M/s Bholey Baba Milk Food Industries Ltd., Agra V. A.C.I.T., Circle-4(1), Agra

ITA 101/AGR/2013

• Counselvise Citation: 10120314 RSA 2013
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2013
• Assessment Year: misc
• Appeal Filed On: 10-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 14A; 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.101/AGRA/2013 ASSESSMENT YEAR: 2006-07 M/S. BHOLE BABA MILK FOOD VS. ASSTT. COMMISSIONER OF INCOME TAX, INDUSTRIES LIMITED, CIRCLE 4(1), AGRA. 7/52D, NAGLA JAWAHAR, BYE PASS ROAD, AGRA. (PAN: AACCB 3948 F). ITA NO.102/AGRA/2013 ASSESSMENT YEAR: 2009-10 M/S. BHOLE BABA MILK FOOD VS. JOINT COMMISSIONER OF INCOME TAX, INDUSTRIES LIMITED, RANGE-4, AGRA 7/52D, NAGLA JAWAHAR, BYE PASS ROAD, AGRA. (PAN: AACCB 3948 F). ITA NO.151/AGRA/2013 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME TAX, VS. M/S. BHOLE BABA MILK FOOD CIRCLE 4(1), AGRA. INDUSTRIES LIMITED, 7/52D, NAGLA JAWAHAR, BYE PASS ROAD, AGRA. (PAN: AACCB 3948 F). (APPELLANTS) (RESPONDENTS) ASSESSEE BY : NONE REVENUE BY : NONE DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 08.08.2013 2 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: ITA NOS.101 & 102/AGRA/2013 HAVE BEEN FILED BY THE ASSESSEE AGAINST TWO DIFFERENT ORDERS DATED 27.02.2013 & 06.02.2013 PASS ED BY THE LD. CIT(A)-II, AGRA FOR THE A.YS. 2006-07 & 2009-10 RESPECTIVELY AND IT A NO.151/AGRA/2013 HAS BEEN FIELD BY THE REVENUE AGAINST THE ORDER DATED 0 6.02.2013 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE A.Y. 2009-10. 2. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AS WE LL AS REVENUE. EARLIER THE CASE FIXED FOR 02.07.2013 WAS ADJOURNED ON THE REQU EST OF THE ASSESSEE. INSPITE OF GIVING ADJOURNMENT ON THE REQUEST OF THE ASSESSEE B UT THE ASSESSEE FAILED TO APPEAR ON THE ADJOURNED DATE I.E. 06.08.2013. CONSIDERING THE FACTS OF THE CASE, WE PROCEED TO DECIDE THE APPEALS ON MERIT ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. 3. FIRST WE TAKE UP ITA NOS.101 & 102/AGRA/2013 FIL ED BY THE ASSESSEE. THE ASSESSEE HAS RAISED COMMON GROUNDS IN BOTH THE APPE ALS BASED ON IDENTICAL SET OF FACTS. THE FIRST COMMON GROUND RAISED IN ASSESSEE S APPEAL IS PERTAINING TO CLAIM 3 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 OF THE ASSESSEE FOR HIGHER RATE OF DEPRECIATION ON THE BOILERS AND TUCKS USED OR ITS OWN PURPOSES. 4. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTI CED THAT THE ASSESSEE HAS CLAIMED 100% DEPRECIATION ON BOILERS ON THE GROUND THAT THE BOILERS INSTALLED IN THE FACTORY PREMISES ON THE PLEA THAT INVESTMENT IN POWER SAVING DEVICES OR RENEWAL POWER DEVICES WHERE SAVING ON ACCOUNT OF PO WER AND FUEL WAS MADE AND THUS GENERATING HIGHER INCOME WAS ENTITLED FOR DEPR ECIATION @ 100%. THE A.O. DID NOT ACCEPT THE ASSESSEES CONTENTION AND ALLOWE D DEPRECIATION @ 80% ON BOILER. THE CIT(A) AFTER CONSIDERING THE TABLE OF RATES OF DEPRECIATION FOUND THAT IN THE TABLE OF RATES OF DEPRECIATION THE ENERGY SA VING DEVICES SPECIFICALLY FOR SPECIALIZED BOILER AND FURNACES THE RATE OF DEPRECI ATION IS PROVIDED @ 80%. IN THE LIGHT OF THE FACT, THE CIT(A) HAS CONFIRMED THE ORD ER OF A.O. 5. WE NOTICE THAT THE RATE OF DEPRECIATION ON BOILE RS AS PER APPENDIX-I EFFECTIVE FROM A.Y. 2006-07 ONWARD PART-A III MACHI NERY & PLANT, ITEM-8 (IX) IS 80% WHICH IS REPRODUCED AS UNDER :- (IX) ENERGY SAVING DEVISE, BEING - A. SPECIALIZED BOILERS AND FURNACES: (A) IGNIFLUID/FLUIDIZED BED BOILERS (B) FLAMELESS FURNACES AND CONTINUOUS PUSHER TYPE F URNACES (C) FLUIDIZED BED TYPE HEAT TREATMENT FURNACES 4 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 (D) HIGH EFFICIENCY BOILERS (THERMAL EFFICIENCY HIG HER THAN 75 PER CENT IN CASE OF COAL FIRED AND 80 PER CENT IN CASE OF OIL/GAS FIRED BOILERS). 6. WE FIND THAT THE CIT(A) HAS RIGHTLY UPHELD THE O RDER OF A.O. AS IN DEPRECIATION APPENDIX, THE ADMISSIBLE DEPRECIATION ON BOILER IS 80%. IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A). ORDER OF CIT(A) IS CONFIRMED ON THE ISSUE FOR BOTH THE YEARS I.E. A.YS . 2006-07 & 2009-10. 7. THE SECOND PART OF GROUND NO.1 IS DEPRECIATION O N TRUCKS. THE ASSESSEE CLAIMED 30% DEPRECIATION ON TRUCKS USED FOR ASSESSE ES BUSINESS. THE A.O. RESTRICTED THE DEPRECIATION ON TRUCK @ 15%. 8. THE CIT(A) FOLLOWED THE ORDER OF I.T.A.T. IN ASS ESSEES OWN CASE IN ITA NO.42/AGR/2012 & 58/AGRA/2012 FOR THE A.Y. 2008-09 VIDE ORDER DATED 20.07.2012 AND CONFIRMED THE ORDER OF A.O. 9. WE FIND THAT THE CIT(A) HAS FOLLOWED THE ORDER O F I.T.A.T. IN ASSESSEES OWN CASE ITA NO.42/AGR/2012 & 58/AGRA/2012 FOR THE A.Y. 2008-09, ORDER DATED 20.07.2012. THE RELEVANT FINDING OF I.T.A.T. IN TH E ABOVE APPEAL IS REPRODUCED AS UNDER :- 5 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 14. AFTER HEARING THE LD. REPRESENTATIVES OF THE P ARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. ANUP CHAND & CO., 239 ITR 466 (M.P.) WHEREIN IT HAS BEEN HELD AS UNDER :- THE ASSESSEE WAS A REGISTERED FIRM DERIVING INCOME FROM CONTRACT WORK. THE ASSESSEE CLAIMED DEPRECIAT ION ALLOWANCE AT THE RATE OF 40 PER CENT. ON TRUCKS USE D FOR ITS BUSINESS PURPOSE. THE INCOME TAX OFFICER ALLOWED O NLY 30 PER CENT. ALLOWANCE ON THE GROUND THAT THE VEHICLES WER E USED FOR THE ASSESSEES OWN BUSINESS OF TRANSPORTING GOODS. ON A REFERENCE : HELD, THAT THE BENEFIT OF 40 PER CENT. DEPRECIATION ALLOWANCE WAS ADMISSIBLE ONLY FOR VEHICLES USED FOR BUSINESS OF HIRE IN VIEW OF THE PROVISIONS OF ENTRY NO.III(II)E(1-A) OF PART I OF APPENDIX I TO THE INCOME-TAX RULES, 1962, AND SINCE THE ASSESSEE USED THE VEHICLES FOR ITS OWN BUSINESS OF TRANSPORTING ITS GOODS ONLY 30 PER CENT. DEPRECIATION WAS ALLOWA BLE. 15. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE H ONBLE HIGH COURT OF M.P., THE ORDER OF THE CIT(A) IS CONFIRMED. 10. SINCE THE CIT(A) HAS FOLLOWED THE ORDER OF I.T. A.T., IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) . ORDER OF CIT(A) IS CONFIRMED. 11. SIMILAR IS THE POSITION IN RESPECT OF SECOND PA RT OF GROUND NO.1 IN A.Y. 2009- 10. IN THE LIGHT OF THE ABOVE DISCUSSION MADE IN A .Y. 2006-07, THE GROUND RAISED IN A.Y. 2009-10 IS ALSO REJECTED. 6 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 12. THE SECOND EFFECTIVE GROUND IN ASSESSEES APPEA L IS IN RESPECT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF THE ACT ON ACCOUNT OF DUTY DRAW BACK. 13. THE DISALLOWANCE MADE BY THE A.O. HAS BEEN CONF IRMED BY THE CIT(A) BY FOLLOWING THE JUDGEMENT OF THE APEX COURT IN THE CA SE OF LIBERTY INDIA VS. CIT, 317 ITR 218 (SC). WE FIND THAT THE CIT(A) HAS FOLL OWED THE JUDGEMENT OF APEX COURT. IN THE LIGHT OF THE FACT, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS CONFIRMED ON THE ISSUE. THUS, T HE SECOND GROUND RAISED BY THE ASSESSEE IN BOTH THE APPEALS FOR A.YS. 2006-07 & 20 09-10 ARE REJECTED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 15. NOW WE TAKE UP ITA NO.151/AGRA/2013 FILED BY TH E REVENUE. 16. THE EFFECTIVE GROUND RAISED IN REVENUES APPEAL IS IN RESPECT OF DELETION OF ADDITION OF RS.52,42,261/- MADE BY THE A.O. INVOKIN G SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 17. THE DISALLOWANCE MADE BY THE A.O. HAS BEEN DELE TED BY THE CIT(A) FOLLOWING THE ORDER OF I.T.A.T. IN ASSESSEES OWN C ASE AS UNDER:- (PAGE NOS.3 & 4) 7 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 3.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT. I FIND THAT O N IDENTICAL ISSUE THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE JURISDICTIONAL BENCH OF AGRA TRIBUNAL IN ITA NO.142 /AGR/2011 DATED 16.07.12 FOR A.Y. 07-08 AND IN ITA NO.58/AGR/2012 D ATED 20.07.12 FOR A.Y. 08-09. MOREOVER DURING THE YEAR UNDER CON SIDERATION NO FRESH INVESTMENTS WERE MADE. RESPECTFULLY FOLLOWIN G THE SAME, THE ADDITION MADE BY THE A.O. U/S 14A IS DELETED. ACCO RDINGLY GROUND NO.3 IS ALLOWED. 18. WE FIND THAT THE CIT(A) HAS FOLLOWED THE ORDER OF I.T.A.T. IN ASSESSEES OWN CASE IN ITA NO.142/AGRA/2011 A.Y. 2007-08, ORDER DA TED 22.06.2012. THE RELEVANT FINDING IS REPRODUCED AS UNDER :- 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE ASSESSEE WAS HAVING OWN CAPITAL RESERVES AND SURPLUS OF RS.64,24,17,895/-. THE CLAIM OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE DEFERRED TAX LIABILITY OF RS.2,80,56,2 00/- IS ALSO ASSESSEES OWN CAPITAL OR INTEREST FREE FUND IS NOT ACCEPTABLE AS THIS LIABILITY PERTAINS TO THE BUSINESS. THE NET AVAILABLE OWN CAPITAL AVAILABLE WITH THE ASSESSEE AS ON 31.03.2007 WAS RS.64,24,17,895/- AGAINST INVESTMENT IN SHARES OF RS.13 CRORES. THE I.T.A.T., AGRA BENCH IN THE CASE OF M/ S LALA RAM FINANCE & INVESTMENT CO. PVT. LTD. VS. DCIT IN ITA NO.260 & 2 61/AGR/2011 ORDER DATED 08.06.2012 HAS HELD AS UNDER :- 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE CASE OF ASSESSIN G OFFICER IS DISALLOWANCE OF INTEREST. THE INTEREST EXPENSES IS ALLOWABLE UNDER SECTION 36(1)(III) OF THE ACT. SUCH DISALLOW ANCE CANNOT BE MADE IN CASE WHERE THE ASSESSEE IS HAVING SUFFIC IENT INTEREST FREE FUNDS AS HELD BY THE I.T.A.T., AGRA BENCH IN T HE CASE CITED ABOVE. THIS VIEW IS ALSO FORTIFIED BY THE JUDGEMEN T OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. RELIANC E UTILITY AND POER LIMITED, 313 ITR 340 (BOMBAY). IN THE CAS E UNDER CONSIDERATION IT IS ADMITTED FACT THAT THE ASSESSEE WAS HAVING 8 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 SUFFICIENT INTEREST FREE FUNDS TO COVER THE INVESTM ENT MADE IN SHARES OF WHICH INCOME IS EXEMPT UNDER SECTION 10 O F THE ACT. IN CASE OF CIT VS. HERO CYCLES LIMITED, 323 ITR 518 (P&H) WHEREIN IT HAS BEEN HELD THAT DISALLOWANCE UNDER SE CTION 14A IS NOT PERMISSIBLE WHERE NO NEXUS BETWEEN THE EXPENDIT URE INCURRED AND INCOME GENERATED HAS BEEN ESTABLISHED. HONBLE HIGH COURT OF BOMBAY IN THE CASE OF INCOME TAX APPE AL NO.1260 OF 2009 IN CASE OF CIT VS. K. RAHEJA CORPOR ATION P. LTD. JUDGEMENT DATED 08.08.2011 WHILE CONFIRMING TH E ORDER OF I.T.A.T. HELD THAT IF THE INVESTMENT IS MADE OUT OF THE ASSESSEES OWN INTEREST FREE FUNDS, NO DISALLOWANCE CAN BE MAD E UNDER SECTION 14A OF THE ACT. SECTION 14A IS NOT A CHARG ING SECTION BUT ONLY DISALLOWANCE OF EXPENDITURE FOR A FAIR ASC ERTAINING OF ALLOWING COMMON EXPENSES BETWEEN TAXABLE AND NON-TA XABLE INCOME. RULE 8D CAN BE APPLICABLE ONLY WHERE DISAL LOWANCE OF INTEREST ON BORROWED CAPITAL WARRANT FOR EXPENSES O UT OF SUCH BORROWED CAPITAL WITH THE AMOUNT RELATING TO INVEST MENT IN SHARES AND SEARCH AND NOT ASCERTAINABLE. IN THE LI GHT OF THE ABOVE JUDGEMENT OF BOMBAY HIGH COURT AND OTHERS (SU PRA), THE DISALLOWANCE OF INTEREST IS NOT WARRANTED UNDER THE CIRCUMSTANCES. THEREFORE, THERE IS NO QUESTION OF INVOKING RULE 8D OF THE RULES. IN THE LIGHT OF THE ABOVE DISCUSSI ONS AND AFTER CONSIDERING THE ADMITTED FACT THAT THE ASSESSEE WAS HAVING SUFFICIENT OWN INTEREST FREE FUND TO COVER THE INVE STMENT MADE IN SHARES, WE, THEREFORE, ARE OF THE VIEW THAT NO DISA LLOWANCE CAN BE MADE UNDER SECTION 14A OF THE ACT. WE, THEREFOR E, DELETE THE ADDITIONS OF RS.15,00,000/- MADE BY THE ASSESSING O FFICER AND SUSTAINED BY THE CIT(A) FOR EACH ASSESSMENT YEAR I. E. 2007-08 & 2006-07. 7. WE FOLLOW THE ORDER OF I.T.A.T. WHEREIN THE CONT ENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE OWN CAPITAL HA S BEEN ALREADY INVESTED IN THE BUSINESS IS NOT ACCEPTABLE AS PER DETAILED D ISCUSSIONS MADE BY THE I.T.A.T., MUMBAI BENCH IN ITS ORDER IN THE CASE OF H.P. SHAH & CO. ITA NO.3694/MUM/2006 ORDER DATED 15.01.2009. SINCE IN THE CASE UNDER CONSIDERATION, THE ASSESSEE WAS HAVING SUFFICIENT O WN FUNDS TO MAKE INVESTMENT IN SHARES, UNDER THE CIRCUMSTANCES, THE DISALLOWANCE IS NOT WARRANTED. WE ACCORDINGLY DELETE THE ADDITION OF R S.21,94,877/-. 9 ITA NOS.101, 102 & 151/AGRA/2013. A.YS. 2006-07 & 2009-10 19. SINCE THE CIT(A) HAS FOLLOWED THE ABOVE ORDER O F I.T.A.T. IN ASSESSEES OWN CASE AND THERE IS NO CHANGE IN FACTS IN THE YEAR UN DER CONSIDERATION AND IN THE CASE DECIDED BY I.T.A.T. IN ITA NO.142/AGRA/2011 (SUPRA) , WE, THEREFORE, FOLLOW THE ABOVE ORDER OF I.T.A.T. AND IN THE LIGHT OF THE FAC T, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) ON THE ISSUE IS CONFIRMED. THUS, APPEAL FILED BY THE REVENUE IS DISMISSED. 20. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE AND THE APPEAL FILED BY THE REVENUE, ALL ARE DISMISSED (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY