U.P Rajya Vidyut Utpadan Nigam Limited, Lucknow V. Dy. Commissioner Of Income Tax, Lucknow

ITA 105/LKW/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1146 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 04-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Question of law; Revised return
• Section: 14A

Judgement Text

I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 2011-12 U.P. RAJYA VIDYUT UTPADAN NIGAM LIMITED, 14, ASHOK MARG, LUCKNOW. PAN:AAACU 4749 D VS. DY.C.I.T., RANGE-VI, LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LEARNED CIT(A) BOTH DATED 28/11/2014 FOR ASSESSMENT YEARS 2010- 11 AND 2011-12. 2. IN BOTH THE APPEALS THE COMMON GROUND TAKEN BY T HE ASSESSEE IS ITS GRIEVANCE WITH THE ACTION OF LEARNED CIT(A) BY WHIC H HE HAS CONFIRMED A DISALLOWANCE U/S 14A OF THE I.T. ACT. IN I.T.A. NO .105/LKW/2015 THE ASSESSEE VIDE GROUND NO. 2 HAS ALSO TAKEN A PLEA FO R ALLOWABILITY OF FUEL EXPENSES WHICH WAS LIABLE TO BE ALLOWED AS LIABILIT Y HAD ARISEN IN THE YEAR UNDER CONSIDERATION. IN I.T.A. NO.106/LKW/2015, TH E ASSESSEE HAS TAKEN AN ADDITIONAL GROUND OF APPEAL WHEREBY HE HAS AGITATED THAT ASSESSING OFFICER HAD INCLUDED DISALLOWANCE MADE U/S 14A TO THE BOOK PROFITS OF THE ASSESSEE. APPELLANT BY SHRI SANDEEP KUMAR, F.C.A. RESPONDENT BY SHRI J. S. MINHAS, CIT, D.R. DATE OF HEARING 29/01/2018 DATE OF PRONOUNCEMENT 31 / 01 /201 8 I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 2 BOTH THE APPEALS WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDER IS BEI NG PASSED. 3. AT THE OUTSET, LEARNED A. R. WITH RESPECT TO DIS ALLOWANCE U/S 14A STATED THAT NO EXEMPT INCOME WAS RECEIVED BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION AND IN THIS RESPECT OUR ATTENTI ON WAS INVITED TO PAGES 1 & 2 OF THE PAPER BOOK OF THE RESPECTIVE YEARS WHERE THE COPIES OF COMPUTATION OF INCOME AND PROFIT & LOSS ACCOUNT FOR THE TWO YEARS WAS PLACED. LEARNED A. R. SUBMITTED THAT IN THE PROFIT & LOSS ACCOUNT THERE IS NO EXEMPT INCOME AND IN THE COMPUTATION OF INCOME ALSO THE ASSESSEE HAS NOT REDUCED ANY AMOUNT STATING TO BE AS EXEMPT INCOME A ND THEREFORE, IT WAS ARGUED THAT IN THE ABSENCE OF EXEMPT INCOME, THE DI SALLOWANCE U/S 14A IS NOT WARRANTED. RELIANCE IN THIS RESPECT WAS PLACED ON THE ORDER OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SHIVAM MOTORS (P) LTD. IN INCOME TAX APPEAL NO. 88 OF 2014. LEARNED A. R. FU RTHER SUBMITTED THAT THE INVESTMENTS IN THE COMPANIES WAS NOT MADE FOR T HE PURPOSE OF EARNING ANY DIVIDEND AND RATHER THE INVESTMENTS WERE MADE F OR STRATEGIC PURPOSES FOR CARRYING OUT CERTAIN PROJECTS FOR WHICH JOINT V ENTURES WERE ENTERED WITH THE GROUP COMPANIES AND THEREFORE, IT WAS ARGUED TH AT SINCE THE INVESTMENT WAS NOT FOR EARNING OF EXEMPT INCOME AND THEREFORE ALSO DISALLOWANCE U/S 14A WAS NOT WARRANTED. RELIANCE IN THIS RESPECT WAS PLACED ON AN ORDER OF THE TRIBUNAL IN THE CASE OF U.P. ELECTRONICS LIMITE D IN I.T.A. NO.538/LKW/2012 FOR ASSESSMENT YEAR 2009-10 WHEREIN THE TRIBUNAL VIDE ORDER DATED 23/01/2015 HAD ALLOWED RELIEF TO THE AS SESSEE. WITHOUT PREJUDICE LEARNED A. R. ARGUED THAT ASSESSING OFFIC ER HAD MADE DISALLOWANCE WITHOUT RECORDING ANY OBJECTIVE SATISF ACTION AND THEREFORE, ALSO THE DISALLOWANCE WAS NOT WARRANTED. RELIANCE IN TH IS RESPECT WAS PLACED ON AN ORDER OF LUCKNOW BENCH OF THE TRIBUNAL IN I.T.A. NO.360/LKW/2015 WHEREIN THE TRIBUNAL VIDE ORDER DATED 05/12/2017 HA D HELD THAT WHERE THE I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 3 ASSESSING OFFICER HAD NOT RECORDED ANY OBJECTIVE SA TISFACTION REGARDING THE APPLICABILITY OF PROVISIONS OF SECTION 14A, THE DIS ALLOWANCE WAS NOT WARRANTED. ARGUING ON THE ADDITIONAL GROUND OF APP EAL, LEARNED A. R. SUBMITTED THAT IN I.T.A. NO.106, THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER DATED 31/12/2013 HAD ADDED BACK THE DISALLOWA NCE U/S 14A TO THE BOOK PROFITS OF THE ASSESSEE COMPANY FOR THE PURPOS E OF MAKING COMPUTATION OF BOOK PROFIT. LEARNED A. R. SUBMITTE D THAT THIS GRIEVANCE OF THE ASSESSEE WAS THOUGH COVERED IN THE ORIGINAL GRO UNDS OF APPEAL BUT FOR THE PURPOSE OF TAKING THIS GRIEVANCE SPECIFICALLY, THE ASSESSEE HAS RAISED THIS AS ADDITIONAL GROUND OF APPEAL AND IT WAS PRAYED TH AT THE ADDITIONAL GROUND MAY BE ACCEPTED AS THIS IS COMING OUT OF THE FACTS AND MATERIAL AVAILABLE ON RECORD. 3.1 AS REGARDS THE DEDUCTION OUT OF PRIOR PERIOD EX PENSES, LEARNED A. R. SUBMITTED THAT ASSESSEE IN THE ORIGINAL RETURN OF I NCOME AND COMPUTATION OF INCOME FORGOT TO CLAIM A PART OF FUEL EXPENSES WHIC H HAD ACCRUED DURING THE YEAR AND ASSESSING OFFICER HAD ALSO NOT GIVEN ANY D EDUCTION DESPITE OUR SUBMISSIONS DATED 26/12/2012 BY WHICH THE ASSESSEE HAD SPECIFICALLY CLAIMED THAT PRIOR PERIOD EXPENSES WHICH HAD BECOME ACCRUED DURING THE YEAR SHOULD BE ALLOWED. IT WAS SUBMITTED THAT THIS GROUND COULD ALSO NOT BE TAKEN BEFORE LEARNED CIT(A) AND THEREFORE, THE CIT( A) HAS NOT ADJUDICATED ON THIS GROUND. LEARNED A. R. SUBMITTED THAT IN TH E INTEREST OF SUBSTANTIAL JUSTICE, THE ASSESSING OFFICER BE DIRECTED TO ALLOW RELIEF AS THE MISTAKE COMMITTED BY THE ASSESSEE WAS DULY BROUGHT TO HIS N OTICE VIDE LETTER DATED 26/12/2012 PLACED AT PAGES 42 TO 46 OF THE PAPER BO OK. 4. LEARNED D. R., ON THE OTHER HAND, IN RESPECT OF DISALLOWANCE U/S 14A HEAVILY PLACED RELIANCE ON THE ORDERS OF THE AUTHOR ITIES BELOW AND IN RESPECT OF THE CLAIM OUT OF PRIOR PERIOD CHARGES FOR FUEL E XPENSES, LEARNED D. R. STATED THAT THE ASSESSEE HAD NOT CLAIMED IT IN THE ORIGINAL RETURN OF INCOME I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 4 AND WITHOUT FILING A REVISED RETURN OF INCOME THE C LAIM OF THE ASSESSEE WAS NOT ADMISSIBLE AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT [2006] 284 ITR 323 (SC). 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS THE DISALLOWANCE U/S 14A, WE FIND THAT IN THE COMPUTATION OF INCOME, PLACED AT PAGE NO. 1 OF THE PAPER BOOK FOR RESPECTIVE YEARS, THE ASSESSEE HAS NOT CLAIMED ANY EXEMPT INCOME AND IN THE PROFIT & LOSS ACCOUNT ALSO THERE IS NO EXEMPT I NCOME AS IS APPARENT FROM THE COPIES OF PROFIT & LOSS ACCOUNT AVAILABLE AT PA GE NO. 2 OF THE PAPER BOOK. UNDER THESE CIRCUMSTANCES HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SHIVAM MOTORS (P) LTD. (SUPRA) IN INCOME TAX APP EAL NO. 88 OF 2014 HAS HELD THAT DISALLOWANCE U/S 14A IS NOT WARRANTED. T HE RELEVANT FINDINGS OF HON'BLE COURT ARE REPRODUCED BELOW: AS REGARDS THE SECOND QUESTION, SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSES OF COMPUTING THE TOT AL INCOME UNDER THE CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS THAT IF THERE I S ANY INCOME WHICH DOES NOT FORM PART OF THE INCOME UNDER THE AC T, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE INCOM E IS NOT AN ALLOWABLE DEDUCTION. FOR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE IN COME. HENCE, IN THE ABSENCE OF ANY TAX FREE INCOME, THE CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUTF OR DISALLOWANCE. THE VIEW OF THE CIT(A), WHICH HAS BEE N AFFIRMED BY THE TRIBUNAL, HENCE DOES NOT GIVE RISE TO ANY SU BSTANTIAL QUESTION OF LAW. HENCE, THE DELETION OF THE DISALLO WANCE OF RS.2,03,752/- MADE BY THE ASSESSING OFFICER WAS IN ORDER. NO SUBSTANTIAL QUESTION OF LAW WOULD HENCE ARISE. F OR THESE REASONS, WE ARE OF THE VIEW THAT THE APPEAL BY THE REVENUE DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF L AW. THE APPEAL SHALL, ACCORDINGLY, STAND DISMISSED. I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 5 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WITHO UT GOING INTO OTHER ASPECTS OF THE CONTENTIONS OF THE ASSESSEE REGARDIN G RECORDING OF OBJECTIVE SATISFACTION AND FOR STRATEGIC INVESTMENT, WE ALLOW GROUND NO. 1 IN BOTH THE APPEALS. 5.1 GROUND NO. 2 IN I.T.A. NO. 106 IS WITHOUT PREJU DICE TO GROUND NO. 1 WHEREBY THE ASSESSEE HAS ARGUED THAT ASSESSING OFFI CER SHOULD HAVE EXCLUDED SHARE APPLICATION MONEY FOR THE CALCULATIO N OF AVERAGE VALUE OF INVESTMENT FOR APPLYING RULE 8D. SINCE WE HAVE ALR EADY DECIDED GROUND NO. 1 IN FAVOUR OF THE ASSESSEE AND THEREFORE, GROU ND NO. 2 IN I.T.A. NO.106 HAS BECOME INFRUCTUOUS AND THEREFORE, IS NOT ADJUDI CATED. 5.2 GROUND NO. 3 & 4 ARE GENERAL AND THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 5.3 AS REGARDS THE ADDITIONAL GROUND OF APPEAL, WE FIND THAT BY THIS GROUND OF APPEAL THE ASSESSEE HAS CHALLENGED THE AD DITION TO THE BOOK PROFITS OF THE AMOUNT DISALLOWED BY ASSESSING OFFIC ER U/S 14A. WE HAVE ALREADY HELD THAT NO DISALLOWANCE WAS WARRANTED IN THE PRESENT CASE AND THEREFORE, IN VIEW OF ZERO DISALLOWANCE U/S 14A, TH E ADDITION TO THE BOOK PROFITS IS ALSO NOT WARRANTED. 5.4 THOUGH AT THE TIME OF HEARING OF APPEALS, WE HA D PRONOUNCED THAT THE ISSUE REGARDING ADDITION TO BOOK PROFIT WILL BE REMITTED TO THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER HE HAS MADE ANY ADDITION TO THE BOOK PROFITS FOR THE PURPOSE OF CALCULATION OF LIABILITY OF MAT BUT WHILE FINALIZING THE ORDER, WE OBSERVED THAT THIS MATTER DOES NOT RE QUIRE TO BE SENT BACK AS FROM THE ASSESSMENT ORDER ITSELF WE FIND THAT THE A SSESSING OFFICER HAD MADE ADDITION TO BOOK PROFITS FOR THE AMOUNT OF DIS ALLOWANCE U/S 14A OF THE ACT AND IF THE DISALLOWANCE IS ZERO, ADDITION TO BO OK PROFITS ALSO BECOMES I.T.A. NOS.105 & 106/LKW/2015 ASSESSMENT YEARS:2010-11 & 11-12 6 ZERO. IN VIEW OF THE ABOVE, ADDITIONAL GROUND OF AP PEAL IS ALLOWED. IN NUTSHELL THE APPEAL IN I.T.A. NO.106 IS PARTLY ALLO WED. 5.5 AS REGARDS APPEAL IN I.T.A. NO.105, GROUND NO. 1 HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE THEREFORE, GROUND NO. 1 IS ALLOWED. REGARDING GROUND NO. 2 FOR THE CLAIM OF THE ASSESSE E FOR ALLOWABILITY OF FUEL EXPENSES OUT OF PRIOR YEAR EXPENSES, WE FIND THAT A SSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 28/06/2017 AND AFTER COMPLETION OF AUDIT, REVISED RETURN WAS FILED ON 07/10/2011. AS PER THE CASE LA W RELIED ON BY LEARNED D.R. NO CLAIM FOR DEDUCTION OF ANY AMOUNT CAN BE MA DE OTHERWISE THAN BY FILING A REVISED RETURN. THE FACT AS TO WHETHER TH E ASSESSEE HAD CLAIMED SUCH EXPENSES IN THE REVISED RETURN OF INCOME IS NO T COMING OUT FROM THE RECORDS, THEREFORE, THE SAME IS REQUIRED TO BE EXAM INED BY THE ASSESSING OFFICER WHO SHOULD EXAMINE THE CLAIM OF THE ASSESSE E KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CASE LA W RELIED ON BY LEARNED D. R. IN VIEW OF THE ABOVE, GROUND NO. 2 IS ALLOWE D FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL IN I.T.A. NO.105 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL IN I.T.A. NO.106 IS PARTLY ALLO WED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:31/01/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW