The DCIT, (OSD), Range-1, Ahmedabad V. CLP India Pvt. Ltd, Ahmedabad

ITA 1386/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8935 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA MORARI
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1386/AHD/2014 WITH C.O. NO.248/AHD/2014 (ASSESSMENT YEAR:200 8-09) DCIT (OSD), RANGE-1, AHMEDABAD APPELLANT VS. M/S. CLP INDIA PVT. LTD. 6 TH FLOOR, CHANAKYA BUILDING, OFF. ASHRAM ROAD, AHMEDABAD RESPONDENT PAN: AAACG7999P /BY REVENUE : SHRI KRISHNA MORARI, CIT D.R. /BY ASSESSEE : SHRI S. N. SOPARKAR, A.R. /DATE OF HEARING : 22.03.2017 /DATE OF PRONOUNCEMENT : 23.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL AND ASSESSEES CROSS OBJECTIO N ARISES AGAINST THE CIT(A)-6, AHMEDABADS ORDER DATED 14.03.2014, P ASSED IN CASE NO. ITA NO. 1386/AHD/2014 WITH C.O. NO. 248/AHD/14 [DCIT (OSD) VS. CLP INDIA PVT. LTD.] A.Y. 2005-06 - 2 CIT(A)-VI/ACIT(OSD) R-1/156/12-13, IN PROCEEDINGS U /S.143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE REVENUES SOLE SUBSTANTIVE GROUND PLEADED IN ITS APPEAL ITA NO.1386/AHD/2014 READS AS UNDER; THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOLDIN G THAT ONLY THE NET INTEREST INCOME IS TO BE EXCLUDED FROM THE ELIGIBLE PROFIT FOR COMPUTATION OF DEDUCTION U/S 80IA OF THE ACT IN ABSENCE OF ANY SUC H PROVISION IN THE ACT. THE CIT(A) HAS NOT APPRECIATED THE FACT THAT THE AS SESSEE HAS FAILED TO ESTABLISH A NEXUS BETWEEN THE INTEREST EXPENDITURE AND INTEREST INCOME INCIDENTAL TO THE ELIGIBLE BUSINESS. 3. THE ASSESSEES CROSS OBJECTION NO.248/AHD/2014 R AISES THE FOLLOWING SUBSTANTIVE GROUNDS: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E RESPONDENT'S CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING D ISALLOWANCE U/S 80IA ON INTEREST INCOME OF RS 45,52,33,000 WITHOUT APPRECIATING THE FACT THAT INTEREST INCOME IN QUESTION WAS BUSINESS INCOME OF APPELLANT ELIGIBLE FOR SUCH DEDUCTION. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING D ISALLOWANCE U/S 80IA ON INTEREST INCOME OF RS 45,52,33,000 WITHOUT APPRECIATING THE FACT THAT INTEREST INCOME IS TAXED AS BUSINESS INCO ME IN THE HANDS OF APPELLANT HENCE SUCH INTEREST INCOME WAS TO BE SET OFF AGAINST THE INTEREST EXPENDITURE. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, DISALLOWANCE U/S 80IA ON INTEREST INCOME IS UNCALLE D FOR AS INTEREST EXPENDITURE INCURRED IS MORE THAN INTEREST INCOME E ARNED BY APPELLANT. 4. RELEVANT FACTS OF THE CASE ARE IN A NARROW COMPA SS. THIS IS SECOND ROUND OF LITIGATION BETWEEN THE PARTIES BEFORE THE TRIBUNAL. THE WHOLE ISSUE RAISED HEREIN IS ABOUT ASSESSEES GROSS INTEREST OF RS.45,52,33,000/- AS DISALLOWED BY THE ASSESSING OFFICER FOR THE PURPOSE OF COMPUTING SECTION ITA NO. 1386/AHD/2014 WITH C.O. NO. 248/AHD/14 [DCIT (OSD) VS. CLP INDIA PVT. LTD.] A.Y. 2005-06 - 3 80IA DEDUCTION. THE ASSESSING OFFICER HAD FOLLOWED THIS COURSE OF ACTION IN ASSESSMENT ORDER DATED 31.12.2007 FRAMED U/S.143 (3) OF THE ACT. THE CIT(A) REVERSED THE SAME BY FOLLOWING HIS ORDER IN PRECEDING ASSESSMENT YEAR AND DIRECTED THE ASSESSING OFFICER TO CONSIDER INTEREST INCOME AS WELL AS INTEREST EXPENDITURE FOR THE PURPOSE OF THE IMPU GNED DEDUCTION. THE DEPARTMENT FILED ITA NO.2839/AHD/2008 IN THE TRIBUN AL. A CO-ORDINATE BENCH THEREIN OBSERVED THAT THE SAID NETTING OF INT EREST ORDERED IN CIT(A)S ORDER WAS WELL ACCORDING TO THE LAW. THE DEPARTMEN T APPEARS TO HAVE FILED TAX APPEAL NO.655/2012 AGAINST THE SAID ORDER. 5. WE PROCEED TO NOTICE THE ASSESSING OFFICER ONCE AGAIN REITERATED THE INTEREST DISALLOWANCE FOR THE PURPOSE OF DEDUCTION CLAIM RAISED U/S.80IA OF THE ACT. THE CIT(A) TAKES NOTE OF TRIBUNALS EARLI ER ORDER TO OBSERVE THAT DEPARTMENTS GROUND RAISED THEREIN ALREADY STOOD DI SMISSED AND THEREFORE THE ASSESSING OFFICERS ACTION UNDER CHALLENGE HAS NO LEGS TO STAND. THIS LEAVES THE REVENUE AGGRIEVED. 6. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. THE REVENUES SOLE GROUND CHALLENGES CORRECTNESS OF NETTING PRINCIPLE QUA DISALLOWANCE OF INTEREST INCOME FOR THE PURPOSE OF RE-WORKING OF SE CTION 80IA DEDUCTION. SHRI SOPARKAR FILES BEFORE US HONBLE JURISDICTIONA L HIGH COURTS DECISION DATED 19.02.2013 IN ASSESSEES OWN CASE (SUPRA). T HEIR LORDSHIPS OBSERVED THEREIN THAT THE ABOVE NETTING PRINCIPLE IS TO BE A DOPTED AS PER HONBLE APEX COURTS DECISION IN ACG ASSOCIATED CAPSULES PVT. LT D. VS. CIT [2012] 343 ITR 89 (SC). THEIR LORDSHIPS IN OTHER WORDS HAVE U PHELD THIS TRIBUNALS EARLIER ORDER DATED 30.03.2012 (SUPRA). WE TAKE IN TO ACCOUNT THE SAME AND FIND NO REASON TO INTERFERE WITH THE CIT(A)S DIREC TIONS UNDER CHALLENGE. THE REVENUES SOLE SUBSTANTIVE GROUND AS WELL AS IT S APPEAL ITA ITA NO. 1386/AHD/2014 WITH C.O. NO. 248/AHD/14 [DCIT (OSD) VS. CLP INDIA PVT. LTD.] A.Y. 2005-06 - 4 NO.1386/AHD/2014 FAILS. OUR DISCUSSION HEREINABOVE FURTHER RENDERS ASSESSEES CROSS OBJECTION NO.248/AHD/2014 AS INFRU CTUOUS. 7. REVENUES APPEAL ITA NO.1386/AHD/2014 IS DISMISS ED. ASSESSEES CROSS OBJECTION NO.248/AHD/2014 IS DISMISSED AS INF RUCTUOUS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF MARCH, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 23/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0