Gujarat State Financial Services Ltd, Ahmedabad v. The Income tax Officer, Ward-4(1),, Ahmedabad

ITA 865/AHD/2006 | 2002-2003
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 86520514 RSA 2006
Bench Ahmedabad
Appeal Number ITA 865/AHD/2006
Duration Of Justice 4 year(s) 9 month(s) 10 day(s)
Appellant Gujarat State Financial Services Ltd, Ahmedabad
Respondent The Income tax Officer, Ward-4(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 21-01-2011
Date Of Final Hearing 12-01-2011
Next Hearing Date 12-01-2011
Assessment Year 2002-2003
Appeal Filed On 10-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.865/AHD/2006 & ITA NO.1927/AHD/2007 ASSESSMENT YEAR:2002-03 DATE OF HEARING:12.1.11 DRAFTED:19.1.11 GUJARAT STATE FINANCIAL SERVICES LTD. B WING 3 RD FLOOR KHANIJ BHAVAN 132 FT. RING ROAD NR. UNIVERSITY GROUND VASTRAPUR AHMEDABAD- 380052 PAN NO.AAACG5581B ACIT CIRCLE-4 1 ST FLOOR NAVIJAVAN TRUST BUILDING OFF. ASHRAM ROAD AHMEDABAD-380 014 V/S . V/S . INCOME TAX OFFICER WARD-4(1) AHMEDABAD GUJARAT STATE FINANCIAL SERVICES LTD. 62 6 TH FLOOR CITY CENTRE NR. SWASTIK CHAR RASTA NAVRANGPURA AHMEDABAD (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI SANJAY R SHAH A.R REVENUE BY:- SHRI SHELLEY JINDAL CIT-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE AR ISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VIII AHMEDABAD IN APPEAL NO. CIT(A)-VIII/ITO/4(1)/021/05-06 DATED 23-02-2006 . THE ASSESSMENT WAS FRAMED BY ITO WARD-4(1) AHMEDABAD U/S143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 10-03-2005 FOR ASSESSMENT YEAR 2002-03. ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 2 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AS REGARDS TO CIT(A) CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OFFIC ER RELATING TO INTEREST U/S.14A. FOR THIS ASSESSEE HAS RAISED THE FOLLOWIN G EFFECTIVE GROUND NO.1 :- ITA NO.865/AHD/2006 FOR ASSESSEE. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2 69 26 054 RELAT ING TO INTEREST U/S.14A. IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS SUBMITTED THAT PROVISIONS OF SECTION14A ARE NOT APPLICABLE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN APPLYING DECISION OF AHMEDABAD ITAT IN THE CASE OF H.K.BHATT V. ITO. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE DECISION OF THE AHMEDABAD ITAT IS NOT APPLICAB LE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT NO FRESH INVESTMENTS ARE MADE IN TH E CURRENT YEAR AND IN THE IMMEDIATELY PRECEDING YEAR COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED SUCH DISALLOWANCE. THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN TOTALLY IGNORING COMMISSIONER OF INCOME TAX (APPEALS)S ORD ER FOR A.Y. 2001-02 AND CONFIRMING THE DISALLOWANCE. IT IS SUBM ITTED THAT IT BE SO HELD NOW. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SHRI SANJAY R SHAH STATED THAT EXACTLY ON IDENTICAL FACTS THE TRIBUNAL IN AS SESSEES OWN CASE IN ITA NO.229/AHD/2005 DATED 10-07-2009 FOR ASSESSMENT YEAR 2001-02 HAS S ET ASIDE THIS ISSUE BY GIVING FOLLOWING FINDINGS IN PARA-4 :- 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MAT ERIAL ON RECORD AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHOR ITIES. WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES CONCERNED HAVE NOT CORRECTLY APPRECIATED THE FACTS AND BROUGHT RELEVANT MATERIAL ON RECORD FOR MAKING PROPORTIONATE DISALLOWANCE. IT HAS TO BE SHO WN THAT INTEREST HAS BEEN PAID ON FUNDS WHICH WERE INVESTED IN TAX FREE SECURITIES. SINCE THE ASSESSEE IS MAKING CLAIM OF RS.28.65 CRORES ONUS I S ON THE ASSESSEE TO PROVE THAT INTEREST BEARING FUNDS ARE NOT INVEST ED IN TAX FREE SECURITIES. IF IT IS UNABLE TO PROVE SO THEN FOLLO WING THE DECISION OF SPECIAL BENCH ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD. 312 ITR (AT) 01 A PROPORTIONATE DISALLOWANCE OF INTEREST P AYMENT IS REQUIRED. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF A O FOR DECIDING THE ISSUE ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 3 AFRESH AFTER GIVING ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTIC AL PURPOSE. ON THE OTHER HAND LD. CIT-DR SHRI SHELLEY JINDAL ALSO STATED THAT ISSUE IS COVERED AND IN THIS YEAR THE FACTS BEING EXACTLY ID ENTICAL CAN BE REMITTED BACK TO THE FILE OF ASSESSING OFFICER EXACTLY ON SIMILAR DIRECTIONS. WE FIND THAT ISSUE REQUIRES RECONSIDERATION AND ASSESSING OFFICER IS D IRECTED TO DECIDE THIS ISSUE IN TERMS OF THE DECISION OF THIS TRIBUNAL IN EARLIE R YEAR. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OF FICER ON ACCOUNT OF ADMINISTRATIVE EXPENSES U/S.14A. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.4 48 180 OUT OF A DMINISTRATIVE EXPENSES U/S 14A. IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS SUBMITTED THAT NO DISALLOWANCE WAS TO BE MADE OUT O F ADMINISTRATIVE EXPENSES U/S.14A OF THE I.T. ACT. IT IS SUBMITTED T HAT IT BE SO HELD NOW. 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE FAIRL Y STATED THAT HE HAS INSTRUCTIONS FROM THE ASSESSEE NOT TO PRESS THIS IS SUE AND ACCORDINGLY HE IS NOT INTERESTED IN PROSECUTING THIS GROUND DUE TO SM ALLNESS OF AMOUNT. ACCORDINGLY THIS ISSUE IS DISMISSED DUE TO SMALLNE SS OF AMOUNT AND NOT PRESSED BY ASSESSEE. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE IN PROVISIONS IN DIM INUTION IN VALUE OF INVESTMENTS AS NOT ALLOWABLE DEDUCTION U/S.28/37(1) OF THE ACT. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.3 :- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN HOLDING THAT RS.8 99 77 463 FOR PROVISION IN DIMINUTION IN VALUE OF INVESTMENTS IS NOT ALLOWABLE AS A DEDUCTION U/S.218/37(1) OF THE A CT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE PROVISION MADE FOR DIMINUTION IN VALUE OF INVESTMENTS IS ALLOWABLE AS A DEDUCTION U/S.28 /37(1). IT IS SUBMITTED THAT IT BE SO HELD NOW. ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 4 7. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STATE D THAT THIS ISSUE IS SQUARELY COVERED BY THIS TRIBUNAL IN PARA-12 AS UNDER:- 12. GROUND NO.3 RELATES TO DISALLOWANCE OF RS.21.9 8 LAKHS BEING THE PROVISION IN DIMINUTION IN VALUE OF INVESTMENT. THI S WAS DISCUSSED BY THE AO IN PARA-4C OF HIS ORDER AND BY LEARNED CIT(A ) IN PARA-5. ISSUE AGAIN GOES AGAINST THE ASSESSEE BY THE SAME DECISIO N OF THE ITAT IN THE CASE OF GUJARAT GAS FINANCIAL SERVICES (SUPRA). THIS GROUND OF THE ASSESSEE IS ALSO REJECTED. AS THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THI S ISSUE IS COVERED WE TAKE A CONSISTENT VIEW AND RESPECTFULLY FOLLOWING THE TR IBUNALS DECISION WE DISMISS THIS ISSUE OF ASSESSEES APPEAL. 8. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE CHARGING OF INTEREST U/S 234B OF THE ACT. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.4 :- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE INTEREST CHARGED U/S 234B OF THE ACT . IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE INTEREST IS NOT REQUIRED TO BE CHARGED. IT BE SO HELD NOW. 9. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CAS E IN EARLIER YEAR IN ASSESSEES OWN CASE IN PARA-13 HAS HELD AS UNDER:- 13. FOURTH ISSUE RELATES TO CHARGING OF INTEREST U NDER SECTION 234B AND 234D OF THE ACT. THE ASSESSEE CLAIMED THAT IT PAID ADVANCE TAX ON THE BASIS OF THE DECISION OF ITAT MUMBAI IN THE CASE OF DATAMATICS LTD. VS. ACIT 110 ITR 24. THE TRIBUNAL HAS FOLLOWED THAT DECISI ON IN HARYANA WAREHOUSING CORPN VS. DCIT 75 ITD 155. SIMILAR VIEW WAS TAKEN BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. K.K. MARKETING 278 ITR 596 AND BY HONBLE UTTARANCHAL HIGH COURT IN THE CASE OF CIT VS. SEDCON FOREX INTERNATIONAL DRILING CO. 264 ITR 320. LEARNED AR SUBMITTED THAT SINCE THE ASSESSEE WAS IN BONAFIDE BELIEF THAT PARTICULAR AMOUNT OF INCOME WAS NOT TAXABLE IT DID NOT DECLARE THE SAME AND DID NOT PAY THE ADVANCE TAX. SUBSEQUENTLY THE INCOME BECAME TAXABLE. IT HAS BEEN HELD BY THE HONBLE UTT ARANCHAL HIGH COURT THAT INTEREST CANNOT BE LEVIED UNDER SECTION 234B I F THERE IS A DISPUTE REGARDING TAXABILITY OF AMOUNT. LEARNED DR ON OTHER HAND SUBMITTED THAT CHARGING OF INTEREST UNDER SECTION 234B IS MAN DATORY IN VIEW OF THE DECISION HONBLE SUPREME COURT M.H. GHASWALAS CASE 252 ITR 1 AND THIS HAS TO BE LEVIED ON THE BASIS OF ASSESSED INCOME AND IS ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 5 CONSEQUENTIAL. IN VIEW OF THIS INTEREST UNDER SECT ION 234B AND FOR THAT MATTER UNDER SECTION 234C DEPENDS UPON THE FINALLY ASSESSED INCOME. THEREFORE NO INTERFERENCE IS CALLED FOR IN THE ORD ER OF LEARNED CIT(A). THIS PART OF THE GROUND IS ALSO REJECTED. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNA L WE DISMISS THIS ISSUE OF ASSESSEES APPEAL. 10. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE INTEREST CHARGE U/S.234D OF THE A CT. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.5 :- 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE INTEREST CHARGED U/S.234D OF THE ACT . IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE INTEREST IS NOT REQUIRED TO BE CHARGED. IT BE SO HELD NOW. 11. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THIS ISSUE IS SQUARELY COVERED BY THIS TRIBUNAL IN PARA-14 AS UNDER:- 14. REGARDING CHARGING OF INTEREST UNDER SECTION 2 34D LEARNED AR SUBMITTED THAT ITAT DELHI BENCH IN THE CASE OF VAN OORD DREDGING AND MARINE CONTRACTORS BV AND OTHER VS. DDIT 105 ITD 97 AND SPECIAL BENCH IN THE CASE OF EKTA PROMOTERS PVT. LTD. 113 ITD 719 HAS HELD THAT THE PROVISIONS OF SECTION 234D HAS CO ME INTO EFFECT FROM JUNE 2003 AND THEREFORE WOULD NOT APPLICABLE PRIOR TO A.Y.2004-2005. SINCE SPECIAL BENCH HAS TAKEN VIEW THAT APPLICATION OF SECTION 234D IS PROSPECTIVE AND APPLICABLE W.E.F. A.Y. 2004-2005 N O INTEREST WOULD BE CHARGEABLE FOR A.Y. 2001-2002. ACCORDINGLY GROUND NO.4 IS PARTLY ALLOWED. TAKING A CONSISTENT VIEW AND RESPECTFULLY FOLLOWING THE TRIBUNALS DECISION WE PARTLY ALLOW THIS ISSUE OF ASSESSEES APPEAL IN TER MS OF TRIBUNALS DECISION. NOW COMING TO REVENUES APPEAL IN ITA NO.1927/AHD/2 007. 12. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF DEPRECIATION ON ASSETS OF SALE AND LEASE ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 6 BACK TRANSACTION. FOR THIS REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND NO.1 TO 4 :- 1. THE LD. CIT(A) ERRED IN LAW AND DO THE FACTS OF THE CASE IN DIRECTING THE A.O TO DELETE THE DISALLOWANCE OF RS.2 48 94 45 2/- MADE ON ACCOUNT OF DEPRECIATION ON ASSETS OF SALE AND LEASE BACK T RANSACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECTS. 4. IN THIS CASE THE ORDER OF THE LD. CIT(A) WAS RE CEIVED IN THE OFFICE OF THE CIT AHMEDABAD-II AHMEDABAD ON 08.03.2006. AS SUCH THE LIMITATION FOR FILING SECOND APPEAL SUBSISTED UP TO 06.05.2006. THE SAID LIMITATION HAS ALREADY EXPIRED. IT IS THEREFORE PR AYED THAT THE INADVERTENT DELAY INFILLING OF THIS APPEAL DUE TO OVERSIGHT MAY KINDLY BE CONDONED. 13. AT THE OUTSET IT IS NOTICED THAT THIS APPEAL I S BARRED BY LIMITATION BY 366 DAYS AS THE LD. COUNSEL FOR THE ASSESSEE HAS NOT O BJECTED TO THE CONDONATION OF DELAY WE CONDONE THE DELAY AND ADMI T THE APPEAL. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED T HAT THIS ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN EARLIER YEAR WHER EIN PARA-6 HELD AS UNDER:- 6. WE HAVE HEARD LEARNED DR AND LEARNED AR. WE NOT ICED THAT THE ASSESSEE ENTERED INTO FIVE LEASE TRANSACTIONS WITH GSRTC. THEY ARE FIRST TRANSACTION WAS IN FINANCIAL YEAR 1993-94 WHE N DEPRECIATION WAS CLAIMED AT RS.59 97 155/-. THE SECOND LEASE TRANSAC TION WAS ALSO ENTERED INTO IN A.Y. 1994-95 WHEREIN DEPRECIATION O F RS.40 18 720/- WAS CLAIMED AND ALLOWED. THE THIRD LEASE TRANSACTIO N WAS ENTERED INTO IN F.Y. 1996-97 ON WHICH THE DEPRECIATION APPROX. O F RS.2 00 06 325/- WAS CLAIMED. FORTH TRANSACTION TOOK PLACE IN A.Y. 1 998-99 IN WHICH DEPRECIATION OF RS.4 01 38 576/- WAS CLAIMED AND AL LOWED. FIFTH ALSO TOOK PLACE IN A.Y. 1998-99 IN WHICH THE DEPRECIATIO N OF RS.7 99 42 946/- WAS CLAIMED. IT IS STATED BY THE LEARNED AR OF THE ASSESSEE THAT NO FRESH LEASE TRANSACTION HAS TAKEN PLACE THIS YEAR A ND DEPRECIATION IN RESPECT OF OLD LEASE TRANSACTIONS HAS ONLY BEEN CLA IMED THIS YEAR. THEREFORE FOLLOWING THE PRINCIPLE OF CONSISTENCY AS PROPOUNDED IN CIT VS. H.P. COTTON TEXTILE MILLS LTD. 311 ITR 436 CIT VS. MALBOROUGH POLYCHEM PVT. LTD. 309 ITR 43; CIT VS. MOONLIGHT BUILDERS AND DEVELOPERS 307 ITR 197 AND ACIT VS. GENDALAL HAZARILAL & CO. 263 ITR 679 WHEREIN IT IS HELD THAT EVEN THOUGH IN INCO ME-TAX PROCEEDINGS ITA NO.865/AHD/2006 & 1927/AHD/2007 A.Y 2002-0 3 GFSL V. ITO WD-4(1) ABD PAGE 7 PRINCIPLE OF RES-JUDICATA IS NOT APPLICABLE BUT CONSISTENCY HAS TO BE MAINTAINED UNLESS THERE IS MANIFEST DISTINGUISHABLE FACTS. IN EARLIER YEARS CLAIM OF DEPRECIATION WAS ACCEPTED BY THE RE VENUE WHICH HAS NOW BECOME FINAL THE REVENUE CANNOT DISALLOW THE P RESENT CLAIM UNLESS FACTS AND CIRCUMSTANCES ARE DISTINGUISHABLE. THEREFORE THE REVENUE IS REQUIRED TO MAINTAIN A JUDICIAL CONSISTE NCY BETWEEN ITSELF AND TAXPAYERS. AS A RESULT WE DO NOT FIND ANY MERIT IN THE CLAIM OF THE REVENUE AND THIS GROUND OF THE REVENUE IS DISMISSED . AS THE TRANSACTION OF LEASE AND SALE BACK IS A CONT INUING TRANSACTION ADDITION ADMITTED BY BOTH THE SIDES RESPECTFULLY FOLLOWING THE TRIBUNALS DECISION WE DISMISS THIS ISSUE OF REVENUES APPEAL. 14. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED AND THAT OF REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/01/2011 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 21/01/2011 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-VIII AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD