED IN FIXED ASSETS (RS. 90 CRORES EA RLIER) AND HENCE ARE NOT AT ALL AVAILABLE FOR INVESTMENT IN MUTUAL FUND THE FACTS CLEARLY PROVE THAT ENTIRE INVESTMENT WAS DIRECTLY FROM BORROWED FUNDS. THUS C ASE LAW AND ASSESSEE'S SUBMISSIONS BY CIT[A) IS INCORRECT. THEREFORE THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MODE BY THE A.O ON ACCOUNT OF DISALLOWANCE U/S.!4A OF THE I.T. ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IF IS THEREFORE PRAYED THAT THE ORDER O F THE CIT(A) BE SET ASIDE AND THAT OF A.O BE RESTORED TO THE ABOVE EXTENT. 2.2. GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OB JECTION ARE AS UNDER :- LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIR MING THE LEVY OF INTEREST U/S 234B & C OF THE ACT WHEN THE TOTAL INCOME WAS A SSESSED U/S 115JB OF THE ACT. LD. C1T(A) FURTHER FAILED TO APPRECIATE THAT L D. AO HAS LEVIED INTEREST U/S 234B & 234C OF THE ACT ON THE ASSESSED INCOME FIGUR E WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. THE AP PELLANT CAME TO KNOW ABOUT THE LEVY OF INTEREST ONLY WHEN THE ASSESSMENT ORDER ALONG WITH NOTICE U/S 156 OF THE ACT WERE RECEIVED BY IT. THE ISSUE IS DI RECTLY COVERED BY THE DECISION OF THE 1TAT AHMEDABAD BENCH IN THE CASE O F VIKSHARA TRADING & INVESTMENT (P) LTD. VS. DCIT (51 TTJ 6) FOLLOWING T HE DECISION OF THE COCHIN BENCH IN THE CASE OF M. MANI -VS.- ACIT (51 TTJ 273 ) WHEREIN IT WAS HELD THAT THE LEVY OF INTEREST U/S 234A/B/C IS AN APPEAL ABLE ISSUE AND THEREFORE OPPORTUNITY OF HEARING MUST BE GRANTED TO THE ASSES SEE. IF THE OPPORTUNITY IS NOT GRANTED THERE IS GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE THE LEVY OF INTEREST DESERVES TO BE DELE TED. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED ARE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLOWED THE INTEREST TO THE EXTENT OF DI VIDEND INCOME DECLARED AMOUNTING TO RS.6 92 997/-. ACCORDING TO THE ASSESSING OFFICER DIVIDEND INCOME IS EXEMPT UNDER THE INCOME TAX ACT THEREFORE INTEREST PAID AMOUNTING TO RS.6 92 997/- TO THAT EXTENT IS NOT ALLOWABLE. 3.1. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE SAID ADDITION FOR THE REASONS GIVEN IN PARA 3.3 WHICH READS AS UNDER :- 3.3.AFTER GOING THROUGH THE ACCOUNTS OF THE APPELLANT FROM THE BALANCE-SHEET IT IS NOTICED THAT THE APPELLANT HAS SHOWN TOTAL INVESTMENTS OF 3 ITA NO. 3533 & CO-288/AHD/2008 RS.1 32 37 857/- AS COMPARED TO TOTAL INVESTM ENTS OF RS.70 84 140/- AS ON 31/3/2004. IT IS ALSO NOTICED THAT NO EXPENDITURE C LAIMED TO HAVE BEEN INCURRED TO EARN DIVIDEND INCOME. THE APPELLANT HAS NOT BORR OWED ANY MONEY FOR THE PURPOSE OF INVESTMENTS NOR INCURRED ANY EXPENDITURE TO EARN THE SAID DIVIDEND INCOME. FURTHER IT IS ALSO NOTICED THE INVESTMENT IS OLD INVESTMENT AND FRESH INVESTMENT IS ONLY 60.82 LACS AND THERE ARE NO FRES H BORROWINGS. THE APPELLANT HAD SUBSTANTIAL INTEREST FREE FUNDS AT ITS DISPOSAL AND THEREFORE IN ABSENCE OF NEXUS BETWEEN THE BORROWINGS AND THE INVESTMENT NO PART-DISALLOWANCE OF INTEREST IS WARRANTED. THE APPELLANT HAS SHARE CAPI TAL OF RS.2005 LACS WHEREAS THE RESERVES AND SURPLUS ARE TO THE TUNE OF RS 267 LACS AS AGAINST INVESTMENTS OF RS.60.32 LACS MADE DURING THE YEAR IN DISPUTE. I T IS NOTABLE THAT IN THE PAST NO DISALLOWANCE OF INTEREST HAS BEEN MADE SO FAR TH E OLD INVESTMENTS ARE CONCERNED. WHEN AN TRANSACTION IS OLD TRANSACTION A ND NO DISALLOWANCE OF INTEREST HAS BEEN MADE IN THE PAST IT IS NET OPEN TO THE REVENUE TO MAKE DISALLOWANCE OF INTEREST ON OLD OUTSTANDING AS THE YEAR IN WHICH THE INVESTMENT HAVE BEEN MADE THERE IS NO DISALLOWANCE OF INTERES T AND IF THE SAME INVESTMENT CONTINUES NO DISALLOWANCE & INTEREST CAN BE MADE A T A LATER STAGE. IN VIEW OF THE ABOVE DISCUSSION AND MORE PARTICULARLY LOOKING TO THE FACT THE APPELLANT COMPANY HAD FAR MORE FUNDS OF ITS OWN THAN THE INVE STMENTS AND THAT THE ASSESSING OFFICER HAS NOT ESTABLISHED ANY NEXUS TO PROVE UTILIZATION OF DEPOSITS FOR INTEREST FREE INVESTMENT I AM OF THE CONSIDERE D VIEW THAT THE DISALLOWANCE OF INTEREST OF RS.6 92 997/-MADE BY ASSESSING OFFIC ER IS NOT JUSTIFIED AND THEREFORE ASSESSING OFFICER IS DIRECTED TO DELETE T HE DISALLOWANCE RS.6 92 997/-. THIS GROUND IS THEREFORE ALLOWED. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING ON BEHALF OF REVENUE SHR I K. MADHUSUDAN LD. SR. D.R. APPEARING ON BEHALF OF THE REVENUE CONTENDED THAT IN THE ASSE SSMENT ORDER THE ASSESSING OFFICER DISALLOWED INTEREST TO THE EXTENT OF RS.6 92 997/- WHEREAS THE ASSESSING OFFICER SHOULD HAVE DISALLOWED 12% ON THE ENTIRE AMOUNT OF RS.1 32 37 8 57/- INVESTED BECAUSE ALL THE INVESTMENTS WERE MADE FROM THE CURRENT ACCOUNT WHICH SHOWS DEB IT BALANCE ALREADY ON THE OPENING DAY AND DURING THE ENTIRE PERIOD OF INVESTMENT I.E. FINANC IAL YEAR 2003-04 & 2004-05. THE LD. D.R. CONTENDED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) DECIDED THE APPEAL OF THE ASSESSEE WITHOUT CALLING THE ASSESSMENT RECORD THE REFORE THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE SET ASIDE AND THE MATTER BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR BRINGING THE COMPLETE FACTS RELATING TO THE DISALLO WANCE OF INTEREST UNDER SECTION 14A OF THE INCOME TAX ACT 1961. 4 ITA NO. 3533 & CO-288/AHD/2008 5. ON THE OTHER HAND SHRI TUSHAR P. HEMANI LD. CO UNSEL APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT IN THE YEAR UNDER CONSIDERA TION I.E. ASSESSMENT YEAR 2005-06 PROVISIONS OF SUB-SECTIONS (2) & (3) OF SECTION 14A OF THE ACT AND RULE 8D ARE NOT APPLICABLE S HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. VS.- DCIT (ITA 626 & WP 758 OF 2010 DATED 12.08.2010) (MUM.). THEREFO RE DISALLOWANCE UNDER SECTION 14A FOR THE YEAR UNDER CONSIDERATION IS TO BE MADE IN A REA SONABLE MANNER. CONTINUING HIS ARGUMENT THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT OUT OF T OTAL INVESTMENTS OF RS.1 32 37 857/- ONLY INVESTMENTS OF RS.60 82 417/- ARE FRESH INVESTMENT MADE DURING THE YEAR WHEREAS INVESTMENTS OF RS.70 84 140/- WERE MADE IN THE EARLIER YEARS AND N O DISALLOWANCE HAS BEEN MADE IN THE PAST. IN RESPECT OF PAST INVESTMENTS NO DISALLOWANCE CAN BE MADE AS HELD BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.- SRIDEV ENTERPRISE RE PORTED IN 192 ITR 165. 5.1. THE LD. COUNSEL OF THE ASSESSEE ALSO POINTED O UT THAT THERE WERE NO FRESH BORROWINGS. BORROWINGS IN THE YEAR UNDER CONSIDERATION HAVE GON E DOWN BY A SUM OF RS.791.43 LACS THEREFORE THERE CANNOT BE A PRESUMPTION THAT BORRO WED MONEY HAVE GONE INTO MAKING THE INVESTMENTS FOR THE YEAR UNDER CONSIDERATION AND T HEREFORE NO DISALLOWANCE IS CALLED FOR. THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE PROFITS AFTER TAX FOR THE YEAR UNDER CONSIDERATION AT RS. 893.27 LACS IS FAR MORE THAN THE TOTAL INVESTMENTS MADE FOR THE YEAR UNDER CONSIDERATION AT RS. 60.82 LACS AND THEREFORE ALSO THE PRESUMPTION HAS T O BE THAT THE INVESTMENTS HAVE COME OUT OF CASH ACCRUALS FOR THE YEAR. IN FACT WHEN ONE INDIVI SIBLE BANK ACCOUNT IS MAINTAINED AND ALL THE SALES PROCEEDS ARE CREDITED IN THE SAID ACCOUNT EV EN IF THE SAID ACCOUNT IS CC/OD ACCOUNTS FUNDS UTILIZED FROM SUCH ACCOUNT CANNOT BE SAID TO BE FROM BORROWED MONEY IF CASH ACCRUALS ARE MORE THAN THE SAID INVESTMENTS. THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF WOOLCOMB ERS OF INDIA LTD. VS.- CIT REPORTED IN 134 ITR 219 (CAL). THE LD. COUNSEL SUBMITTED THAT IT HA S SUBSTANTIAL INTEREST FREE FUNDS AT ITS DISPOSAL AND THEREFORE IN ABSENCE OF NEXUS BETWEEN THE BORRO WINGS AND THE INVESTMENTS NO PART- DISALLOWANCE OF INTEREST IS CALLED FOR. IN THE ABSE NCE OF ANY NEXUS BETWEEN THE BORROWED FUNDS AND INVESTMENTS THE APPELLANT RELYING UPON THE DEC ISION OF MUMBAI HIGH COURT IN THE CASE OF RELIANCE UTILITIES (313 ITR 340) AND TORRENT FINANC IERS (73 TTJ 624) SUBMITTED THAT IT HAS TO BE PRESUMED THAT THE ENTIRE INVESTMENTS HAVE COME FROM ITS OWN FUNDS AND NO PART OF THE BORROWED CAPITAL HAS GONE IN MALTING THE INVESTMENTS. THE AP PELLANT HAS SHARE CAPITAL OF RS.2 005 LACS 5 ITA NO. 3533 & CO-288/AHD/2008 WHEREAS THE RESERVES AND SURPLUS ARE TO THE TUNE OF RS267 LACS AS AGAINST INVESTMENTS OF RS.60.82 LACS MADE DURING THE YEAR UNDER CONSIDERAT ION. 5.2. FURTHER THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT MAJOR BORROWINGS HAVE BEEN TAKEN FROM BANKS AND FINANCIAL INSTITUTIONS WHICH MONITOR THE APPLICATION OF THE BORROWED FUNDS ALSO AND THEREFORE ALSO BORROWED FUNDS COULD NOT BEEN US ED FOR THE PURPOSE OF MAKING THE INVESTMENTS. LASTLY HE PLACED ON THE FOLLOWING DECI SIONS: (I) CIT VS.- PREM HEAVY ENGG. WORKS (P.) LTD. (200 6) 285 1TR 554 (ALLD.]; (II) CIT-VS.- BRITANNIA INDUSTRIES LTD. (2006) 280 ITR 525 (CAL.] (III) CIT VS.- RADICO KHAITAN LTD. (2005) 274 IT R 354 (ALL); (IV) CIT VS.- TIN BOX CO. (2003) 260 ITR 637 (DE L.) THE LD. COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ (SUPRA) HELD THAT PROVISIONS OF SECT ION 14A CANNOT BE APPLIED UNLESS THERE IS PROXIMATE CAUSE FOR DISALLOWANCE FOLLOWING THE DECI SION OF HON'BLE SUPREME COURT IN WALLFORT'S CASE (192 TAXMAN 211) THEREFORE APPLICATION OF TH E PROVISIONS OF SUB SECTIONS (2) & (3) OF SECTION 14A AND RULE 8D IF AT ALL THEY APPLY FOR T HE YEAR UNDER CONSIDERATION IS NOT AUTOMATIC IN EACH AND EVERY CASE WHERE THERE IS INCOME NOT FORMI NG PART OF TOTAL INCOME. SUB SECTIONS (2) AND (3) OF SECTION 14A ARE INTENDED TO ENFORCE AND IMPL EMENT THE PROVISIONS OF SUB SECTION (1). THEREFORE BEFORE THEY ARE INVOKED IT HAS TO BE ASCE RTAINED WHETHER THERE IS PROXIMATE CONNECTION BETWEEN THE EXPENDITURE INCURRED AND EARNING OF THE EXEMPT INCOME NOT FORMING PART OF TOTAL INCOME. THE LD. COUNSEL FURTHER SUBMITTED THAT IF S UCH PROXIMITY IS ESTABLISHED THEN ONLY AO WOULD BE JUSTIFIED IN APPLYING OF THE PROVISIONS OF SUB SECTIONS [2] AND (3) OF SECTION 14A AND RULE 8D BOTH DIRECT AND INDIRECT EXPENDITURE INCUR RED WOULD COME WITHIN THE PURVIEW OF S.14A PROVIDED RELATIONSHIP WITH EXEMPTED INCOME MUST BE PROXIMATE. IN THE FACTS OF THE PRESENT CASE ADMITTEDLY LD. ASSESSING OFFICER HAS NOT ESTABLISHE D MUCH LESS WHISPERED ABOUT SUCH PROXIMITY AND THEREFORE THE QUESTION OF MAKING ANY DISALLOWA NCE CANNOT ARISE. 5.3. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT IF SUFFICIENT MATERIAL IS ON RECORD TO ESTABLISH THAT INVESTMENT IN SHARES/UNITS WAS MADE OUT OF NON INTEREST BEARING FUND NO 6 ITA NO. 3533 & CO-288/AHD/2008 DISALLOWANCE CAN BE MADE ON AN ESTIMATED BASIS OUT OF INTEREST DEBITED TO PROFIT & LOSS ACCOUNT EVEN IF THERE IS DIVIDEND INCOME FROM SUCH INVESTME NTS AS HELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HERO CYCLES (323 ITR 158). HE THEREFORE CONTENDED THAT THE ISSUE IS DIRECTLY AND SQUARELY COVERED BY THE RECEN T DECISION OF HON'BLE ITAT THIRD MEMBER BENCH DELHI IN THE CASE OF WIMCO SEEDLINGS LTD. V S.- DCIT REPORTED IN (2007) 107 ITD 267 (DEL.) (T.M.) WHEREIN IT WAS HELD THAT NO DISALLOW ANCE U/S 14A OF THE ACT CAN BE MADE ON PRESUMPTIVE AND ESTIMATED BASIS. 6. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSME NT ORDER THE ASSESSING OFFICER HAS DISALLOWED INTEREST EXPENSES TO THE EXTENT OF DIVIDEND INCOME I.E. RS.6 92 997/-. NO DISALLOWANCE HAS BEEN MADE IN RESPECT OF OTHER EXPENSES. IN THE ASSESSMEN T ORDER THE ASSESSING OFFICER NOWHERE POINTED OUT THAT INVESTMENT HAS BEEN MADE OUT OF BO RROWED FUNDS. BEFORE THE ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) THE ASSESSEE CONTENDED THAT ONLY INVESTMENT OF RS.60.82 LAKHS IS FRESH INVESTMENT. T HERE IS NO FRESH BORROWING BECAUSE BORROWING HAS GONE DOWN BY A SUM OF RS.791.43 LACS. THEREFORE NO DISALLOWANCE IS CALLED FOR. THIS CONTENTION OF THE ASSESSEE WAS NOT DISPUTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE MA TTER CANNOT BE REMANDED TO THE FILE OF ASSESSING OFFICER. 7. IN THE GROUNDS OF APPEAL THE REVENUE HAS STATED THAT ASSESSING OFFICER SHOULD HAVE DISALLOWED 12% ON THE ENTIRE AMOUNT OF RS.1 32 37 8 57/-.ON THIS BASIS DISALLOWANCE WORKS OUT TO RS.15 88 542/-. IT IS WELL SETTLED LAW THAT THE TRIBUNAL HAS NO POWER OF ENHANCEMENT. FOR THIS REASON ALSO THE MATTER CANNOT BE REMANDED TO THE F ILE OF ASSESSING OFFICER. IN THE GROUND NO 3 IT IS STATED THAT ENTIRE INVESTMENT IN MUTUAL FUND WAS MADE FROM THE BORROWED CAPITAL. HOWEVER IN THE ASSESSMENT ORDER NO SUCH FINDING HAS BEEN G IVEN. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). RESULTANTLY THE APPEAL OF THE REVENUE IS DISMISSED. 8. WITH REGARD TO THE GROUNDS OF CROSS OBJECTION A T THE TIME OF HEARING SHRI TUSHAR P. HEMANI LD. COUNSEL RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF 7 ITA NO. 3533 & CO-288/AHD/2008 SNOWCEM INDIA LTD. VS.- DCIT REPORTED IN [2009] 31 3 ITR 170 (BOM.) CONTENDED THAT WHEN INCOME IS COMPUTED UNDER SECTION 115JA INTEREST CA NNOT BE CHARGED UNDER SECTIONS 234B & 234C. THE LD. COUNSEL OF THE ASSESSEE ACCORDINGLY C ONTENDED THAT INTEREST CHARGED UNDER SECTIONS 234B & 234C BE CANCELLED. 9. ON THE OTHER HAND SHRI K. MADHUSUDAN LD. SR. D .R. APPEARED ON BEHALF OF THE REVENUE AND RELYING ON THE DECISION OF THE ITAT C BENCH AHMEDABAD (THIRD MEMBER) IN THE CASE OF KANEL OIL & EXPORT INDS. LTD. VS.- JCIT (ASST.) S R.-2 AHMEDABAD REPORTED IN [2009] 121 ITD 596 (AHD.) (T.M.) CONTENDED THAT INTEREST UNDER SEC TIONS 234B AND 234C IS LEVIABLE ON INCOME COMPUTED UNDER SECTION 115JA/ 115JB. THE LD. D.R. F URTHER SUBMITTED THAT IN THIS DECISION THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF SNOWCEM INDIA LTD. VS.- DCIT REPORTED IN [2009] 313 ITR 170 (BOM.) (SUPRA) RELIE D BY THE LD. COUNSEL OF THE ASSESSEE HAS BEEN DULY CONSIDERED. THE HON'BLE THIRD MEMBER IN THIS D ECISION HAS HELD THAT JUDGMENT OF NON- JURISDICTIONAL HIGH COURT WHICH IS RENDERED WITHOUT NOTICING A PREVIOUS BINDING PRECEDENT OR A RELEVANT STATUTORY RULE IS CONSIDERED TO HAVE BEEN RENDERED PER INCURIAM. HE ACCORDINGLY CONTENDED THAT THE VIEW TAKEN BY THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) IS INCONFORMITY WITH THE VIEW TAKEN BY THE ITAT C B ENCH AHMEDABAD (THIRD MEMBER) IN THE CASE OF KANEL OIL & EXPORT INDS. LTD. VS.- JCIT (A SST.) SR.-2 AHMEDABAD REPORTED IN [2009] 121 ITD 596 (AHD.) (T.M.) (SUPRA) THEREFORE IT MA Y BE UPHELD. 10. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SNOWCEM INDIA LTD. VS.- DCIT REPORTED IN [2009] 31 3 ITR 170 (BOM.) (SUPRA) HAS BEEN DULY CONSIDERED BY THE ITAT C BENCH AHMEDABAD (THIRD MEMBER) IN THE CASE OF KANEL OIL & EXPORT INDS. LTD. VS.- JCIT (ASST.) SR.-2 AHMEDA BAD REPORTED IN [2009] 121 ITD 596 (AHD.) (T.M.) (SUPRA). AFTER CONSIDERING THE JUDGMENT OF T HE HON'BLE BOMBAY HIGH COURT TRIBUNAL FINALLY FOLLOWED THE DECISION OF THE ITAT SPL. B ENCH AHMEDABAD IN THE CASE OF ACIT -VS.- ASHIMA SYNTEX LTD. REPORTED IN [2009] 117 ITD 1 (AH D.) (SB). WE ARE THEREFORE OF THE VIEW THAT INTEREST CHARGED UNDER SECTIONS 234B & 234C IS LEVIABLE WHEN BOOK PROFIT IS COMPUTED UNDER SECTION 115JB OF THE ACT. 8 ITA NO. 3533 & CO-288/AHD/2008 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 03.09.201 0 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 03/ 09 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT CONCERNED (4) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR ITAT AHMEDABAD LAHA/SR.P.S.