M/s A.B. Sugar Mills Ltd., Chandigarh V. DCIT, C-1(1), Chandigarh

ITA 1201/CHANDI/2019

AI Insights

The case involves M/s A.B. Sugars Limited appealing against the order of the Commissioner of Income Tax (Appeals)-1, Chandigarh, concerning various disallowances and calculations related to the Minimum Alternate Tax (MAT) credit and other tax liabilities for the assessment year 2013-14. The primary issues revolved around the inclusion of surcharge and cess in the MAT credit under section 115JAA, the calculation of interest under sections 234B and 234C, and the allocation of expenses between eligible and non-eligible units under section 80IA. The Tribunal referenced several precedents and statutory provisions to arrive at its decision, which partly favored the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124616 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 26-10-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2019
• Other Referred Cases: M/s Steel Strips Wheels Ltd. vs. DCIT, ACIT vs. Orient Bell Ltd., Kanoria Chemicals & Industries Ltd vs. CIT, CIT vs. K. Srinivasan
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B; 115JB; 250; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH CHANDIGARH Before Shri Sanjay Garg, Judicial Member & Shri Vikram Singh Yadav, Accountant Member I.T.A. No.1201/CHANDI/2019 Assessment Year: 2013-14 M/s A.B. Sugars Limited................... ..................................................... Appellant SCO 80-81, 4 th Floor, Sector-17C, Chanigarh-160017. [PAN:AABCG3045M] vs. DCIT, Circle-1(1), Chandigarh................................................................... Respondent Appearances by: Shri T. N. Singla, CA, appeared on behalf of the appellant. Shri Amanpreet Kaur, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : October 27, 2022 Date of pronouncing the order : January 12 , 2023 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 11.04.2019 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That the order of Learned CIT(Appeals) is bad and against the facts and law. 2. That the CIT(A) has erred in upholding the disallowance of credit of cess and surcharge for the purpose of MAT credit u/s 115JAA of the Act. 3. That the CIT(A) has erred in upholding the MAT credit of Rs.3,80,36,824/- instead of Rs.4,11,36,824/-. 4. That the CIT(A) has erred in upholding the wrong calculation of interest u/s 234B at Rs.21,22,248 instead of Rs.10,39,788/-. 5. That the CIT(A) has erred in upholding the wrong calculation of interest u/s 234C at Rs.13,32,600/- instead of Rs.12,42,657/-. I.T.A. No.1201/CHANDI/2019 Assessment Year: 2013-14 M/s A.B. Sugars Limited 2 6. That the CIT(A) has erred in upholding the disallowance of deduction u/s 80IA amounting to Rs.14,92,822/- on account of expenses claimed. 7. That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal before the final hearing.” 3. Ground No.1 is general in nature. 4. Ground Nos.2 & 3 – The issue raised vide Ground Nos.2 & 3 is to whether MAT credit allowable to the assessee u/s 115JAA of the Act is inclusive of surcharge and cess. 5. At the outset, the ld. Counsel for the assessee has submitted that the issue is squarely covered by the various decisions of the Tribunal including the decision of the Tribunal in the case of “M/s Steel Strips Wheels Ltd. vs. DCIT” in ITA No.887/CHD/2019 and of the Hon’ble Delhi Bench of the Tribunal in the case of “ACIT vs. Orient Bell Ltd.” in ITA No.7534/DEL/2017. We further note that the Coordinate Kolkata Bench of the Tribunal in the case of Kanoria Chemicals & Industries Ltd (ITA No. 2184/Kol/2018) - 2021-TIOL-1835-ITAT-KOL (the Judicial Member herein being part of the Bench in the said decision); while relying upon the decision of Hon’ble Supreme Court in the case of CIT vs. K. Srinivasan (1972) 83 ITR 346 has held that the tax includes surcharge and cess. At this stage, it will be relevant to refer to the provisions of section 115JAA which reads as under: “115JAA. (1) Where any amount of tax is paid under sub-section (1) of section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. (2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act:” I.T.A. No.1201/CHANDI/2019 Assessment Year: 2013-14 M/s A.B. Sugars Limited 3 6. Therefore, credit of tax paid under sub-section (1) of section 115JB is to be given under MAT provisions. As held, the tax includes surcharge and cess paid by the assessee. In view of this, it is held that the MAT credit of taxes allowable to the assessee means that the tax paid including surcharge and cess paid. Therefore, the Ground Nos.2 and 3 are accordingly allowed in favour of the assessee. 7. Ground Nos.4 & 5 agitating the levy of interest, are consequential to the Ground Nos.2 & 3 and the same are accordingly allowed in favour of the assessee. 8. Ground No.6 – Vide Ground No.6, the assessee has contested the action of the CIT(A) in allowing the disallowance of deduction u/s 80IA on account of allocation of expenses by the Assessing Officer between eligible unit u/s 80IA and non-eligible unit on turnover basis. 9. The brief facts of the case are that the assessee has two separate units; one is sugar manufacturing unit and the other is power unit. The power unit is exempt u/s 80IA. However, the Assessing Officer observed that the assessee had booked more expenses in the non-eligible sugar unit as compared to the power unit. The Assessing Officer reallocated the expenditure on turnover basis of both the units and made the impugned addition of Rs.14,92,822/-. 10. The ld. AR, in this respect, has submitted that both the units of the assessee were different and there could not be any comparison on the basis of turnover. There was no direct sale from the power unit and that electricity generation cannot be compared with the sugar manufacturing. That separate accounts of expenses of each unit were maintained. There were separate insurance expenses in respect of both the units and that the expenditure had been booked on actual basis. However, the ld. AR I.T.A. No.1201/CHANDI/2019 Assessment Year: 2013-14 M/s A.B. Sugars Limited 4 has been fair enough to admit that audit expenses and office expenses can be allocated towards power unit. 11. After considering the rival submissions, we do not find justification on the part of the lower authorities in allocating the expenditure for both the units on turnover basis. Since separate accounts have been maintained and separate expenses have been booked on actual basis in respect of each of unit, therefore, the allocation of expenditure on estimation basis/turnover basis was wrong. However, we uphold the allocation of expenses in respect of audit fees and professional expenses. Therefore, the addition is confirmed to the extent of Rs.96511.52/- towards audit fees and Rs.317059.3/- towards professional expenses totalling Rs.413570.82. This Ground is partly allowed. 12. Ground No.7 is general in nature. 13. In the result, the appeal of the assessee stands partly allowed. Chandigarh, the 12 th January, 2023. Sd/- Sd /- [Shri Vikram Singh Yadav] [Sanjay Garg] Accountant Member Judicial Member Dated: 12.01.2023. RS Copy of the order forwarded to: 1. M/s A.B. Sugars Limited 2. DCIT, Circle-1(1), Chandigarh 3. CIT(A)- 4. CIT- , 5. CIT(DR), ITAT, Chandigarh //True copy// By order Assistant Registrar I.T.A. No.1201/CHANDI/2019 Assessment Year: 2013-14 M/s A.B. Sugars Limited 5 1. Date of Dictation.............................................. 2. Date on which the typed order is placed before the dictating Member and other Member..................................................... 3. Date on which the order came back to Sr. PS.......................................... 4. Date on which the file goes to the Bench Clerk....................................... 5. Date on which the file goes to the O.S....................................... 6. Date on dispatch of the order.............................................