IFCI Ltd., New Delhi v. DCIT, Circle- 12(1), New Delhi

ITA 3644/DEL/2018 | 2012-2013
Pronouncement Date: 31-08-2021 | Result: Partly Allowed

Appeal Details

RSA Number 364420114 RSA 2018
Assessee PAN AAACT0668G
Bench Delhi
Appeal Number ITA 3644/DEL/2018
Duration Of Justice 3 year(s) 3 month(s) 15 day(s)
Appellant IFCI Ltd., New Delhi
Respondent DCIT, Circle- 12(1), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 31-08-2021
Last Hearing Date 24-08-2021
First Hearing Date 24-08-2021
Assessment Year 2012-2013
Appeal Filed On 15-05-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C: DELHI BEFORE SHRI R.K. PANDA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA.NO.3644/DEL./2018 ASSESSMENT YEAR 2012-13 IFCI LTD. IFCI TOWER 61 NEHRU PLACE NEW DELHI. PAN NO. AAACT0668G [ VS. DCIT CIRCLE 12(1) NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SH. K. SAMPATH ADV. SH. V. RAJA KUMAR ADV. FOR REVENUE : MS. SUNITA SINGH CIT DR DATE OF HEARING : 26.08.2021 DATE OF PRONOUNCEMENT : 31.08.2021 ORDER PER VIJAY PAL RAO J.M. 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.02.2018 OF CIT(A) FOR THE AY 2012-13 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN: - 2 ITA.NO.3644/DEL./2018 IFCI LTD. 1) CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER TO DISALLOW THE DEPRECIATION ON PLANT & MACHINERY LEASED TO VARIOUS PARTIES; 2) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICE R U/S 14A OF THE INCOME TAX ACT 1961 R.W. RULE 8D OF THE INCOME TAX RULES 1962. BOTH THE ABOVE ACTIONS BEING GROSSLY ARBITRARY PAL PABLY ERRONEOUS AND TOTALLY UNLAWFUL MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. 2. GROUND NO. 1 IS REGARDING DISALLOWANCE OF DEPRECIAT ION ON PLANT & MACHINERY LEASED TO VARIOUS PARTIES. TH E ASSESSEE IS A PUBLIC SECTOR COMPANY INCORPORATED WI TH THE OBJECT TO PROVIDE MEDIUM AND LONG TERM CREDIT T O THE INDUSTRIES AS WELL AS PROVIDE ASSISTANCE AND SERVICES TO THE INDUSTRIAL AND SERVICE CONCERNS FOR THEIR NEW PROJECTS. THE ASSESSEE HAS CLAIMED DEPRECIATIO N OF RS. 1 09 18 928/- ON LEASE OUT PLANT AND MACHINE RY. THE AO DISALLOWED THE CLAIM OF THE DEPRECIATION BY FOLLOWING THE EARLIER ORDERS IN THE ASSESSEES OWN CASE. THE ASSESSEE CHALLENGED THE ACTION BEFORE THE CIT(A ) BUT COULD NOT SUCCEED. 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR AND CONSIDER THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS POINTED OUT THAT FOR THE AY 2010-11 THIS TRIBUN AL 3 ITA.NO.3644/DEL./2018 IFCI LTD. HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND ALLOWED THE CLAIM OF DEPRECIATION. HE HAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW SINCE AY 1999-2000 TILL 2010-11. 4. THE LD. DR HAS NOT DISPUTED THE FACT THAT THIS TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE FOR ALL THE PRECEDING YEARS AND LAST FOR T HE AY 2010-11 IN ITA NO. 2982/2015 VIDE ORDER DATED 08.10.2010 THEREFORE THIS ISSUE IS NOW COVERED BY THE EARLIER DECISIONS OF THIS TRIBUNAL AND PARTICULARLY FOR THE AY 2010-11. THE TRIBUNAL HAS HELD IN PARA 5.5 AS UNDER: - 5.5 IN OUR OPINION THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO TH E AY 1999-2000 AND THERE IS NO CHANGE IN THE CIRCUMSTANCES. IN THE AY 1999-2000 THE ASSESSEE HAD PRODUCED SUCH CERTIFICATES FROM THE LESSEES BEFORE THE TRIBUNAL WHEREAS IN THE PRESENT CASE THE CERTIFICATES HAVE BEEN PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS NOT OBSERVED ANYTHING WRONG IN THOSE CERTIFICATES. IF HE WAS HAVING ANY DOUBT REGARDING THOSE CERTIFICATES AND IF SAME WERE PRODUCED FOR THE FIRS T TIME BEFORE HIM HE SHOULD HAVE ADMITTED THE SAME AS ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES AND EITHER HE HIMSELF SHOULD HAVE VERIFIED OR SHOULD HAVE REFERRED THE SAME TO 4 ITA.NO.3644/DEL./2018 IFCI LTD. THE ASSESSING OFFICER FOR VERIFICATION. THE IMPUGNED ORDER OF THE LD. CIT(A) WAS PASSED IN THE YEAR 2015 HOWEVER NOTHING HAS BEEN BROUGHT ON RECORD BEFORE US THAT ANYTHING WRONG HAS BEEN OBSERVED BY THE DEPARTMENTAL AUTHORITIES IN THOSE CERTIFICATES. BEFORE US THE LD. DR HAS ALSO NOT POINTED OUT ANYTHING WRONG WITH THOSE CERTIFICATES SUBMITTED BEFORE THE LD CIT(A). IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA) WE DO NOT FIND AN Y JUSTIFICATION OR CAUSE FOR ISSUING DIRECTION BY THE LD. CIT(A) TO THE ASSESSING OFFICER FOR VERIFICATIO N OF THE DEPRECIATION CLAIMED BY THE LESSEES BEFORE ALLOWING DEPRECIATION TO THE ASSESSEE ON SUCH LEASED ASSET. ACCORDINGLY THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. ACCORDINGLY TO MAINTAIN THE RULE OF CONSISTENCY W E FOLLOW THE EARLIER ORDER OF THIS TRIBUNAL AND ALLOW THE CLAIM OF DEPRECIATION. THE ADDITION MADE BY THE AO ON THIS ACCOUNT IS DELETED. 6. GROUND NO. 2 IS REGARDING DISALLOWANCE MADE BY THE AO U/S 14A READ WITH RULE 8D. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2010-11 AND VIDE ORDER DATED 08.10.2010 THE TRIBUNAL HAS DELETED THE DISALLOWANC E MADE BY THE ASSESSING OFFICER U/S 14A. HE HAS THU S 5 ITA.NO.3644/DEL./2018 IFCI LTD. CONTENDED THAT THE FACTS AS RECORDED BY THE AO AND FINDINGS OF THE AO FOR MAKING THE DISALLOWANCE U/S 14A ARE IDENTICAL AS FOR THE AY 2010-11 THEREFORE ON THE IDENTICAL FACTS AND FINDINGS THE TRIBUNAL HAS DELETED THE ADDITION FOR THE AY 2010-11 THEN THE IS SUE IS COVERED BY THE DECISION OF THE TRIBUNAL. HIS MA IN THRUST OF ARGUMENT IS ON THE POINT THAT THE AO HAS NOT RECORDED HIS SATISFACTION WHILE REJECTING THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE. HE HAS POINTED OUT THAT THE ASSESSEE HAS MADE A SUO MOTO DISALLOWANCE OF RS. 10 LACS U/S 14A WHICH IS IN LIN E WITH THE DISALLOWANCE FOR THE AY 2010-11 WHICH WAS FINALLY ACCEPTED BY THE TRIBUNAL. THUS THE LD. AR HAS SUBMITTED THAT THE ADDITION MADE BY THE AO IS LIABL E TO BE DELETED. HE HAS ALSO RELIED UPON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT 402 ITR 640. 7. ON THE OTHER HAND LD. DR HAS SUBMITTED THAT FOR TH E YEAR UNDER CONSIDERATION THE AO HAS RECORDED THE FA CT THAT NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE TO 6 ITA.NO.3644/DEL./2018 IFCI LTD. ESTABLISH THAT NO EXPENSES HAVE BEEN INCURRED IN EARNING THE DIVIDEND INCOME. THE AO HAS OBSERVED THAT CERTAIN EXPENSES LIKE COST OF BORROWINGS SALA RY EMPLOYEE WELFARE EXPENSES POSTAGE/TELEGRAM EXPENSES TRAVELLING AND CONVEYANCE EXPENSES RENT ETC. ARE COMMON EXPENSES WITH REGARD TO EARNING THE DIVIDEND INCOME AND REGULAR BUSINESS INCOME. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT VS. CIT (SUPRA) IS RELEVANT IN RESPECT OF DISALLOWANCE ON ACCOUNT OF INTEREST EXPE NSES BUT THE SAID DECISION CANNOT TAKE AWAY THE PROVISIO NS OF RULE 8D(2) TOWARDS INDIRECT ADMINISTRATIVE EXPEN SES. WHEN THE ASSESSEE HAS MADE A HUGE INVESTMENT IN THE SHARES AND SECURITIES AND THERE IS A REGULAR TRANSACTIONS OF SALE AND PURCHASE THEN IT CANNOT BE ACCEPTED THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE DIVIDEND INCOME. THE A O HAS NOT MADE ANY ADDITION ON ACCOUNT OF INTEREST EXPENDITURE BUT HE HAS COMPUTED THE DISALLOWANCE BEING .5% OF AVERAGE INVESTMENT WHICH IS INDIRECT 7 ITA.NO.3644/DEL./2018 IFCI LTD. ADMINISTRATIVE EXPENSES. THEREFORE AN ADHOC DISALLOWANCE MADE BY THE ASSESSEE OF RS. 10 LACS HA S NO BASIS EXCEPT THE FACT THAT THE SIMILAR AMOUNT WA S DISALLOWED BY THE ASSESSEE FOR THE AY 2010-11. WHE N THERE IS A CHANGE IN THE TRANSACTIONS OF THE PURCHA SE AND SALE OF THE INVESTMENT AND ALSO THERE IS A HUGE DIFFERENCE IN THE INVESTMENT AS ON 31.03.2012 IN COMPARISON TO THE INVESTMENT AS ON 31.03.2010 THEN THE SAID AMOUNT OF RS. 10 LACS HAS NO RELEVANCE FOR MAKING THE SUO MOTO DISALLOWANCE. THE LD. DR HAS THUS SUBMITTED THAT IN THE ABSENCE OF ANY BASIS FO R MAKING THE SUO MOTO DISALLOWANCE THE AO HAS RIGHTLY REJECTED THIS CLAIM OF SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE. 8. THE ORDER OF THE TRIBUNAL FOR THE AY 2010-11 SHALL HAVE NO BEARING ON THE FACTS OF THE CASE UNDER CONSIDERATION. SHE HAS RELIED UPON THE ORDER OF TH E AUTHORITIES BELOW. IN THE REJOINDER THE LD. AR HAS SUBMITTED THAT THE REASONS GIVEN BY THE ASSESSING OFFICER FOR REJECTING THE SUO MOTO DISALLOWANCE ARE 8 ITA.NO.3644/DEL./2018 IFCI LTD. IDENTICAL AS FOR THE AY 2010-11 WHICH ARE REPRODUCE D BY THIS TRIBUNAL IN THE ORDER DATED 08.10.2020. TH US HE HAS REITERATED THAT THE ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R THE AY 2010-11. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS MADE AN INVESTMENT OF RS. 1867.81 CRORES THE DIVIDEND INCOME OF WHICH IS EXEMPT FROM TAX. THERE IS NO DISPUTE THAT THERE IS A SIGNIFICANT DIFFERENCE IN THE AMOUNT OF INVESTMENT AS ON 31.03.2010 AND AS ON 31.03.2012. THE ASSESSEE HAS MADE THE SUO MOTO DISALLOWANCE OF RS. 10 LACS FOR THE AY 2010-11 AND SAME AMOUNT OF DISALLOWANCE WAS ALSO ADOPTED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THUS EXCEPT FOR THE DISALLOWANCE O F IDENTICAL AMOUNT FOR THE AY 2010-11 THERE IS NO OTH ER BASIS FOR TAKING THIS AMOUNT OF RS. 10 LACS AS SUO MOTO DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION. THE AO HAS ACCEPTED THE CLAIM THAT THE INVESTMENTS WERE 9 ITA.NO.3644/DEL./2018 IFCI LTD. MADE OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE BUT HE HAS MADE THE DISALLOWANCE ONLY ON ACCOUNT OF ADMINISTRATIVE EXPENSES. ONCE THERE IS A REGULAR TRANSACTION OF PURCHASE AND SALE OF SHARES BY THE ASSESSEE AND THE DECISION OF MAKING THE INVESTMENT AS WELL AS SALE OF THE INVESTMENT IS TAK EN AT THE TOP LEVEL OF THE MANAGEMENT THEN THE CLAIM OF T HE ASSESSEE THAT NO EXPENDITURE IS INCURRED FOR EARNIN G THE DIVIDEND INCOME IS NOT ACCEPTABLE AND RATHER IT IS CONTRARY TO THE FACTS. THEREFORE THE PRIMARY ONUS IS ON THE ASSESSEE TO SHOW THAT THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE IS EITHER BASED O N THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE OR ESTIMATED ON SOME REASONABLE AND PROPER BASIS. THE ASSESSEE HAS NOT CLAIMED THAT THE SUO MOTO DISALLOWANCE OF RS. 10 LACS IS BASED ON THE ACTUAL EXPENDITURE RATHER THE ASSESSEE HAS CLAIMED THAT NO EXPENDITURE WAS INCURRED BY THE ASSESSEE. THEREFOR E THE SUO MOTO EXPENDITURE IS BASED ON ESTIMATION ONLY. BUT THE ASSESSEE HAS FAILED TO EXPLAIN THE BASIS OF THE 10 ITA.NO.3644/DEL./2018 IFCI LTD. SUO MOTO DISALLOWANCE EXCEPT THE IDENTICAL AMOUNT WAS DISALLOWED FOR THE AY 2010-11. SINCE NO RESJUDICATA IS APPLICABLE IN THE MATTER OF TAX AND EACH YEAR IS A SEPARATE ASSESSMENT UNIT THEREFORE UNTIL AND UNLE SS THE FACTS ARE IDENTICAL THE SUO MOTO DISALLOWANCE MADE IN THE AY 2010-11 CANNOT BE APPLIED FOR THE AY 2012 - 13. HENCE THE DECISION OF THIS TRIBUNAL WHICH IS PURELY ON THE LEGAL ISSUE OF NON RECORDING OF SATISFACTION BY THE AO AND NOT A FINDING OF FACT GI VEN ON THE MERITS OF THE ISSUE WOULD NOT OPERATE AS A BINDING PRECEDENT FOR THE YEAR UNDER CONSIDERATION. WE FIND THAT THE AO HAS CLEARLY POINTED OUT WHILE ISSUING THE SHOW CAUSE NOTICE TO THE ASSESSEE THAT THE ASSESSEE HAS NOT GIVEN ANY BASIS FOR THE SUO MOTO DISALLOWANCE OF RS. 10 LACS WHICH AMOUNTS TO RECORDING THE SATISFACTION BY THE AO. WHEN THE FAC TS FOR THE TWO ASSESSMENT YEARS ARE ENTIRELY DIFFERENT THEN THE REASONING RECORDED BY THE AO FOR THE YEAR UNDER CONSIDERATION CANNOT BE COMPARED FOR THE AY 2010-11 . HENCE WE DO NOT FIND ANY SUBSTANCE IN THE CONTENTI ON 11 ITA.NO.3644/DEL./2018 IFCI LTD. OF THE LD. AR OF THE ASSESSEE THAT ADDITION MADE BY THE AO IS LIABLE TO BE DELETED. SINCE THE AO HAS COMP UTED THE DISALLOWANCE BY APPLYING THE FORMULA UNDER RULE 8D WHICH IS 0.5% OF THE AVERAGE INVESTMENT THEN WE DO NOT FIND ANY FAULT IN THE COMPUTATION OF DISALLOWAN CE MADE BY THE AO. AS WE HAVE ALREADY DISCUSSED THAT THERE IS A REGULAR TRANSACTION OF PURCHASE AND SALE OF SHARES AND SECURITIES BY THE ASSESSEE THEREFORE T HE ADMINISTRATIVE EXPENSES WHICH IS INCURRED BOTH FOR THE TAXABLE INCOME AND EXEMPT INCOME HAS TO BE APPORTIONED AS PER THE FORMULA PROVIDED IN RULE 8D. HENCE THIS ISSUE IS DECIDED AGAINST THE ASSESSEE A ND IN FAVOUR OF THE REVENUE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- (R.K. PANDA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST AUGUST 2021 *KAVITA ARORA SR. PS 12 ITA.NO.3644/DEL./2018 IFCI LTD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC-2 BENCH DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR ITAT DELHI BENCH ES : DELHI.