M/s. Jubilant Enpro Pvt. Ltd., Noida V. DCIT, Noida

CO 176/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9183 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 13-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OB JECTION IS FILED
• Assessee Lawyers: ARE DIRECTED AGAINST IMPUGNED
• Keywords: Rule 8D; Set aside
• Section: 14A; 28

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 828/DEL/2016 A.Y. : 2011-12 DCIT, CIRCLE-1, AAYAKAR BHAWAN, A-2/D, SECTOR-24, NOIDA VS. M/S JUBILANT ENPRO PVT. LTD., PLOT NO. 1-A, SECTOR- 16A, NOIDA (PAN: AAACE0653L) (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 176/DEL/2018 (IN ITA NO. 828/DEL/2016) A.Y. 2011-12 M/S JUBILANT ENPRO PVT. LTD., PLOT NO. 1-A, SECTOR- 16A, NOIDA (PAN: AAACE0653L) VS. DCIT, CIRCLE-1, AAYAKAR BHAWAN, A-2/D, SECTOR-24, NOIDA (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJ ECTION IS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE IMPU GNED ORDER DEPARTMENT BY SH. JAGDISH SINGH, SR. DR. ASSESSEE BY SH. GAURAV JAIN, ADV., SH. ADITYA VOHRA, ADV. & SH. ARPIT GOYAL, CA 2 DATED 01.06.2015 PASSED BY THE LD. CIT(A)-I, NOIDA IN RELATION TO ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL READ AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 2,89,27,362/- MADE ON ACCOUNT OF DUTY CREDIT SCRIPS RECEIVED BUT NOT UTILIZED. 2. THE CIT(A) IGNORED THE FINDING RECORDED BY THE AO AND THE FACTS THAT THE DUTY CREDIT WAS NOT OFFERED FOR TAXATION BY THE ASSESSEE. 3. THE ORDER OF THE CIT(A)-I IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 4. THAT THE APPELLANT CRAVES TO LEAVE, ADD, ALTER AND AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE HEARING. 5. THAT THE ORDER OF CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE SET ASIDE / CANCELLED AND THE ORDER OF THE AO TO BE RESTORED. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION READ AS UNDER:- 3 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 WAS REQUIRED TO BE MADE ONLY IN RESPECT OF SUCH INVESTMENTS WHICH YIELDED EXEMPT DIVIDEND INCOME NOT FORMING PART OF THE TOTAL INCOME COMPUTED FOR THE SUBJECT ASSESSMENT YEAR. 2. WITHOUT PREJUDICE, THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, SUO MOTU DISALLOWANCE OF RS. 34.86 CRORES MADE BY THE RESPONDENT UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES OUGHT TO HAVE BEEN RESTRICTED TO RS. 3.36 CRORES, BEING THE TOTAL AMOUNT OF EXEMPT DIVIDEND INCOME EARNED BY THE RESPONDENT DURING THE RELEVANT PREVIOUS YEAR. THE RESPONDENT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY FROM THE ABOVE GROUNDS AT OR BEFORE THE TIME OF HEARING. 4. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NO T DISPUTED BY BOTH THE PARTIES, THEREFORE, NO NEED TO R EPEAT THE SAME FOR THE CONVENIENCE. 4 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESS EE STATED THAT THE ISSUE INVOLVED IN THE GROUNDS RAISED BY TH E REVENUE HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESEE IN ASSESSEES OWN CASE VIDE ORDER DATED 18.0 3.2014 IN APPEAL NO. 39/2013-14/NOIDA FOR THE ASSESSMENT YEAR 2010- 11 OF THE LD. CIT(A). LD. COUNSEL FOR THE ASSESSEE D RAW OUR ATTENTION TOWARDS THE FINDINGS OF THE LD. CIT(A) WH ICH IS MENTIONED AT PAGE NO. 9 & 10 OF THE IMPUGNED ORDER AND REQUESTED BY FOLLOWING THE SAME, THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. HE FURTHER STATED THAT A SSESSEE HAS ALSO FILED THE CROSS OBJECTION NO. 176/DEL/2018 REGARDING THE DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 . ON ASKING BY THE BENCH, WHETHER THE ASSESSEE HAS RAISED THE ISSUE INVOLVED IN THE CROSS OBJECTION BEFORE THE RE VENUE AUTHORITY BELOW AND ASKED THE QUESTION WITH THE LD. COUNSEL FOR THE ASSESSEE ABOUT THE MAINTAINABILITY OF THE C ROSS OBJECTION FILED BY THE ASSESSEE. LD. COUNSEL FOR TH E ASSESSEE STATED THAT EXACTLY SIMILAR ISSUE HAS BEEN DECIDED BY THE ITAT, D BENCH, NEW DELHI IN REVENUES ITA NO. 3485/DEL/ 2014 (AT 2010-11) AND IN ASSESSEES CROSS OBJECTION NO. 194/ DEL/2017 (IN ITA NO. 3485/DEL/2014) (AY 2010-11). ABOUT THE MAINTAINABILITY OF CROSS OBJECTION, HE CITED THE DEC ISION IN THE CASE OF PCIT VS. SILVER LINE (2016) 383 ITR 455. 6. LD. SR. DR RELIED UPON THE ORDER PASSED BY THE A SSESSING OFFICER ON THE ISSUE INVOLVED IN THE GROUNDS RAISED BY THE 5 REVENUE AND REITERATED THE CONTENTION RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS PASSED BY THE REVENUE AUTHORITIES ON THE ISSUE INV OLVED IN THE GROUNDS MENTIONED BY THE REVENUE ALONGWITH THE IMPU GNED ORDER PASSED BY THE LD. CIT(A). FOR THE SAKE OF CONV ENIENCE, THE RELEVANT FINDING OF THE LD. CIT(T) MENTIONED AT PAGE NO. 9 & 10 ARE REPRODUCED BELOW:- 5. OBSERVATIONS: I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSIONS OF THE APPELLANT AND ALSO THE CONTENTS OF THE ASSESSMENT ORDER AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD AND AFTER HAVING CAREFULLY CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, MY CONCLUSIONS ON THE ISSUES RAISED IN THE GROUNDS OF APPEAL ARE AS UNDER :- GROUND NO. 1 & 1.1 RELATE TO GRIEVANCE OF THE APPELLANT AGAINST THE ACTION OF ASSESSING OFFICER IN MAKING AN ADDITION ON ACCOUNT OF A PORTION OF DUTY CREDITS SCRIPS, ISSUED DURING THE PREVIOUS YEAR, WHICH REMAINED UNUTILIZED TO THE EXTENT OF RS 2,89,27,362/- AT THE END OF PREVIOUS YEAR. THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT HAVE BEEN CONSIDERED. I FIND THAT THE IDENTICAL 6 ISSUE IN THE APPELLANT'S OWN CASE WAS DECIDED BY ME VIDE ORDER DATED 18.03.2014 IN APPEAL NO. 39/2013-14/NOIDA FOR THE ASSESSMENT YEAR 2010-11 AND THE FINDINGS OF THAT ORDER IS REPRODUCED BELOW:- 'RELATE TO GRIEVANCE OF THE APPELLANT AGAINST THE ACTION OF ASSESSING OFFICER IN MAKING AN ADDITION ON ACCOUNT OF A PORTION OF DUTY CREDITS SCRIPS, ISSUED DURING THE PREVIOUS YEAR, WHICH REMAINED UNUTILIZED TO THE EXTENT OF RS 5,79,60,145/- AT THE END OF PREVIOUS YEAR. THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT HAVE BEEN CONSIDERED. I FIND THAT THE IDENTICAL ISSUE IN THE APPELLANT'S OWN CASE WAS DECIDED BY THE CIT(A)-VII, DELHI VIDE ORDER DATED 01.04.2011 IN APPEAL NO. 193/2010-11 FOR THE ASSESSMENT YEAR 2007-08 AND THE FINDINGS OF THAT ORDER IN PARA 8.1 AND 8.2 ARE REPRODUCED BELOW:- '8.1 I HAVE CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE APPELLANT, THE FINDING OF THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER AND THE FACT ON RECORD. IT IS OBSERVED THAT A.0. HAD TAXED THE ASSESSEE ON NOTIONAL 7 INCOME BY WAY OF DUTY CREDIT I.E. INCOME IT SHOULD HAVE EARNED BUT NOT EARNED AND THE DISALLOWANCE HAS BEEN DONE PURELY ON THE BASIS OF WRONG APPLICATION OF CLAUSES (IIIA) (IIIB) AND (IIIC) OF SECTION 28 OF THE ACT TO THE FACT OF THE CASE. IT IS OBSERVED THAT CLAUSES (IIIA) (IIIB) AND (IIIC) OF SECTION 28 OF THE ACT, ENVISAGE THAT THE PROFIT ON SALE OF IMPORT ENTITLEMENT LICENCES, CASH ASSISTANCE AND DRAWBACK OF DUTY RESPECTIVELY SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION AND THE DUTY CREDIT SCRIPS DO NOT COME WITHIN THE AMBIT OF CLAUSES (IIIA), (IIIB) AND (IIIC) OF SECTION 28 OF THE ACT. 8.2 IT IS ALSO WELL SETTLED THAT NOTIONAL INCOME CANNOT BE TAXED. RELIANCE IS PLACED ON THE DECISION RENDERED BY THE SUPREME COURT IN GODHRA ELECTRICITY CO. LTD VS CIT [1997] 225 ITR 746, WHERE AN ELECTRICITY COMPANY DID NOT TAKE CREDIT FOR THE ENHANCEMENT RATE FIXED BY IT, BECAUSE OF PENDING LITIGATIONS AND SUBSEQUENT TAKEOVER OF THE UNDER TAKING ITSELF BY 8 THE GOVERNMENT, SO THAT THE ENHANCED RATE COULD NOT HAVE BEEN AVAILABLE TO THE COMPANY, EVEN IF ULTIMATELY SUCH ENHANCEMENT WAS CLEARED BY THE COURTS. IN THIS CASE, ADOPTION OF THE ENHANCED RATE FOR ASSESSMENT WAS FOUND TO BE UNTENABLE BY THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL BUT THE HIGH COURT HELD IN FAVOUR OF THE REVENUE ON THE GROUND THAT A LEGAL RIGHT TO RECOVER THE CONSUMPTION CHARGES AT THE ENHANCED RATE WAS AVAILABLE NOTWITHSTANDING PENDING LITIGATION. ALL THAT HAD HAPPENED WAS THAT THE MATTER OF RECOVERY WAS STAYED PENDING FINAL ADJUDICATION. THE ASSESSEE COMPANY ITSELF HAVING DEBITED THE CONSUMERS AND CREDITED ITSELF WITH THE INCREASED RATE THE CLAIM THAT THE DIFFERENCE REPRESENTED ONLY HYPOTHETICAL INCOME AND COULD NOT BE TAXED WAS NOT FOUND ACCEPTABLE BUT THE SUPREME COURT REVERSED THE HIGH COURT DECISION ON THE GROUND THAT THE ENTRIES WARE NOT CONCLUSIVE AS LONG AS LONG AS RECOVERY WAS NOT POSSIBLE. 9 THE PRINCIPAL LAID DOWN IN CIT VS SHOORJI VALLABHDAS AND CO. [1962] 46 ITR 144 (SC) AND VARIOUS OTHER DECISIONS FOLLOWING THE SAME WOULD REQUIRED THAT EVEN IN THE ACCRUAL SYSTEM THERE SHOULD BE A CLEAR RIGHT TO RECEIVED THE PAYMENT. THE ACCRUAL MUST BE A REAL ONE. NOTHING HAS BEEN BROUGHT ON RECORD BY THE A.O. TO SHOW THAT DUTY CREDIT SCRIPS HAVE BEEN UTILIZED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THE DISCUSSION MADE ABOVE, IT IS HELD THAT THE ADDITION OF RS. 56,29,884/- ON ACCOUNT OF DUTY CREDIT SCRIPS RECEIVED BUT NOT UTILIZED BY THE APPELLANT IS NOT JUSTIFIED & THE APPELLANT SUCCEEDS IN RESPECT OF GROUNDS OF APPEAL NO. 5.1 AND 5.2. AS THE FACTS AND CIRCUMSTANCES OF THE CASE ARE PARI MATERIA WITH THE CASE OF THE APPELLANT IN A.Y. 2010-11 FOLLOWING THE AFORESAID ORDER THE GROUND NO. 1 AND 1.1 ARE ALLOWED AND THE APPELLANT GETS A RELIEF OF RS.2,89,27,362/-. 7.1 AFTER GOING THROUGH THE AFORESAID FINDINGS OF T HE LD. CIT(A) ON THE ISSUE INVOLVED IN THE REVENUES APPE AL, WE ARE OF THE VIEW THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE LD. 10 CIT(A) VIDE HIS ORDER DATED 18.3.2014 IN APPEAL NO. 39/2013- 14/NOIDA FOR THE ASSESSMENT YEAR 2010-11 IN ASSESSE ES OWN CASE WHICH HAS BEEN UPHELD BY THE TRIBUNAL IN ITA N O. 3485/DEL/2014 (AY 2010-11) VIDE ORDER DATED 16.8.2018 . WE ALSO NOTE THAT NO CONTRARY DECISION HAS BEEN BROUGH T TO OUR NOTICE BY THE LD. SR. DR TO THE DECISION MENTIONED B Y THE LD. CIT(A) IN HIS FINDING. THEREFORE, WE ARE OF THE VIE W THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED FIN DING OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND DISMISS THE APP EAL FILED BY THE REVENUE. ASSESSEES CROSS OBJECTION NO. 176/DEL/2018 8. AS REGARDS THE ISSUE INVOLVED IN ASSESSEES CROS S OBJECTION AS WELL AS THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESEE VIZ. DECISION IN THE CASE OF PCIT VS. S ILVER LINE (2016) 383 ITR 455 AND DECISION DATED 16.8.2018 OF I TAT, D BENCH, NEW DELHI IN REVENUES ITA NO. 3485/DEL/2014 (AY 2010-11) & ASSESSEES CROSS OBJECTION NO. 194/DEL/20 17 (IN ITA NO. 3485/DEL/2014) (AY 2010-11), WE ARE OF THE V IEW THAT THIS CROSS OBJECTION IS NOT MAINTAINABLE, BECAUSE I SSUE ARISES THEREIN HAS NOT BEEN RAISED BEFORE THE REVENUE AUTH ORITIES BELOW AND HAS NOT BEEN DECIDED AGAINST THE ASSESSEE . EVEN OTHERWISE, WE HAVE ALREADY DISMISSED THE REVENUES APPEAL BY UPHOLDING THE FINDING OF THE LD. CIT(A), THUS TH E CROSS OBJECTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS, HE NCE, THE CROSS OBJECTION IS DISMISSED AS SUCH. 11 9. IN THE RESULT, THE REVENUES APPEAL AS WELL AS AS SESSEES CROSS OBJECTION STAND DISMISSED. THE DECISION IS PRONOUNCED ON 11.08.2020. SD/- SD/- (R.K. PANDA) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.08.2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI 12