JCIT, (OSD), CIR-4(1), KOLKATA, Kolkata V. M/s Apex Enterprises (India) Ltd., Kolkata

ITA 1187/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1318 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 1187/KOL/20 16 ASSESSMENT YEAR : 2009-1 0 JCIT(OSD), CIRCLE-4(1), KOLKATA -VS- M/S APEX ENTERPRISE (INDIA) LTD. [PAN: AADCA 7387 A] (APPELLANT) (RES PONDENT) FOR THE APPELLANT : SHRI SALLONG YADEN , ADDL. CIT FOR THE RESPONDENT : SHRI AKKAL DUDHWEWALA, F CA DATE OF HEARING : 15.02.2018 DATE OF PRONOUNCEMENT : 07.03.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-16, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO.482/CIT(A)- 16/KOL/2014-15/C-4(1) DATED 29.03.2016 AGAINST THE ORDER PASSED BY THE JCIT(OSD) CIRCLE-4, KOLKATA [ IN SHORT THE LD AO] UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 14.12.2011 FOR THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE OF EXPEND ITURE OF RS. 11,696/- U/S 14A OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INVESTMENT COMPANY AND HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 11.06.2010 DECLARING TOTAL INCOME OF RS. 7,12,310/-. THE ASSESSEE COMPANY CLAI MED DIVIDEND INCOME OF RS. 1,16,175/- AS EXEMPT U/S 10(34) OF THE ACT. THE ASS ESSEE VOLUNTARILY WORKED OUT THE 2 ITA NO.1187/KOL/2016 M/S APEX ENTERPRISE(INDIA) LTD. A.YR.2009-10 2 DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE RULES AT RS. 2,17,267/- AND OFFERED THE SAME TO TAX IN THE RETURN OF INCOME BY CONSIDERING THE ONLY DIVIDEND BEARING INVESTMENTS. THE LD. AO IGNORED THE SAME AND PROCEE DED TO MAKE FRESH DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE RULES UNDER ALL 3 LIMBS THEREON AND ARRIVED THE DISALLOWANCE FIGURE OF RS. 2,28,963/-. THIS DISALLO WANCE WAS MADE BY THE LD. AO WITHOUT CONSIDERING THE DISALLOWANCE OF RS. 2,17,26 7/- ALREADY MADE BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE LD. CIT(A), THIS F ACT WAS BROUGHT TO HIS KNOWLEDGE. THE LD. CIT(A) DELETED THE ENTIRE DISALLOWANCE OF R S. 2,28,963/- MADE BY THE LD. AO IN VIEW OF THE FACT THAT THE ASSESSEE ITSELF HAD DULY WORKED OUT THE DISALLOWANCE U/S 14A IN CONSONANCE WITH THE DECISION OF THIS TRIBUNAL IN TH E CASE OF REI AGRO REPORTED IN 144 ITD 141. 4. THE ASSESSEE ALSO ADDED BACK A SUM OF RS. 2,17,2 67/- IN THE COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT IN THE RETURN OF INCOM E WHICH WAS REPLACED BY LD. AO AT RS. 2,28,963/-. THIS WAS ALSO DELETED BY THE LD. CI T(A) IN FIRST APPEAL. IN EFFECT THE DISALLOWANCE U/S 14A WAS ARRIVED FINALLY AT RS. 2,1 7,267/- BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS U/S 115JB OF THE ACT, WHICH I S THE SAME FIGURE AS WAS OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME. AGGRIE VED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF EXPENDITURE TO RS. 11,696/- U/S 14A BASED ON FACTUALLY INCORRECT INFORMATION INSTEAD OF RS. 2,28 ,963/-. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. FROM THE FA CTS NARRATED ABOVE WE ARE CONVINCED THAT THE LD. CIT(A) HAD RIGHTLY DELETED T HE DISALLOWANCE OF RS.2,28,963/- U/S 14A OF THE ACT IN VIEW OF THE FACT THAT THE ASSESSE E ITSELF HAD WORKED OUT THE DISALLOWANCE BY CONSIDERING THE RULE 8D AND BY CONS IDERING ALL THE INVESTMENTS WHICH YIELDED DIVIDEND INCOME, IN LINE WITH THE DECISION OF THIS TRIBUNAL IN THE CASE OF REI 3 ITA NO.1187/KOL/2016 M/S APEX ENTERPRISE(INDIA) LTD. A.YR.2009-10 3 AGRO LIMITED REPORTED IN 144 ITD 141. ACCORDINGLY, GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 6. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS WRI TE BACK OF PROVISION FOR DOUBTFUL DEBTS OF RS. 65,60,963/- BOTH FROM COMPUTATION OF I NCOME UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS U/S 115JB OF THE ACT. 7. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE MADE PROVISION FOR DOUBTFUL DEBTS DURING THE ASSESSMENT YEARS 2003-04 TO 2006-07 FOR NON-PERFORMING ASSETS AND HAD ADDED BACK THE SAME IN THE RESPECTIVE RETURN OF INC OME, BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER COMPUTATION OF BOOK PRO FITS U/S 115JB OF THE ACT. DURING THE YEAR UNDER APPEAL, THE ASSESSEE WROTE BACK THOS E PROVISIONS FOR NON-PERFORMING ASSETS IN THE SUM OF RS. 65,60,963/- BY CREDITING T O PROFIT AND LOSS ACCOUNT. SINCE, THIS SUM WAS ALREADY OFFERED TO TAX IN THE EARLIER YEARS AT THE TIME OF MAKING PROVISION, THE SAME SHOULD NOT BE SUBJECTED TO DOUBLE TAX AT THE T IME OF WRITE BACK OF THE SAID PROVISION. ACCORDINGLY, THE ASSESSEE CLAIMED THE SA ME AS A DEDUCTION BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER COMPU TATION OF BOOK PROFITS U/S 115JB OF THE ACT. THE LD. AO DID NOT APPRECIATE THIS CONTENT ION AND ADDED THE SUM OF RS. 65,60,963/- AGAIN UNDER NORMAL PROVISIONS OF THE AC T AND IN THE COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. THE LD. CIT(A) OBSERV ED THAT SINCE THE ASSESSEE HAS ALREADY OFFERED TO TAX IN THE EARLIER YEARS, THE SA ID SUM OF RS. 65,60,963/-, IF BROUGHT TO TAX, IN THIS YEAR MERELY BECAUSE IT HAS BEEN WRITTE N BACK TO PROFIT AND LOSS ACCOUNT, DURING THE YEAR UNDER APPEAL, WOULD ONLY RESULT IN DOUBLE TAXATION. ACCORDINGLY, HE DELETED THE SAID ADDITION MADE BY THE LD. AO UNDER NORMAL PROVISIONS OF THE ACT. 4 ITA NO.1187/KOL/2016 M/S APEX ENTERPRISE(INDIA) LTD. A.YR.2009-10 4 8. WITH REGARD TO THE ADDITION MADE IN THE SUM OF R S. 65,60,963/- U/S 115JB OF THE ACT, HE OBSERVED THAT THE SAME WOULD FALL IN THE FIRST I TEM OF DEDUCTIONS IN EXPLANATION (I) TO 115JB OF THE ACT WHICH IS AS UNDER: SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES EXPLANATION (I) FOR THE PURPOSE OF T HIS SECTION, BOOK PROFITS MEANS THE PROFIT AS SHOWN IN THE STATEMENT OF PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTION ( 2), AS INCREASED BY- (A) TO (K) AND AS REDUCED BY- (I) THE AMOUNT WITHDRAWN FROM ANY RESERVE OR PROVISION (EXCLUDING A RESERVE CREATED BEFORE THE FIRST DAY OF APRIL, 1997 OTHERWISE THAN BY WAY OF A DEBIT TO THE PROFIT AND LOSS ACCOUNT), IF ANY SUCH AMOUNT IS CREDITED TO TH E PROFIT AND LOSS ACCOUNT. PROVIDED THAT WHERE THIS SECTION IS APPLICABLE TO A N ASSESSEE IN ANY PREVIOUS YEAR, THE AMOUNT WITHDRAWN FROM RESERVES CREATED OR PROVISION S MADE IN A PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1997 SHALL NOT BE REDUCED FROM THE BOOK PROFIT UNLESS THE BOOK PROFIT OF SUCH YEAR HAS BEEN INCREASED BY THOSE RESERVES OR PROVISIONS (OUT OF WHICH THE SAID AMOUN T WAS WITHDRAWN) UNDER THIS EXPLANATION OR EXPLANATION BELOW THE SECOND PROVISO TO SECTION 115JA, AS THE CASE MAY BE; OR].. (II)TO (VIII). ACCORDINGLY THE LD. CIT(A) DELETED THIS ADDITION FR OM THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT ALSO. AGGRIEVED THE REV ENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN ALLOWING THE ASSESSEES CLAIM FOR DEDUCTION OF PROV ISIONS FOR DOUBTFUL DEBTS OF RS. 65,60,963/- BOTH FROM COMPUTATION OF TOTAL INCO ME UNDER NORMAL PROVISIONS AS WELL AS BOOK PROFIT U/S 115JB OF THE I.T.ACT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE VER IFIED THE FACTS STATED ABOVE WITH THE EVIDENCES REPRODUCED IN THE PAPER BOOK. WE ARE CONVINCED THAT THE LD. CIT(A) HAD RIGHTLY DELETED THE SAID ADDITION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT 5 ITA NO.1187/KOL/2016 M/S APEX ENTERPRISE(INDIA) LTD. A.YR.2009-10 5 AND IN ORDER TO REMOVE THE ANOMALY OF DOUBLE TAXATI ON WHICH HAD CREPT IN, BY THE ACTION OF THE LD. AO. HENCE, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY, GROUND NO. 2 RA ISED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 07.03.2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.03.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. JCIT, (OSD), CIRCLE-4(1), KOLKATA, P-7, CHOWRING HEE SQUARE, KOLKATA-700069. 2. M/S APEX ENTERPRISES (INDIA) LTD., 16, NETAJI SU BHAS ROAD, 4 TH FLOOR, KOLKATA- 700001. 3. C.I.T(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S