DCIT, Circle - 3(1), Kolkata, Kolkata V. M/s. Tata Metaliks Limited, Kolkata

ITA 1339/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9425 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-04-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Question of law; Set aside
• Section: 14A; 80IA

Judgement Text

TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO.1152/KOL/2017 (ASSESSMENT YEAR: 2009-10) TATA METALIKS LIMITED ASSESSEE [PAN:AABCT1389B] VS DCIT, CIRCLE-3(1), KOLKATA REVENUE/DEPARTMENT & I.T.A NO.1339/KOL/2017 (ASSESSMENT YEAR: 2009-10) DCIT, CIRCLE-3(1), KOLKATA ASSESSEE VS TATA METALIKS LIMITED REVENUE/DEPARTMENT [PAN:AABCT1389B] FOR THE ASSESSEE : SHRI NAGESWAR RAO, ADVOCATE FOR THE REVENUE : SHRI A.K. SINGH, CIT-DR DATE OF HEARING : 10.04.2019 DATE OF PRONOUNCEMENT : 05.07.2019 ORDER PER SHRI S.S. VISWANETHRA RAVI, JM: BOTH THESE APPEALS BY THE ASSESSEE AND REVENUE AGAINST THE COMMON ORDER DATED 27.02.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-17, KOLKATA [CIT(A)] FOR ASSESSMENT YEAR 2009-10. TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 2 2. SINCE THE ISSUES RAISED IN BOTH THE APPEALS ARE BASED ON SAME IDENTICAL FACTS AND WITH THE CONSENT OF BOTH THE PARTIES, WE PROCEED TO HEAR BOTH THE APPEALS TOGETHER AND PASS A CONSOLIDATED ORDER FOR THE SAKE OF BREVITY. 3. FIRST WE SHALL TAKE UP ITA NO.1152/KOL/2017 BY THE ASSESSEE FOR ASSESSMENT YEAR 2009-10. 4. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LEAVE ENCASHMENT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. HEARD BOTH PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UNION OF INDIA GRANTED STAY AGAINST THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF EXIDE INDUSTRIES LTD. REPORTED IN 292 ITR 470(CAL) UNTIL FURTHER ORDERS VIDE ORDER DATED 08.09.2008. FURTHER, DURING THE PENDENCY OF CIVIL APPEAL THE HONBLE SUPREME COURT WAS PLEASED TO DIRECT ASSESSEE THEREIN TO PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK THOUGH IT WOULD BE ENTITLED TO MAKE CLAIM IN THE RETURN VIDE ORDER DATED 08.05.2009. KEEPING IN VIEW OF THE ABOVE ORDERS OF HONBLE SUPREME COURT, ON SIMILAR CASES, THIS TRIBUNAL IS REMANDING THE MATTER TO THE FILE OF ASSESSING OFFICER TO DECIDE AFRESH AFTER AWAITING FINAL ORDER OF HONBLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA). WE FIND THIS TRIBUNAL IN ASSESSEES OWN CASE REMANDED THE SIMILAR ISSUES FROM ASSESSMENT YEARS 2005-06 TO 2011-12 WHICH ARE PLACED ON RECORD AT PAGES 229 TO 230 AND RESPECTFULLY FOLLOWING THE SAME, WE DEEM IT PROPER TO REMAND THE MATTER TO THE FILE OF ASSESSING OFFICER FOR HIS FRESH CONSIDERATION TAKING INTO ACCOUNT FINAL ORDER OF HONBLE SUPREME TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 3 COURT. THUS ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. NEXT, WE SHALL TAKE UP ITA NO.1339/KOL/2017 FILED BY THE REVENUE FOR ASSESSMENT YEAR 2009-10. 7. IT IS NOTED THAT THE APPEAL WAS FILED WITH A DELAY OF 10 DAYS AND AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE REASONS STATED BY THE APPELLANT REVENUE ARE BONA FIDE WHICH REALLY PREVENTED THE APPELLANT REVENUE TO FILE THIS APPEAL IN TIME. THEREFORE, DELAY OF 10 DAYS IS CONDONED. 8. GROUND NO.1 IS RELATING TO DELETION OF ADDITION MADE U/S 80IA OF THE ACT. 9. HEARD BOTH PARTIES AND PERSUED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT A SIMILAR ISSUE ON SAME IDENTICAL FACTS HAS BEEN DISPOSED OFF BY THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE CONSOLIDATED ORDER DATED 04.03.2016 FOR ASSESSMENT YEARS 2005-06 TO 2008-09 IN FAVOUR OF THE ASSESSEE IN GRANTING DEDUCTION U/S 80IA OF THE ACT. FOR READY REFERENCE, THE RELEVANT PORTION OF THE ORDER AT PAGE NO.159 OF PAPER BOOK IS REPRODUCED HEREINBELOW: 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES, THIS ISSUE INVOLVED IN GROUND NO. 1 & 2 OF THE REVENUES APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, INTER ALIA, BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2003-04 AND 2004-05 RENDERED VIDE ITS ORDER DATED 23.10.2009 IN ITA NOS. 752 & 785/KOL/2008, WHEREIN THE SIMILAR CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA IN RESPECT OF CAPTIVE POWER UNITS HAS BEEN ALLOWED BY THE TRIBUNAL RELYING ON THE VARIOUS JUDICIAL PRONOUNCEMENTS AS WELL AS THE CBDT INSTRUCTION NO. 1116. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH, WE UPHOLD THE IMPUGNED ORDER TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 4 OF THE LD. CIT(APPEALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA ON CAPTIVE POWER UNIT AND DISMISS GROUNDS NO. 1 & 2 OF THE REVENUES APPEAL. 10. IN THE LIGHT OF ABOVE DISCUSSION BY THE COORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 TO 2008-09, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY IT IS JUSTIFIED. THUS GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 11. GROUND NO.2 IS RELATING TO DELETION OF DISALLOWANCE MADE ON ACCOUNT OF CAPITAL INVESTMENT SUBSIDY AND SALES TAX REMISSION. 12. HEARD BOTH PARTIES AND PERSUED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IS COVERED IN ASSESSEES OWN CASE BY THE ORDER OF COORDINATE BENCH WHICH IS PLACED AT 161 OF PAPER BOOK AND FOR BETTER UNDERSTANDING THE SAME IS REPRODUCED HEREINBELOW: 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES, THIS ISSUE INVOLVED IN GROUNDS NO. 3 & 4 OF THE REVENUES APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, INTER ALIA, BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2003-04 AND 2004-05 RENDERED VIDE ITS ORDER DATED 23.10.2009 (SUPRA), WHEREIN THE SIMILAR AMOUNT OF INCENTIVE RECEIVED BY THE ASSESSEE-COMPANY UNDER THE SAME SCHEME OF WEST BENGAL GOVERNMENT HAS BEEN HELD TO BE CAPITAL IN NATURE NOT CHARGEABLE TO TAX. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUNDS NO. 3 & 4 OF THE REVENUES APPEAL. 13. IN VIEW OF THE ABOVE DISCUSSION AND FURTHER THERETO, IT IS NOTED THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010- 11 HELD THAT SUBSIDIES GIVEN TO PROMOTE INDUSTRIES ARE NOT SUBJECTED TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 5 TO TAX VIDE ORDER DATED 27.04.18 AT PAGE 208 OF PAPER BOOK AND THE SAME HAS BEEN FOLLOWED IN ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 12.09.2018 AT PAGE 229 OF PAPER BOOK. IT IS NOTED THAT THE CIT(A) PLACED RELIANCE ON THE ORDER OF KOLKATA TRIBUNAL. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). THUS GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 14. GROUND NO.3 IS RELATING TO DELETION OF DISALLOWANCE MADE U/S 14A OF THE ACT. 15. HEARD BOTH PARTIES AND PERSUED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE EARNED NO EXEMPT INCOME AND THE CIT(A) BY PLACING RELIANCE ON THE ORDER DATED 02.09.15 OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. IN ITA NO.749/2014 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREINBELOW: DECISION: IT IS ADMITTED IN THE SUBMISSIONS THAT THE ASSESSEE HAS NOT BEEN EARNED ANY EXEMPTED DIVIDEND INCOME DURING THE YEAR. THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. (ITA NO.749/2014 VIDE ITS ORDER DATED 02 SEPTEMBER 2015). IT IS SUBMITTED THAT THE HONBLE DELHI HIGH COURT HAS CATEGORICALLY HELD THAT THE EXPRESSION DOES NOT FORM PART OF TOTAL INCOME AS APPEARING IN SECTION 14A OF THE ACT ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. THE HONBLE DELHI HIGH COURT HAS HELD AS UNDER: 21. THERE IS MERIT IN THE CONTENTION OF MR. VOHRA THAT THE DECISION OF THE SUPREME COURT IN RAJENDRA PRASAD MODDY (SUPRA) WAS RENDERED IN THE CONTEXT OF ALLOWABILITY OF DEDUCTION UNDER SECTION 57(III) OF THE ACT, WHERE THE EXPRESSION USED IS FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. SECTION 14A OF THE TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 6 ACT ON THE OTHER HAND CONTAINS THE EXPRESSION IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE DECISION IN RAJENDRA PRASAD MOODY(SUPRA) CANNOT BE USED IN THE REVERSE TO CONTEND THAT EVEN IF NO INCOME HAS BEEN RECEIVED, THE EXPENDITURE INCURRED CAN BE DISALLOWED UNDER SECTION 14A OF THE ACT. RESPECTFULLY FOLLOWING THE ABOVE DECISION AS NO EXEMPTED DIVIDEND INCOME HAS BEEN EARNED BY THE ASSESSEE. I AM OF THE OPINION THAT NO DISALLOWANCE U/S 14A CAN BE MADE IN THIS CASE. ACCORDINGLY THE ADDITION MADE BY THE A.O OF RS.19,246,532/- IS HEREBY DELETED. THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. 16. FURTHER TO THE ABOVE, THE HONBLE SUPREME COURT IN THE CASE OF OIL INDUSTRIES DEVELOPMENT BOARD VIDE ORDER DATED 16.02.2018 UPHELD THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CHEMINVEST LIMITED (SUPRA). FOR READY REFERENCE, THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREINBELOW: THE REVENUES APPEAL CHALLENGES AN ORDER OF THE INCOME TAX APPELLATE TRIBUNAL (ITAT) WHICH HAD SET ASIDE THE DISALLOWANCE OF RS.1,62,49,000/- UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER (A.O) AND LATER THE CIT(A) MADE THE DISALLOWANCE BY TAKING INTO ACCOUNT ONLY THE INVESTMENT PATTERNS OF THE ASSESSEE FOR THE CONCERNED ASSESSMENT. THE ITAT RELIED UPON THE RULING OF THIS COURT IN CHEMINVEST LIMITED VS. COMMISSIONER OF INCOME TAX-VI, (2015) 378 ITR 33 WHICH RULED IN THE ABSENCE OF ANY EXEMPT INCOME, DISALLOWANCE UNDER SECTION 14A OF THE ACT OF ANY AMOUNT WAS NOT PERMISSIBLE. SINCE THE DECISION IN CHEMINVEST LIMITED (SUPRA) WAS FOLLOWED, THERE IS NO SUBSTANTIAL QUESTION OF LAW THAT REQUIRES CONSIDERATION. 17. IN THE LIGHT OF ABOVE DISCUSSION, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY IT IS JUSTIFIED. THUS GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. TATA METALIKS LIMITED I.T.A NO.1152/KOL/2017 & I.T.A NO.1339/KOL/2017 ASSESSMENT YEAR: 2009-10 PAGE | 7 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.07.2019. SD/- SD/- [J. SUDHAKAR REDDY] [S.S. VISWANETHRA RAVI] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05.07.2019 PLACE : KOLKATA RS, SR.PS COPY OF THE ORDER FORWARDED TO: 1 . ASSESSEE TATA METALIKS LIMITED, TATA CENTRE, 10 TH FLOOR, 43 JAWAHARLAL NEHRU ROAD, KOLKATA 71. 2 REVENUE DCIT, CIRCLE-3(1), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA //TRUE COPY// BY ORDER, ASSISTANT REGISTRAR, ITAT, KOLKATA