The ACIT, Circle -5, Ahmedabad V. M/s. P.G. Foils Ltd., Ahmedabad

ITA 1343/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8489 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Revised return; Unabsorbed depreciation
• Section: 143(3); 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CIR - 5, AHMEDABAD (APPELLANT) VS M/S. P.G. FOILS LTD. 6, NEPTUNE TOWER, ASHRAM ROAD, AHMEDABAD PAN: AAACP9274C (RESPONDENT) REVENUE BY : S H RI K. MADHUSUDAN , SR. D . R. ASSESSEE BY: S H RI GAURAV NAHTA , A.R. DATE OF HEARING : 13 - 07 - 2 017 DATE OF PRONOUNCEMENT : 13 - 09 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THE S E TWO REVENUE S APPEAL S FOR A .Y S. 2009 - 10 & 2010 - 11 , AR ISE FROM ORDER OF THE CIT(A) - XI, AHMEDABAD DATED 25 - 02 - 2014 IN APPEAL NO. CIT(A) - XI/370/ADDL. CIT R - 5/2011 - 12 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO S . 1343 & 1344 / A HD/20 14 A SSESSMENT YEAR 200 9 - 10 & 2010 - 11 I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 2 2. THE FACTS AND ISSUE IN BOTH T HE APPEAL OF THE REVENUE ITA NO.134 3 /AHD/14 FOR ASSESSMENT YEAR 200 9 - 201 0 AND ITA NO. 1344/AHD/14 FOR ASSESSMENT YEAR 2010 - 2011 ARE IDENTICAL, THEREFORE , BOTH THE APPEAL ARE DECIDED TOGETHER. WE TAKE THE ITA NO.1343/AHD/14 AS THE LEAD CASE AND ITS FINDING S WILL BE APPLICABLE TO THE ITA NO.1344/AHD/14. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITA NO. 1343/AHD/2014 I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 53,80,484/ - ON ACCOUNT OF DISALLOWANCE MADE U/S. 14A OF THE I.T. ACT. II) THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN HOLDING THAT THE NETTING OF THE INTEREST IS TO BE CONSIDERED FOR WORKING OUT THE DISALLOWANCE DISREGARDING THE FACT THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT THERE WAS DIRE CT NEXUS BETWEEN THE INTEREST INCOME AND THE INTEREST EXPENDITURE. III) THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN NOT DECIDING THE ISSUE OF DISALLOWANCE OF DEDUCTION OF RS. 32,64,698/ - U/S. 80IA OF THE ACT BY HOLDING THAT THERE WOULD BE NO PROFIT AFTER ALLOWING THE GROUND AGAINST THE DISALLOWANCE U/S. 14A OF THE ACT. 3 . IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 2 , 07 , 19 , 4 32 / - WAS FILED ON 23 RD SEPTEMBER, 2009. SUBSEQUENTLY, THE ASSESSEE HAS FILED REVISED RETURN OF INCOME ON 23 RD MAR CH, 2000 BY DECLARING A LOSS OF RS. 2,07,19,432/ - DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ON PERUSAL OF BALANCE SHEET, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT O F RS. 20 , 70 , 65 , 601/ - AT THE BEGINNING OF THE YEAR AND RS. 26 , 63 , 31 , 126/ - AT THE END OF THE YEAR. HE FURTHER NOTICED THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED DIVIDEND INCOME OF RS. 9 , 54 ,294/ - AND INTEREST ON TAX FREE UTI BOND OF RS. 16 , 10 , 668/ - WHICH WERE CLAIMED AS EXEMPT INCOME. THEREAFTER, THE ASSESSING OFFICER HAS I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 3 APPLIED THE PROVISION OF SECTION 14A R.W.S. 8D AND WORKED OUT DISALLOWANCE AMOUNTING OF RS. 64 , 67 , 548/ - UNDER THE PROVISION OF SECTION 14A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ALSO NOTIC ED THAT ASSESSEE HAS CLAIMED INCOME FROM GENERATION OF WIND MILL AS EXEMPT U/S. 10(41) IN THE SECOND REVISED RETURN OF INCOME FILED ON 30 TH SEP, 2010. THEREAFTER IN THE THIRD REVISED RETURN OF INCOME THE ASSESSEE HAS WITHDRAWN ITS CLAIM OF EXEMPT ION U/S. 10(41) AND CLAIMED EXEMPT ION FROM WIND MILL U/S. 80IA OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT AS PER PROVISION OF SECTION 80IA (5) INCOME FROM THE UNDERTAKING WAS TO BE COMPUTED AS IF T HE UNDERTAKING WAS ONLY THE UNDERTAKING FROM INITIAL ASSESSME NT YEAR AND THEREAFTER IN THE SUBSEQUENT ASSESSMENT YEAR. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, HE NOTICED THAT AFTER SET OFF OF UNABSORBED DEPRECIATION OF THE UNDERTAKING FROM THE EARLIER ASSESSMENT YEAR, THERE WAS NO PROFIT ELIGIBLE FOR DEDUC TION U/S. 80IA DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE OF DEDUCTION OF RS. 3264698/ - . 4 . AGGRIEVED AGAINST THE DECISION OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE BY APPLYING RULE 8D READ WITH SECTION 14A. IT WAS NOTED BY HIM THAT THE APPELLANT HAD MADE - SUBSTANTIAL INVESTMENT IN SHARES ARID HAS ALSO INCURRED INTEREST EXPENSES OF RS. 2,77,74,029/ - . THEREFORE, AFTER CONSIDERING THE APPELLANT'S SUBMISSION AND THE ASSESSME NT STAGE HE APPLIED THE PROVISIONS UNDER SECTION 14A. I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 4 THE APPELLANT ON THE OTHER HAND, HAS SUBMITTED THAT NO BORROWED WERE USED FOR MAKING THE INVESTMENT. THE APPELLANT HAD HUGE BALANCE IN SHARE CAPITAL AND RESERVES AND SURPLUS AND THEREFORE , NO DISALLOW ANCE SHOULD HAVE BEEN MADE. THE APPELLANT HAS SUBMITTED THAT IT HAS MADE A FRESH INVESTMENT OF RS. 5.89 CROR ES AS AGAINST THAT IT HAD A PROFIT OF RS. 8 CRORES. THE COMPANY HAD I NTEREST INCOME OF RS. 76,09,577/ - WHICH WAS REQUIRED TO BE DEDUCTED WHILE CAL CULATING INTEREST CLAIMED FOR THE PURPOSE OF RULE 8D. IT IS ALSO SUBMITTED THAT IT HAD INTEREST - FREE UNSECURED LOAN OF RS. 4.26 CRORES WHICH WERE UTILISED FOR MAKING THE INVESTMENT. IT HAS ALSO FURTHER SUBMITTED THAT THE FRESH INVESTMENT INCLUDED IT SUM OF RS. 5.5 CRORES MADE IN DEBT SECURITI ES INCOME FROM WHICH ARE NOT EXEMPT FROM TAX AND THEREFORE, THE SAME SHOULD BE EXCLUDED WHILE CALCULATING THE INVESTME NT FOR THE PURPOSE OF RULE 8D. IT HAS ALSO GIVEN A BREAK UP OF THE INTEREST EXPENDITURE TO SHOW THAT ALL INTEREST EXPENDITURE SHOULD NOT BE TAKEN FOR INTEREST E XPENSES FOR THE PURPOSE OF RULE 8D. IT IS NOTED FROM THE SUBMISSION OF VARIOUS CLAIMS REGARDING DISALLOWANCE OF I NTEREST EX PENDITURE UNDER SECTION 14A. ALL THE CLAIMS MADE BY THE APPELLANT SHALL BE EXAMINED ONE AFTER THE OTHER. FIRST OF ALL THE APPLICABILITY OF SECTIO N 14 A AND THE DISALLOWANCE BY APPLYING RULE 8D IS TO BE EXAMINED. X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX NOW THE CLAIM OF THE APPELLANT REGARDING H OW MUCH INTEREST IS TO BE TAKEN FOR THE PURPOSE OF DISALLOWANCE UNDER SECTION 14 A IS TO BE EXAMINED. THE APPELLANT HAS CLAIMED THAT OUT OF THE TOTAL E XPENDITURE OF INTEREST THERE ARE SEVERAL INTEREST EXPENDITURES WHICH ARE DIRECT IN NATURE AND CANNOT BE ATTRIBUTED TO THE INVESTMENT MADE BY THE AP PELLANT IN TAX - EXEMPT ASSETS. T HESE EXPENDITUR ES ARE SPECIFIC IN NATURE AND ARE RELATED TO THE FUNDS UTILISED FOR A SPECIFIC PURPOSE. IN ORDER TO UNDERSTAND THE SITUATION THE DETAILS GI VEN BY THE APPELLANT REGARDING VARIOUS EXPENDITURE OF INTEREST AND THEIR N ATURE ARE REPRODUCED HEREUNDER: SR. NO. PARTICULARS A MOUNT (RS) 1 INTEREST ON FBT PAYMENT 1226.00 ON FBDT PAYMENT. 2 INTEREST ON TDS CHALLAN 3607. 00 FOR LATE, PAYMENT OF TDS AND ADDED BACK IN COMPUTATION 3 INTEREST ON WEALTH TAX 20272.00 ON WEALTH TAX PAYMENT 4 INT EREST PAID 2 75738.00 ON PURCHASE OF RAW MATERIAL TO BHA RAT ALUMINUM CO. LTD. ON OUTSTANDING BALANCE 5 INTEREST TO BANK FOR LC DISCOUNTING 05766.00 ON DISCOUNTING OF BILLS RAISED TO SALE PARTY I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 5 6 INTEREST TO BANK OF RAJASTHAN LTD. 2933382.98 ADDED BACK IN COMPUTATION OF T OTAL INCOME. 7 INTEREST TO CITI BANK 17 136099.96 FOR BUYERS CREDIT EXCLUSIVELY FOR RAW MATERIAL IMPORTED 8 INTEREST TO DEUTCH BANK 7 62028.00 FOR BUYERS CREDIT EXCLUSIVELY FOR RAW MATERIAL IMPORTED 9 INTEREST ON IDBI GENERAL NATURE USED FOR DAY TO DAY WORKING NEED INCLUDING OF INVESTMENT IN SHARES / MUTUAL FUND / TAX PAYMENT ETC. 10 INTEREST TO SBBJ PIPLIAKALAN OVERDRAFT AGAINST FIXED DEPOSITS USED FOR MEETING ROUTING EXPENSES. 11 INTEREST TO SBBJ RAIPUR 3 74239.48 OVERDRAFT AGAINST FIXED DEPOSITS USED FOR MEETING ROUTING EXPENSES. 12 INTEREST TO SSI UNITS 1 69869 ADDED BACK IN COMPUTATION OF TOTAL INCO ME. 13 INTEREST TO STANDARD CHARTERED BANK 444820 FOR BUYERS CREDIT EXCLUSIVELY FOR RAW MATERIAL IMPORTED TOTAL 27774029 . 42 IT HAS BEEN SUBMITTED BY THE APPELLANT THAT INTEREST ON FBT PAYMENT; T DS CHALLAN, WEALTH TAX SHOULD NOT B E TAKEN INTO ACCOUNT AS IT IS NOT RELATED TO INVESTMENT IN SHARES AND MUTUAL FUNDS AND IT IS NOT ON ACCOUNT OF ANY FUNDS BORROWED BY THE APPELLANT. THE SUBMISSION OF THE APPELLANT IS ACCEPTABLE AND AC CORDINGLY THESE INTEREST SR. NO. 1, 2 &. 3 ARE DIRECTED TO BE EXCLUDED FROM THE INTEREST FOR THE PURPOSE OF RULE 8D. THE INTEREST PAID FOR PUR CHASE OF RAW MATERIAL, PAID TO BANK FOR OBTAINING LC FOR DISCOUNTI NG OF BILLS RAISED TO SALE PARTY, INTEREST TO CITIBANK FOR BUYERS - CREDIT EXCLUSIVELY FOR RAW MATERIAL IMPORTED, INTEREST DEUTCH BANK, AND : INTEREST TO STANDARD CHARTERED BANK FOR BUYERS CREDIT FARE ALSO DIRECTLY RELATED TO PURCHASE OF RA W MATERIAL AND OBTAINING I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 6 BUYERS CREDIT ET CETERA. THE SUBMISSION OF THE APPELLANT IS THAT THERE IS NO POSSIBILITY O F USING THESE FU NDS OTHERWISE FOR THE PURPOSE OF MAKING INVESTMENT IS ACCEPTABLE AND THEREFORE, THESE ITEMS OF EXPENDITURE (SR. NO. 4, 5, 7, 8 & 13) ARE ALSO DIRECTED TO BE EXCLUDED. SIMILARLY THE ITEM NUMBER 6 & 12 IN THE ABOVE TABLE IS RELATED TO INTERES T OF BANK OF RAJASTHA N LTD. AND SSI UNIT. THE APPELLANT HAS SUBMITTED THAT THESE HAVE BEEN ADDED BACK IN THE COMPUTATION O F TOTAL INCOME BY IT . THE CLAIM OF THE APPELLANT IS ACCEPTABLE AND THEREFORE THESE INTERESTS SHOULD ALSO NOT BE CONSIDERED FOR RULE 8D. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXX AFTER DETERMINING WHICH INTERES T EXPENDITURE IS TO BE TAKEN TH E CLAIM OF THE APPELL ANT REGARDING NETTING OF INTEREST INCOME WITH THE EXPENDITURE IS TO BE FURTHER EXAMINED. IT IS A SETTLED PRINCIPLE OF LAW THAT THE INTEREST INCOME AND EXPENDITURE CAN BE ADJUSTED OR NETTED OFF ONLY IN CASE WHERE THE EXPENDITURE AS WELL AS INTEREST IS RELAT ED TO THE BUSINESS. IN OTHER WORDS THERE SHOULD BE A NEXUS BETWEEN THE INCOME AND THE EXPENDITURE. THE APPELLANT HAS GIVEN DETAILS OF INTEREST INCOME E ARNED BY IT D URING THE YEAR, WHICH IS REPROD UCED HEREUNDER. 1 INTEREST ON I.T. REFUND 736796.00 INTER EST ON EXCESS PAYMENT OF ADVANCE TAX. ADVANCE TAX WERE PAID USING IDBI BANK ACCOUNT. 2 INTEREST RECEIVED FROM CUSTOMERS 5059328.13 RECEIVED FROM CUSTOMERS ON EXTENDING CREDIT PERIOD OR DISCOUNTING LC. 3 INTEREST RECEIVED ON BANK FDR 1813453 INTEREST ON F DR WHICH WERE OBTAINED IN EARLIER YEAR AND USED FOR OVERDRAFT FACILITY TOTAL 7609577.13 IT IS NOTED F ROM THE ABOVE TABLE THAT INTEREST ON IT REFUND AND RECEIVED ON BANK FD R HAS NO NEXUS WITH THE INTEREST EXPENDITURE MADE BY THE APPELLANT AND THEREFOR E THE SAME CANNOT BE CONSIDERED FO R THE PURPOSE OF SETTING OFF OR REDUCING THE SAME FROM THE INTEREST EXPENDITURE. THE INTEREST RECEIVED FROM CUSTOMERS IS THE INTEREST WHIC H IS RECEIVED FOR EXTENDING THE CREDIT PERIOD OR DISCOUNTING OF LC. THE APPELLANT HA S EXPLAINED THAT THIS INTEREST HA S BEEN CHARGED FROM THE CUSTOMERS AS IT HAS EXTENDED THE CREDIT PERIOD OF PAYMENT TO AGAINST SALES MADE TO VARIOUS CUSTOMERS. THE FUNDS RECEIVED ON ACCOUNT OF SALES ARE DIRECTLY DEPOSITED IN IDBI ACCOUNT AND THE INTEREST EX PENDITURE INCURRED FROM THAT ACCOUNT WOULD BE REDUCED IF THE APPELLANT RECEIVED THE PAYMENT IN TIME THEREFORE THERE IS A DIRECT NEXUS WITH THE INTEREST PAID ON IDBI BANK AN D THE INTEREST RECEIVED FROM CUSTOMERS. THE SUBMISSION OF THE APPELLANT IS ACCEPTABL E AS THERE IS A DIRECT NEXUS BETWEEN THE INTEREST RECEIVED FROM CUSTOMERS AND TH E INTEREST PAID BY THE APPELLANT TO IDBI ON GENERAL BORROWINGS. ACCORDINGLY THE CLAIM OF THE APPELLANT REGARDING NETTING OF THE EXPENDITURE IS ACCEPTED ONLY TO THIS EXTENT. TH ER EFORE, TO SUM UP THE INTEREST EX PENDITURE WHICH IS TO BE TAKEN FOR THE PURPOSE OF RULE 8D FOR MAKING THE DISALLOWANCE UNDER - SECTION 14 A WOULD BE (RS.5796124 - 523 1990) 172662 ONLY . I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 7 4.3 DECISION: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSION MADE BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S. 80IA AMOUNTING TO RS. 32,64,698/ - AS IT HAS BEEN HELD BY HIM THAT IT HAS TO BE COMPUTED AFTER DEDUCTION OF NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINESS EVEN IF THE SAME HAVE BEEN SET OFF AGAINST THE OTHER INCOME IN EARLIER YEARS. THE APPELLANT HAS SUBMITTED THAT THE VIEW TAKEN BY THE A.O. WAS ERRONEOUS AND RELIED ON THE DECISION OF HON BLE ITAT, BA NGALORE IN THE CASE OF SHRI ANIL H. LAD VS. DCIT, CENTRAL CIRCLE - 2(3), BANGALORE [ITA NO. 1262/BANG/2010 IN RESPECT OF CLAIM MADE U/S. 80IA FOR INCOME FROM WIND MILL GENERATION. IT IS NOTED THAT THE APPELLANT HAS GOT SUBSTANTIAL RELIEF OF THE ISSUE OF DIS ALLOWANCE UNDER SECTION 14A AND THERE WOULD BE NO PROFIT AFTER THE RELIEF ALLOWED FROM THAT ADDITION SO ASSESSMENT ORDER TO ALLOW DEDUCTION UNDER SECTION 80IA. THE GROUND OF APPEAL THEREFORE, BECOMES ACADEMIC IN NATURE AND HENCE IT IS NOT ADJUDICATED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . WE HAVE NOTICED THAT THE AO HAS MADE THE DISALLOWANCE BY APPLYING RULE 8D READ WITH SECTION 14A. THE ASSESSEE HAS CLAIMED THAT NO BORROWED FUNDS WERE USED FOR MAKING THE INVESTMENT AS THERE WAS A PROFIT OF RS. 8 CRORES AS A GA INST FRESH INVESTMENT OF RS. 5.89 CRORES. THE ASSESSEE HAS ALSO CLAIMED IT WAS HAVING INTEREST INCOME OF RS. 76,09,577/ - REQUIRED TO BE CONSIDERED WHILE DETERMINATION OF EXEMPT INCOME. THE ASSES SEE WAS ALSO HAVING INTEREST - FREE UNSECURED LOAN OF RS. 4.26 CRORES WHICH IT HAS UTILI Z ED TOWARDS INVESTMENT . THE FRESH INVESTMENT ALSO INCLUDED A SUM OF RS. 5.5 CRORES MADE IN DEBT SECURITIES INCOME FROM WHICH ARE NOT EXEMPT FROM TAX . WE HAVE CONSIDE RED ALL THE ABOVE STATED FACTS AND DETAIL S FINDINGS OF THE LD.CIT(A) I NCLUDING ANALYSIS AND BREAK UP OF INTEREST EXPENDITURE WHICH WAS ATTRIBUTED TOWARDS EXEMPT INCOME. WE CONSIDER TH AT THE LD.CIT(A) HAS TAKEN IN TO ACCOUNT ALL THE RELEVANT FACTORS AS ELABORATED SUPRA IN HIS FINDINGS WHILE DETERMINING OUT THE DISALLOWANCE U/S 14A IN THE CASE OF THE I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 8 ASSESSEE, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF THE LD.CIT(A) THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED ON THIS IS SUE . 6. DEDUCTION U/S. 80IA WE HAVE NOTICED THAT THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S. 80IA AMOUNTING TO RS. 32,64,698/ - ON THE GROUND THAT IT HAS TO BE COMPUTED AFTER DEDUCTION OF NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINESS EVEN IF THE SAME HAVE BEEN SET OFF AGAINST THE OTHER INCOME IN EARLIER YEARS. WE HAVE FURTHER NOTICED THAT THE LD. C IT(A) STATED THAT THE ASSESSEE HAS GOT SUBSTANTIAL RELIEF OF THE ISSUE OF DISALLOWANCE UNDER SECTION 14A AND THERE WOULD BE NO PROFIT AFTER THE RELIEF ALLOWED FROM THAT ADDITION TO ALLOW DEDUCTION UNDER SECTION 80IA. DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE LD. DR HAS NOT CONTROVERT THE FINDINGS OF THE LD.CIT(A) BY DEMONSTRATING THAT THERE WAS ANY PROFIT LEFT AFTE R CONSIDERING THE RELIEF PROVIDED BY THE DECISION OF THE LD. CIT(A), THEREFORE, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LD.CIT(A). THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED ON THIS ISSUE ALSO . 6 . IN THE RESULT , BOTH THE APPEAL S OF THE REV ENUE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 1 3 - 09 - 201 7 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 13 /09 /2017 I.T.A NO S . 1343 & 1344 /AHD/20 14 A.Y. 2009 - 10 & 2 010 - 11 PAGE NO ACIT VS. M/S. P.G. FOILS LTD. 9 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,