Deputy Commissioner of Income Tax Circle-1(1)(2), Bangalore V. M/s Bhoruka Power Corporation Limited , Bangalore

ITA 1224/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6970 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M GANDHI
• Keywords: Earning of tax free income; Source of fund; Capital receipt; TDS; Rule 8D
• Section: 14A

Judgement Text

ITA NOS.1224 - 1227(B)/ 2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B, BANGALORE BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER ITA NOS. 1224 TO 1227 (BANG)/201 8 (ASSESSMENT YEARS : 2009 - 10,201 1 - 12,20 12 - 13 & 2013 - 14 ) THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1 (1)( 2 ), BANGALORE APPELLANT VS M/S BHORUKA POWER CORPORATION LTD., NO.48, HITANADA BUILDING, LAVELLE ROAD, ST. MARKS ROAD, BENGALURU - 560 001 RESPONDENT REVENUE BY : S HRI R.N.SIDDAPPAJI, ADDL.CIT APPELLANT BY : SHRI M.GANDHI, CA DATE OF HEARING : 10 - 0 7 - 2019 DATE OF PRONOUNCEMENT : 31 - 07 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : P RESENT APPEALS HAS BEEN FILED BY REVENUE AGAINST CONSOLIDATED ORDER DATED 05/12/17 PASSED BY LD.CIT(A) - 1, BANGALORE FOR ASSESSMENT YEARS UNDER CONSIDERATION, ON FOLLOWING GROUNDS OF APPEAL: ITA NOS.1224 - 1227(B)/ 2018 2 ITA NO.1224/BANG/2018 (AY: 2009 - 10) 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DISALLOWANCE MADE U/S 14A R. W. RULE 8D AS THE SAID MATTER HAS NOT REACHED FINALITY DUE TO PENDENCY OF SLP BEFORE THE HON'BLE APEX COURT AGAINST THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF M/S CHEMINVEST LTD (378 ITR 33(DEL)). 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO IN RESPECT OF THE CARBON CREDITS BY TREATING IT AS CAPITAL RECEIPT THOUGH THE SAME SHOULD HAVE BEEN HELD AS REVENUE RECEIPT NOT ELIGIBLE FOR DEDUCTION U/S 80 LA OF THE I.T. ACT, 1961. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEA L. ITA NO.1225/BANG/2018 (AY: 2011 - 12) 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE , IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DISALLOWANCE MADE U/S 14A R. W. RULE 8D AS THE SAID MATTER HAS NOT REACHED ITA NOS.1224 - 1227(B)/ 2018 3 . FINALITY DUE TO PENDENCY OF SLP BEFORE THE HON'BLE APEX COURT AGAINST THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF M/S CHEMINVEST LTD (378 ITR 33 (DEL)). 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO IN RESPECT OF THE CARBON CREDITS BY TREATING IT AS CAPITAL RECEIPT THOUGH THE SAME SHOULD HAVE BEEN HELD AS REVENUE RECEIPT NO T ELIGIBLE FOR DEDUCTION U/S 80 LA OF THE I.T. ACT, 1961. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEA L. ITA NO.1226/BANG/2018 (AY: 2012 - 13) 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DISALLOWANCE MADE U/S 1 4A R. W. RULE 8D AS THE SAID MATTER HAS NOT REACHED FINALITY DUE TO PENDENCY OF SLP BEFORE THE HON'BLE APEX COURT AGAINST THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF M/S CHEMINVEST LTD (378 ITR 33(DEL)). 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ITA NOS.1224 - 1227(B)/ 2018 4 MADE BY THE AO IN RESPECT OF THE CARBON CREDITS BY TREATING IT AS CAPITAL RECEIPT THOUGH THE SAME SHOULD HAVE BEEN HELD AS REVENUE RECEIPT NOT ELIGIBLE FO R DEDUCTION U/S 80 LA OF THE I.T. ACT, 1961. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAV ES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL. ITA NO.1227/BANG/2018 (AY: 2013 - 14) 1.THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DISALLOWANCE MADE U/ S 14A R. W. RULE 8D AS THE SAID MATTER HAS NOT REACHED FINALITY DUE TO PENDENCY OF SLP BEFORE THE HON'BLE APEX COURT AGAINST THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF M/S CHEMINVEST LTD (378 ITR 33(DEL)). 3. ON THE FACTS AND IN CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO IN RESPECT OF THE CARBON CREDITS BY TREATING IT AS CAPITAL RECEIPT THOUGH THE SAME SHOULD HAVE BEEN HELD AS REVENUE RECEIPT NOT ELIGIBLE FOR DEDUCTION U/S 80 LA OF THE I.T. ACT, 1961. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NOS.1224 - 1227(B)/ 2018 5 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, T O AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 2. IMPUGNED ORDER PASSED BY LD.CIT (A) IS CONSOLIDATED ORDER FOR YEAR S UNDER CONSIDERATION. IT IS SUBMITTED THAT ISSUES RAISED BY REVENUE UNDER THESE APPEALS ARE COMMO N ON IDENTICAL FACTS. WE THUS DISPOSE OF THESE APPEALS BY WAY OF COMMON ORDER. 2.1 IT IS ALSO BEEN SUBMITTED BY BOTH PARTIES THAT , ALL THESE APPEALS FILED BY REVENUE RAISES COMMON GROUNDS RELATING TO DISALLOWANCE OF EXPENSES UNDER SECTION 14 A READ WITH RU LE 8D DELETED BY LD. CIT (A) AND C ARBON C REDIT INCOME THAT HAS BEEN HELD AS REVENUE RECEIPT BY LD. CIT (A). 3. AT THE OUTSET, ASSESSEE SUBMITTED THAT THE ISSUE RELATING TO CARBON CREDIT INCOME HAS BEEN DECIDED BY HONBLE KARNATAKA HIGH COURT IN CASE OF SUBASH KABINI POWER CORPORATION LTD REPORTED IN (2016) 385 ITR 592 . 4. NEXT ISSUE THAT HAS BEEN RAISED BY REVENUE IS IN RESPECT OF DISALLOWANCE UNDER SECTION 14 A READ WITH RULE 8D (2) (II) AND (III) OF RULES. ADMITTEDLY , ASSESSEE HAS EARNED EXEMPT INCOME FOR ASSESSMENT YEAR 2009 - 10, 2012 - 13. FOR ASSESSMENT YEARS 2011 - 12 AND 2013 - 14 THERE HAS BEEN NO EXEMPT INCOME EARNED BY ASSESSEE. IT IS OBSERVED THAT , LD.CIT (A) WHILE DECIDING ISSUE ANALYZED ANNUAL REPORTS OF ASSESSEE FOR YEARS UNDER CONSIDERATION AS UN DER: ITA NOS.1224 - 1227(B)/ 2018 6 S.NO. SOURCE OF FUNDS A Y 2009 - 10 A Y 2011 - 12 AY 2012 - 13 AY 2013 - 14 1 SHAREHOLDERS FUND 1410 1410 1410 1410 2 RESERVE AND SURPLUS 13091 13 997 20522 21673 3. PROFIT FOR YEAR (AFTER TAX) 3099 2636 3192 1032 4. INVESTMENT 37.14 88.98 325.25 325.25 IT IS OBSERVED THAT LD. CIT (A) ANALYSED DISALLOWANCE UNDER SECTION 14 A T O BE COMPUTED READ WITH RULE 8D ( I II) HAVING REGARD TO ANNUAL ACCOUNTS FOR YEARS UNDER CONSIDERATION. THERE IS CATEGORICAL OBSERVATION BY LD.CIT (A) THAT ASSESSEE HAD SUFFICIENT FUNDS TO MAKE INVESTMENTS DURING YEARS UNDER CONSIDERATION AND THERE HAS BEEN NO INTEREST - BEARING FUND THAT HAS BEEN UTILIZED FOR THE SAME. FURTHER ANY DISALLOWANCE UNDER RULE 8D2(III) COULD BE MADE ONLY IN RESPECT OF SUCH INVESTMENT THAT YIELDED EXEMPT INCOME. THUS IN OUR CONSIDERED OPINION WE DO NOT FIND ANY INFIRMITY IN SUCH OBSERVATIONS OF LD. CIT (A) FOR ASSESSMENT YEAR 2011 - 12 AND 2013 - 14. 5. COMING TO DISALLOWANCE COMPUTED BY LD.AO UNDER SECTION 14 A READ WITH RULE 8D (III) OF THE AC T, LD.CIT (A) HELD DISALLOWANCE TO BE JUSTIFIED FOR ASSESSMENT YEAR 2009 - 10 AND 2011 - 12 , WHEREAS HE DELETED DISALLOWANCE COMPUTED UNDER RULE 8D(III) , AS THERE WAS NO EXEMPT INCOME FOLLOWING DECISION OF HONBLE DELHI HIGH COURT IN CASE OF M/S CHEMINVEST LTD REPORTED IN 378 ITR 33 . 5.1 WE DO NOT FIND ANY INFIRMITY IN THE AFORESTATED OBSERVATIONS OF LD. CIT (A) AND ACCORDINGLY THE SAME IS UPHELD. ITA NOS.1224 - 1227(B)/ 2018 7 ACCORDINGLY GROUNDS RAISED BY REVENUE IN ALL THE YEARS UNDER CONSIDERATION ARE DISMISSED AS DISCUSSED HEREINABOVE. 6. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2019. SD/ - SD/ - (B.R.BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 31 ST JULY, 2019. *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASST.REGISTRAR ITA NOS. 1224 TO 1227 (B)/20 1 8 8