Paushak Limited,, Baroda v. The Dy.CIT.,Circle-4,, Baroda

ITA 939/AHD/2014 | 2010-2011
Pronouncement Date: 05-10-2016 | Result: Allowed

Appeal Details

RSA Number 93920514 RSA 2014
Assessee PAN AAACD5006G
Bench Ahmedabad
Appeal Number ITA 939/AHD/2014
Duration Of Justice 2 year(s) 6 month(s) 3 day(s)
Appellant Paushak Limited,, Baroda
Respondent The Dy.CIT.,Circle-4,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 05-10-2016
Date Of Final Hearing 28-09-2016
Next Hearing Date 28-09-2016
Assessment Year 2010-2011
Appeal Filed On 02-04-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD .. BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD JUDICIAL MEMBER ./ I.T.A. NO.939/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) PAUSHAK LIMITED 5 TH FLOOR ADMINISTRATIVE BLDG. ACCOUNT DEPT. ALEMBIC ROAD BARODA 390 003 / VS. THE DCIT CIRCLE-4 BARODA $ ./ ./ PAN/GIR NO. : AAACD 5006 G ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI S.N. SOPARKAR AR ($'*) / RESPONDENT BY : MR.PRASOON KABRA SR.DR + *-. / DATE OF HEARING 28/09/2016 /012*-. / DATE OF PRONOUNCEMENT 05/10/2016 / O R D E R PER SHRI MAHAVIR PRASAD JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III BARODA DAT ED 08/01/2014 FOR THE ASSESSMENT YEAR (AY) 2010-11. THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. DISALLOWANCE U/S.14A OF RS.6 43 950/-. ITA NO.939/AHD/ 2014 PAUSHAK LIMITED VS. DCIT ASST.YEAR 2010-11 - 2 - 1.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE U/S.14A READ WITH RULE 8D(2)(III) OF ADMINISTRATIVE EXPENDITURE AMOUNTING TO RS.6 43 950/-. 1.2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE ASSESSING OFFICER HAD NOT REACHED APPROPRIATE SATISFACTION AS REQUIRED UNDER LAW FOR INVOKING THE PROVISIONS OF S.14A. 1.3. WITHOUT PREJUDICE TO THE ABOVE DISALLOWANCE U/S.14 A SHOULD BE SUBSTANTIALLY REDUCED. 2. SINCE THE ISSUES ARE INTER-CONNECTED THEREFORE THE SAME ARE DECIDED TOGETHER FOR THE SAKE OF CONVENIENCE. 2.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MATE RIALS ON RECORD ARE AS UNDER:- 2.2. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CHEMICALS. ASSESSEE FILED ITS RETURN OF INCOME ON 27/09/2010 DECLARING TOTAL INCOME OF RS.2 74 63 969. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REF ERRED TO AS 'THE ACT') VIDE ORDER DATED 08/02/2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.2 82 34 015/-. AGGRIEVED BY THE ORDER OF THE AS SESSING OFFICER (AO) ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) W HO VIDE ORDER DATED 08/01/2014 (IN APPEAL NO.CAB/III-286/2012-13) GRAN TED PARTIAL RELIEF ITA NO.939/AHD/ 2014 PAUSHAK LIMITED VS. DCIT ASST.YEAR 2010-11 - 3 - TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CI T(A) ASSESSEE IS NOW IN CROSS-APPEALS BEFORE US. 3. THE LD.AR REITERATED THE SUBMISSIONS AS WERE MA DE BEFORE THE LD.CIT(A). HE RELIED ON THE DECISION OF THE COORDI NATE BENCH PASSED IN ASSESSEES OWN CASE FOR AY 2009-10. THE COPY OF TH E SAID ORDER PLACED ON RECORD. ON THE OTHER HAND LD.SR.DR SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN OUR CONSIDERED OPINION THIS CASE IS COVERED BY T HE DECISION OF COORDINATE BENCH (ITAT C BENCH AHMEDABAD) IN ASS ESSEES OWN CASE IN ITA NO.1040/AHD/2013 FOR AY 2009-10 ORDER DATED 05/05/2016. THE COORDINATE BENCH IN THE SAID CASE HAS HELD AS U NDER:- WE HAVE HEARD RIVAL CONTENTIONS. CASE FILE PERUSED . THE SOLE DISPUTE BETWEEN BOTH THE PARTIES IS ABOUT CORRECTNESS OF TH E IMPUGNED ADMINISTRATIVE EXPENDITURE DISALLOWANCE OF RS. 6 94 047/-MADE BY BOTH THE LOWER AUTHORITIES. THE ASSESSEE'S CASE INTER AL IA IS THAT IT HAS NOT INCURRED ANY EXPENDITURE QUA EARNING OF ITS EXEMPT INCOME BOTH THE LOWER AUTHORITIES HAVE NOT REJECTED ITS BOOKS OF AC COUNTS BEFORE INVOKING THE IMPUGNED DISALLOWANCE AS HELD MANDATOR Y UNDER SECTION 14A(2) BY HON'BLE DELHI HIGH COURT IN MAXOPP INVEST MENTS VS. CIT (2012) 247 CTR (DELHI) (162) AND FURTHER QUOTES A C O-ORDINATE BENCH DECISION IN ITA NO. 1362 & 1032/DEL/2013 INTERGLOBE ENTERPRISES LTD VS. DCIT DECIDED ON 04-04-2014 HOLDING THAT STRATEG IC INVESTMENTS MADE IN GROUP ENTITY ARE NOT FOR EARNING EXEMPT INC OME SO AS TO INVOKE SUCH A DISALLOWANCE IN QUESTION. THE ASSESSEE ALSO CITES HON'BLE ITA NO.939/AHD/ 2014 PAUSHAK LIMITED VS. DCIT ASST.YEAR 2010-11 - 4 - JURISDICTIONAL HIGH COURT DECISION IN (2015) 376 IT R 553 (GUJ) PCIT VS. INDIA GELATINE CHEMICAL LTD AS WELL AS (2015) 370 I TR 338 (DELHI) CIT VS. TAIKISHA ENGINEERING INDIA LTD TO BUTTRESS ITS ABOVE STATED ARGUMENT CHALLENGING NO SATISFACTION ARRIVED AT BY THE LOWER AUTHORITIES THAT ITS BOOKS OF ACCOUNTS STATING NO EXPENDITURE TO HAVE BE EN INCURRED EARNING OF ITS EXEMPT INCOME ARE NOT CORRECT. THE REVENUE S TRONGLY SUPPORTS THE CIT(A)'S REASONING EXTRACTED HEREINABOVE. WE HAVE G IVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. WE C OME TO 'SATISFACTION' ASPECT AS MANDATED UNDER SECTION 14A(2) R.W. RULE 8 D OF THE INCOME TAX RULES. THERE IS NO DISPUTE THAT THE ASSESSING O FFICER IN HIS ASSESSMENT ORDER DOES NOT RECORD THE SAME SO AS TO DISPUTE ASSESSEE'S BOOKS OF ACCOUNTS RECORDING NO EXPENDITURE INCURRED FOR EXEMPT INCOME. THE CIT(A) UPHOLDS ASSESSING OFFICER'S FIND INGS BY OBSERVING THAT SUCH A SATISFACTION NEED NOT BE EXPLICITLY MEN TIONED IN ASSESSMENT ORDER AS IT CAN BE DEDUCED FROM THE ORDER ITSELF. W E FIND IT TO BE NOT IN TUNE WITH THE SPECIFIC PROVISION IN THE ACT UNDER S ECTION 14A(2). THE LEGISLATURE IN ITS WISDOM SPECIFICALLY ENVISAGES AS SESSING OFFICER'S SATISFACTION BEFORE INVOKING EXPENDITURE DISALLOWAN CE THAT AN ASSESSEE'S BOOKS ARE NOT CORRECT SO FAR AS THEY DO NOT RECORD ANY EXPENDITURE. WE QUOTE THIS STATUTORY PROVISION AS WELL AS THE ABOVE STATED CASE LAW THAT THERE HAS TO BE AN EXPLICIT SATISFACTION AND AN ASS ESSING OFFICER CANNOT SIMPLY BRUSH ASIDE THE RELEVANT BOOKS OF ACCOUNTS. ANY VIOLATION THEREOF IN OUR CONSIDERED OPINION WOULD VIOLATE T HE LEGISLATIVE INTENT AS WELL THE LEGISLATION ITSELF. WE ARE ACCORDINGLY OF THE OPINION THAT THE CIT(A)'S REASONING GOES CONTRARY TO SECTION 14A(2) AS INTERPRETED BY VARIOUS HIGH COURTS HEREINABOVE. THE IMPUGNED ADMIN ISTRATIVE EXPENDITURE DISALLOWANCE OF RS. 6 94 047/- MADE BY BOTH THE LOWER AUTHORITIES UNDER RULE 8D(III) IS ACCORDINGLY DELET ED. 4.1. BEFORE US THE REVENUE HAS NOT CONTROVERTED T HE ORDER OF THE COORDINATE BENCH NOR HAS PLACED ON RECORD ANY CONTR ARY BINDING DECISION IN ITS SUPPORT. THEREFORE RESPECTFULLY FOLLOWING TH E SAID DECISION OF THE COORDINATE BENCH WE ALLOW THE GROUNDS RAISED IN TH E APPEAL OF THE ASSESSEE. ITA NO.939/AHD/ 2014 PAUSHAK LIMITED VS. DCIT ASST.YEAR 2010-11 - 5 - 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05 / 1 0/2016 SD/- SD/- .. ( ) () ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05/ 10 /2016 6... .../ T.C. NAIR SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 78- + 9- / CONCERNED CIT 4. + 9- ( ) / THE CIT(A)-III BARODA 5. :;<-78 .782 / DR ITAT AHMEDABAD 6. <=> / GUARD FILE. / BY ORDER (:-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION ..3.10.16 (DICTATION-PAD 1- PAGE ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3.10.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.10.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.10.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER