JAWAHAR LAL NEHRU PORT TRUST, MUMBAI V. ADDL CIT PANVEL, PANVEL

ITA 1434/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9383 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 31-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIVIN KUMAR
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment; Revised return; Unabsorbed depreciation
• Section: 143(3); 14A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 1434/MUM /2010 ASSESSMENT YEAR : 2006-07 ITA NO. 1427/MUM /2010 ASSESSMENT YEAR : 2007-06 M/S JAWAHAR LAL NEHRU PORT TRUST, ADMINISTRATION BUILDING, SHEVA, TAL URAN, NAVI MUMBAI 400 707. PAN AAALJ0036D VS. ADDL. COMMISSIONER OF INCOME- TAX- PANVEL CIRCLE, PANVEL, NAVI MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI DEEPAK TRASHAWALA DEPARTMENT BY : SHRI PRIVIN KUMAR DATE OF HEARING 08-11-2012 DATE OF PRONOUNCEMENT 21-11-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS DTD. 30-11-2009 PASSED BY THE L D. CIT(A)-I, THANE FOR THE ASSESSMENT YEARS 2006-07 & 2007-08. SINCE THE FACTS ARE IDENTICAL AND COMMON ISSUES ARE INVOLVED, BOTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE FOR THE A.Y. 20 06-07 ARE THAT THE ASSESSEE JAWAHARLAL NEHRU PORT TRUST (JNPT) IS ENGA GED IN RENDERING PORT SERVICES TO PORT USERS FOR LOADING AND UNLOADI NG AND STORAGE CARGO ITA NO. 1434 & 1427/MUM/2010 2 PASSING THROUGH JNPT BY SEA. THE RETURN WAS FILED D ECLARING NIL INCOME IN THE STATUS OF LOCAL AUTHORITY. IN THIS RETURN T HE ASSESSEE HAD SHOWN BUSINESS PROFITS AT RS. 301,86,27,813/- WHICH WAS S ET OFF AGAINST THE BROUGHT FORWARD UNABSORBED BUSINESS LOSS. THE ASSE SSEE HAD ALSO SHOWN INCOME FROM OTHER SOURCES RS. 66,67,07,780/- WHICH WAS ALSO SET OFF AGAINST BROUGHT FORWARD UNABSORBED DEPRECIATION . HOWEVER, THE ASSESSMENT WAS COMPLETED AFTER MAKING VARIOUS DISAL LOWANCES AT AN INCOME OF RS. 162,48,77,808/- VIDE ORDER DTD. 26-12 -2008 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 3. ON THE SAME BASIS, THE ASSESSMENT FOR THE YEAR 2 007-08 WAS ALSO COMPLETED AT AN INCOME OF RS. 2,28,17,02,504/- AS A GAINST THE REVISED RETURNED INCOME OF RS. NIL, VIDE ORDER DTD. 23-3- 2009 PASSED U/S 143(3) OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED BOTH TH E APPEALS. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. ITA 1434/MUM/2010 (A.Y. 2006-07) 6. AT THE TIME OF HEARING, GROUND NOS. 1,2,5 & 6 AR E NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS NOT OBJE CTED TO BY THE LD. D.R. ITA NO. 1434 & 1427/MUM/2010 3 7. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE ABOVE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, REJECTED BEING NOT PRESSED. 8. GROUND NO. 3 IS AGAINST THE SUSTENANCE OF ADDITI ON U/S 14A OF THE ACT. 9. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS O BSERVED BY THE A.O. THAT THE ASSESSEE HAS SHOWN INCOME FROM UTI BONDS AT RS. 10,41,02,402/- AS TAX FREE INCOME U/S 10(35) OF THE ACT. ACCORDING TO THE A.O. AS PER PROVISIONS OF SECTION 14A OF THE AC T, FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER THIS CHAPTER, NO DEDUC TION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE A SSESSEE IN RELATION TO THE INCOME, WHICH DOES NOT FORM PART OF THE TOTAL I NCOME UNDER THE ACT. THE ASSESSEE WAS ASKED AS TO WHY DISALLOWANCE SHOUL D NOT BE MADE U/S 14A R.W.S. RULE 8D. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT THERE IS NO DIRECT EXPENDITURE TO EARN THIS INCOME AS THE ASSESSEE HAS TO COMPULSORILY INVESTS THE SURPLUS IN THE RESERVES AN D HAS TO INVEST THIS IN SPECIFIED ASSETS. IT WAS FURTHER SUBMITTED THAT TH E FIGURE OF INVESTMENT IS THE SAME AS WAS THERE IN LAST YEAR. IT WAS FURTHER EXPLAINED THAT BORROWED INTEREST BEARING FUNDS WERE TAKEN FOR THE PURPOSE OF PORT ACTIVITIES AND FOR INVESTMENTS IN FIXED ASSETS. IT WAS FURTHER SUBMITTED THAT NO FUNDS WERE BORROWED TO MAKE INVESTMENTS IN TAX FREE BONDS. THE INVESTMENTS IN TAX FREE BONDS IS TO BE MADE AS APPO RTION OF THE PROFITS IS ITA NO. 1434 & 1427/MUM/2010 4 NECESSARILY TRANSFERRED TO THE STATUTORY RESERVES A ND, THEREFORE, THE INVESTMENTS IN THE SPECIFIED ASSETS ARE MADE. HOWEV ER, THE A.O. DID NOT ACCEPT THE ASSESSEES EXPLANATION. THE A.O. AS PER CALCULATION APPEARING IN PARA 6.5 AT PAGE 20 OF THE ASSESSMENT ORDER HAS MADE DISALLOWANCE OF RS. 77,23,789/-. ON APPEAL, THE LD. CIT(A) WHILE AG REEING WITH THE VIEWS OF THE A.O. CONFIRMED THE ADDITION MADE BY THE A.O. 10. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT AND OTHERS (201 0) 328 ITR 81 (BOM) THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE Q UESTION OF MAKING THE DISALLOWANCE U/S.14A IS NO MORE RESINTEGRA IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GO DREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT AND OTHERS (201 0) 328 ITR 81 (BOM) HOLDING THAT THE PROVISION OF SECTION 14A ARE APPLICABLE AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE A.O. ON SO ME REASONABLE BASIS AND NOT UNDER RULE 8D. SINCE THE A.O. WHILE CALCULA TING THE DISALLOWANCE U/S.14A HAS ALSO APPLIED RULE 8D OF THE INCOME TAX RULES, 1962, WHICH IS APPLICABLE FROM THE A.Y. 2008-09, WE RESPECTFULL Y FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT ( SUPRA) SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS AC COUNT AND DIRECT THE ITA NO. 1434 & 1427/MUM/2010 5 A.O. TO MAKE DISALLOWANCE, IF ANY, IN THE LIGHT OF THE ABOVE DECISION, AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSE. 12. GROUND NO. 4 IS AGAINST THE DENIAL OF EXEMPTION U/S 10(35) OF THE ACT RS. 10,41,02,402/-. 13. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT FROM TH E PERUSAL OF COMPUTATION OF INCOME, THE A.O. OBSERVED THAT AN AM OUNT OF RS. 10,41,02,402/- HAS BEEN REDUCED FROM THE GROSS RECE IPT ON THE PLEA THAT THIS IS TAX FREE INCOME AND HAS TO BE EXCLUDED BY C OMPUTING THE INCOME U/S 11(1) OF THE ACT. THE A.O. FURTHER OBSERVED TH AT EXCLUSION OF SUCH INCOME FROM GROSS RECEIPTS MEANS THAT THIS INCOME I S NOT AVAILABLE FOR APPLICATION AS PER PROVISIONS OF SECTION 11(1)(A) O F THE ACT. HE FURTHER OBSERVED THAT EVEN IF THE INCOME IS EXEMPTED, THIS HAS TO BE INCLUDED IN THE GROSS RECEIPTS AND HAS TO BE APPLIED AS PER PRO VISIONS OF SECTION 11(1) OF THE ACT BECAUSE THE INCOME HAS TO BE COMPUTED IN COMMERCIAL MANNER AND NOT AS PER PROVISION OF SECTION 14 OF THE ACT. THE A.O. WHILE RELYING ON CERTAIN DECISIONS RENDERED ON THE AGRICULTURAL I NCOME HELD THAT THE INCOME EARNED FROM BONDS OF UTI AMOUNTING TO RS. 10 ,41,02,402/- HAS TO BE TREATED AS INCOME OF BUSINESS UNDERTAKING WHI CH IS A PROPERTY HELD UNDER TRUST AND HAS TO BE APPLIED AS ACCUMULATED AS PER PROVISION OF SECTION 11(1) AND 11 (2) OF THE ACT AND ACCORDINGLY WORKED OUT THE ITA NO. 1434 & 1427/MUM/2010 6 INCOME CHARGEABLE TO TAX AS PER CALCULATION APPEARI NG AT PARA 7.3 AT PAGE 26-27 OF THE ASSESSMENT ORDER AT RS. 146,67,10,413/ -. ON APPEAL, THE LD. CIT(A) WHILE UPHOLDING THE VIEWS OF THE A.O. DI SMISSED THE GROUND TAKEN BY THE ASSESSEE. 14. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE WHILE DISTINGUISHING THE DECISION IN THE CASE OF CIT VS. PANCHAYATI AKHARA NIRMAL (1991) 190 ITR 121 (ALLAHABAD) SUBMITS THAT IN VIEW OF PROVISION OF SECTION 10(35) OF THE ACT, THE ASSESSEE IS ENTIT LED TO EXEMPTION OF RS. 10,41,02,402/- AS THE SAME DO NOT FORM PART OF THE TOTAL INCOME. 15. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DER OF THE A.O. AND THE LD. CIT(A). 16. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ORDER OF THE A.O. WHILE DISTINGUISHING THE DECISIONS IN CIT VS. SILK & ART SILK MILLS ASSOCIATION LTD. (1990) 182 ITR 38 (BOM) AND HIS HO LINESS SILASRI KASIVASI MUTHUKUMARASWAMI THAMBIRAN AND OTHERS V. A GRICULTURAL I.T.O. (1978) 113 ITR 889 (MAD.) PASSED A VERY BRIE F ORDER ON THIS ISSUE WHICH IS AS UNDER (PARA 16.5):- THESE TWO CASES ARE NOT RELEVANT FOR THE CASE OF T HE APPELLANT. EVEN IF THE INCOME IS EXEMPT, THE SAME HAS TO BE INCLUDED I N THE GROSS RECEIPTS AND HAS TO BE APPLIED AS PER PROVISIONS OF SECTION 11(1) BECAUSE INCOME HAS TO BE COMPUTED IN COMMERCIAL MANNER. ACCORDING LY, I TAKE THE VIEW ITA NO. 1434 & 1427/MUM/2010 7 THAT THE ACTION OF THE A.O. IN THIS CONNECTION IS I N ORDER AND ACCORDINGLY THE GROUND IS DISMISSED. 17. SINCE THE LD. CIT(A) HAS NOT ADJUDICATED THE IS SUE PROPERLY AND HAS NOT PASSED A REASONED ORDER, WE ARE OF THE VIEW THA T IN THE INTEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FILE OF TH E LD. CIT(A) AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE LD . CIT(A) AND SEND BACK THE MATTER TO HIS FILE TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATION HEREINABOVE AND ACCORDING TO LAW INCLUD ING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GENERAL IN SURANCE CORPORATION OF INDIA VS. DCIT (2012) 204 TAXMAN 587 (BOM) AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSE. 18. GROUND NO. 7 IS AGAINST THE DISALLOWANCE OF DEP RECIATION ON APPLICATION OF INCOME RS. 2,29,54,563/-. 19. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS OBSERVED BY THE A.O. THAT AN AMOUNT OF RS. 49,05,97,130/- ON ACCOUNT OF PURCHASE OF FIXED ASSETS HAS BEEN SHOWN AS APPLICATION OF INCOME FOR THE OBJECTS OF THE INSTITUTION. IN THE COMPUTATION OF INCOME, THE ASS ESSEE HAS ALSO CLAIMED DEPRECIATION AS PER ACT INCLUDING DEPRECIATION ON T HE ASSET PURCHASED IN THE YEAR AMOUNTING TO RS. 49.05 CRORES. THE ASSESS EE HAS ALSO DEBITED AN AMOUNT OF RS. 1,20,37,104/- WHICH ARE FIXED ASSE TS OF LESS THAN RS. 1 LAKH EACH INTO REVENUE ACCOUNT AND HAS CLAIMED DEPR ECIATION. THUS THE ITA NO. 1434 & 1427/MUM/2010 8 TOTAL ADDITION ON THE FIXED ASSET COMES TO RS. 50,2 6,34,234/-. THE ASSESSEE HAS TREATED THE ENTIRE AMOUNT AS APPLICATI ON OF INCOME. HOWEVER, THE A.O. RELYING ON THE DECISION OF HONBL E SUPREME COURT IN ESCORTS INDIA LTD. VS. UNION OF INDIA (1993) 199 IT R 43 (SC) HELD THAT NO DOUBLE DEDUCTION IS ALLOWABLE AND HENCE AN AMOUNT O F RS. 2,29,54,563/- IS NOT TREATED AS APPLICATION OF INCOME. ON APPEAL THE LD. CIT(A) AFTER CONSIDERING THE DECISION IN CIT VS. INSTITUTE OF BA NKING PERSONAL SELECTION, 131 TAXMAN 386 (BOM) WHILE OBSERVING THA T THE CLAIM OF THE ASSESSEE OF DEPRECIATION ON APPLICATION OF INCOME A MOUNTS TO DOUBLE DEDUCTION, UPHELD THE DISALLOWANCE MADE BY THE A.O. 20. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONAL SELECTION (2003) 264 ITR 110 (BOM) THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E. 21. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DER OF THE A.O. AND THE LD. CIT(A). 22. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE TRIB UNAL. RECENTLY, THIS BENCH OF THE TRIBUNAL HAS CONSIDERED THE SIMILAR IS SUE IN THE CASE OF ADIT (E) VS. SHRI VILE PARLE KELVANI MANDAL IN ITA NO.7106/MUM/2011 ITA NO. 1434 & 1427/MUM/2010 9 FOR A.Y. 2008-09 ORDER DTD. 5-10-2012 AND AFTER CON SIDERING VARIOUS DECISIONS INCLUDING THE DECISION IN LISSIE MEDICAL INSTITUTIONS VS. CIT (2012) 348 ITR 344 (KER.) HAS HELD IN PARA 14-15 OF THE ORDER AS UNDER:- 14. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE. IN THE PRESENT CASE THE ASSESSEE I S NOT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN HE LD BY THE REVENUE AUTHORITIES. THE INCOME OF THE ASSESSEE BEING EXEM PT, THE ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED F ROM THE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAVE TO B E APPLIED FOR THE PURPOSE OF TRUST. THUS THERE IS NO DOUBLE DEDUCTIO N CLAIMED BY THE ASSESSEE. RECENTLY THE HONBLE PUNJAB & HARYANA HIG H COURT IN CIT VS. MARKET COMMITTEE, PIPLI (2011) 330 ITR 16 (P&H) AFT ER DISTINGUISHING THE DECISION OF THE HONBLE SUPREME COURT IN ESCORTS LT D. VS. UOI (1993) 199 ITR 43 (SC) WHILE RELYING ON VARIOUS DECISIONS INCL UDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN INSTITUTE OF B ANKING (SUPRA) HAS HELD VIDE PENULTIMATE PARA 10 AS UNDER:- IN THE PRESENT CASE, THE ASSESSEE IS NOT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SUGGESTED BY LE ARNED COUNSEL FOR THE REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT, T HE ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM T HE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAVE TO B E APPLIED FOR THE PURPOSES OF THE TRUST. THERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANVASSED BY THE REVENUE. THE JUDGMENT OF THE HON'BLE SUPREME COURT IN ESCORTS LTD. CASE [1993] 199 ITR 43 IS DISTINGUISHABLE FOR THE ABOVE REASONS. IT CANNOT BE HELD THAT DOUB LE BENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR COMPUTING INCOM E FOR PURPOSES OF SECTION 11. THE QUESTIONS PROPOSED HAVE, THUS, TO BE ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 15. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BR OUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE CONSISTE NT VIEW OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WHICH IS BINDING ON US AND THE CONSISTENT VIEW OF THE CO-ORDINATE BENCHES OF THE T RIBUNAL INCLUDING THE DECISION IN GKR CHARITIES (SUPRA) WHEREIN THE TRIBU NAL AFTER CONSIDERING THE DECISION CITED BY THE LD. D.R. IN LISSIE MEDICA L INSTITUTIONS, KOCHI HAS HELD THAT IT IS SETTLED PRINCIPLE OF LAW THAT WHERE THERE ARE TWO DIFFERENT DECISIONS OF HIGH COURTS, ONE FAVOURABLE TO THE ASS ESSEE SHOULD BE FOLLOWED, UPHELD THE ORDER OF THE LD. CIT(A) IN DEC IDING THE ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE A.O. THE GROUND TAKEN BY THE REVENUE IS, THEREFORE, REJECTED. ITA NO. 1434 & 1427/MUM/2010 10 23. IN ACIT VS. SHRI ADICHUNCHANAGIRI SHIKSHANA TRU ST (2012) 19 ITR (TRIB)828 (BANGALORE) THE TRIBUNAL AFTER CONSIDERIN G THE DECISIONS INCLUDING THE DECISION IN DY. DIRECTOR OF INCOME TAX (EXEMPTIONS) V. LISSIE MEDICAL INSTITUTIONS (2010) 8 TAXMANN.COM 82 (COCHIN ITAT) AND LISSIE MEDICAL INSTITUTIONS V. CIT (2012) 348 ITR 344 (KER) HAS UP HELD THE ORDER OF THE LD. CIT(A) IN DIRECTING THE A.O. TO GRANT THE DEPRECIAT ION. 24. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BR OUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CONSISTEN T VIEW OF THE TRIBUNAL HOLD THAT THERE IS NO DOUBLE DEDUCTION AND HENCE TH E ASSESSEE IS ENTITLED TO THE DEDUCTION OF DEPRECIATION. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, ALLOWED. 25. GROUND NO. 8 IS AGAINST THE DENIAL OF CLAIM OF ADJUSTMENT OF CARRY FORWARD OF EXCESS APPLICATION OF INCOME OF THE EARL IER YEARS CLAIMED IN THE COMPUTATION OF TOTAL INCOME. 26. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE A.O . OBSERVED THAT AS PER COMPUTATION OF INCOME THE ASSESSEE HAS INCOME OF RS . 146,67,10,413/- WHICH IS CHARGEABLE TO TAX SUBJECT TO PROVISIONS OF SECTION 11(2) OF THE ACT. THE A.O. FURTHER OBSERVED THAT IN THE COMPUTA TION OF INCOME THE ASSESSEE HAS SHOWN INCOME CHARGEABLE TO TAX AT RS. 134,30,96,632/-. HE FURTHER OBSERVED THAT THE ASSESSEE HAS SET OFF O F THIS INCOME OF RS. 134,30,96,632/- WHICH HAS NOT BEEN APPLIED DURING T HE YEAR AGAINST THE EXCESS APPLICATION OF EARLIER YEARS AMOUNTING TO R S. 760,91,01,001/- ITA NO. 1434 & 1427/MUM/2010 11 AND AFTER ADJUSTMENT THE BALANCE AMOUNT OF RS. 626, 60,043,69/- HAS BEEN CARRIED FORWARD. IN SUPPORT, THE ASSESSEE HAS RELIED ON VARIOUS DECISIONS. THE ASSESSEE WAS ASKED TO FURNISH THE B ASIS AS TO HOW EXCESS APPLICATION OF EARLIER YEARS AMOUNTING TO RS. 760,9 1,01,001/- HAS BEEN WORKED OUT. THE A.O. AFTER CONSIDERING THE ASSESSEE S SUBMISSION IN PARA 8 & 9 OF THE ASSESSMENT ORDER OBSERVED THAT THE ASS ESSEE HAS NOT CLAIMED ANY EXEMPTION U/S 11 OF THE ACT, THE ASSESS EE IS NOT ENTITLED TO SET OFF OF ANY EXCESS APPLICATION OF EARLIER YEARS AMOUNTING TO RS. 760,91,01,001/- AS THE ASSESSEE HAS NOT FULFILLED C ONDITIONS TO CLAIM EXEMPTION U/S 11 AND THE RETURNS WHEREIN THE WORKIN G OF RS. 760 CRORES IS MADE ARE NON-EST AND BARRED BY LIMITATION. HE F URTHER OBSERVED THAT THE APPLICATION OVER AND ABOVE 100% OF INCOME HAS B EEN MADE FROM THE BORROWED FUNDS, WHICH DOES NOT CONSTITUTE THE INCOM E OF THAT YEAR AND ACCORDINGLY HELD THAT THE INCOME OF RS. 146,67,10,4 13/- IS TAXABLE AS THE ASSESSEE HAS NOT COMPLIED WITH PROVISIONS OF SECTIO N 11(2) OF THE ACT. THE A.O. BEFORE THE LD. CIT(A) HAS ALSO MADE THE FO LLOWING SUBMISSIONS:- IT HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER IN PA RA 8 AND 9 THAT, THE JUDGMENTS GIVEN BY THE APPELLANT ARE NOT APPLICABLE IN HIS CASE AS THE EXEMPTION U/S 11 WAS NOT CLAIMED BY ASSESSEE AND RE TURNS BARRED BY TIME LIMITATION, THEREFORE, QUESTION OF EXCESS APPL ICATION DOES NOT ARISE. MOREOVER, THE WORKING OF APPLICATION OF INCOME BY A SSESSEE IS INCORRECT AS DISCUSSED IN THE ORDER. 27. ON APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF THE A.O. ITA NO. 1434 & 1427/MUM/2010 12 28. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE LD. CIT(A) HAS ERRED IN NOT DIRECTING THE A.O. TO ALLOW THE CLAIM OF ADJUSTMENT OF CARRY FORWARD OF EXCESS APPLICATION O F INCOME OF THE EARLIER YEARS CLAIMED FOR THE COMPUTATION OF TOTAL INCOME. HE, THEREFORE, SUBMITS THAT THE CLAIM MADE BY THE ASSESSEE BE ALLO WED. 29. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE O RDER OF THE A.O. AND THE LD. CIT(A). 30. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT IT HAS BEEN HELD BY THE A.O. THAT THE EXEMPTION U/S 11 IN THE E ARLIER YEARS WAS NOT CLAIMED BY THE ASSESSEE AND THE RETURNS ARE BARRED BY LIMITATION, THEREFORE, THE QUESTION OF EXCESS APPLICATION DOES NOT ARISE. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS PLA CED ON RECORD THE COPY OF THE TRIBUNAL ORDER IN ITA NO. 2206 TO 2208/M/200 9 FOR A.Y. 2003-04 ORDER DTD. 30-9-2010 SINCE REPORTED IN (2011) 48 SO T 129 (MUM)(TRIB) (URO). ON GOING THROUGH THE SAME WE FIND THAT THE T RIBUNAL (SUPRA) HAS REMITTED THE MATTER BACK TO THE FILE OF THE A.O. WI TH A DIRECTION TO EXAMINE THE MATTER, ON MERIT, FOR ELIGIBILITY TO TA X EXEMPTION AS A RESULT OF THE REGISTRATION U/S 12AA NOW AVAILABLE TO THE A SSESSEE AND IN THE LIGHT OF THE REQUISITE AUDIT REPORT AND OTHER DOCUM ENTS NOW FILED BY THE ASSESSEE. SINCE THE ASSESSMENTS FOR THE EARLIER AS SESSMENT YEARS ARE STILL PENDING, THEREFORE, WE ARE OF THE VIEW THAT, IN THE INTEREST OF JUSTICE, ITA NO. 1434 & 1427/MUM/2010 13 THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. A ND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE REVENUE AUTHORITIES O N THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE A.O. TO DEC IDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATION HEREINABOVE AND ACCORD ING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSE. 31. GROUND NO. 9 IS AGAINST THE LEVY OF INTEREST U/ S 234D OF THE ACT. 32. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAS CONTESTED THE LEVY OF INTEREST U/S 234 D OF THE ACT. ON EXAMINATION, THE LD. CIT(A) HELD THAT THE CHARGING OF INTEREST IS MANDATORY AND, THEREFORE, HE UPHELD THE ACTION OF T HE A.O. 33. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN TEREST U/S 234D OF THE ACT IS NOT CHARGEABLE, THEREFORE, THE SAME BE DELET ED. 34. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DER OF THE A.O. AND THE LD. CIT(A). 35. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE ISSUE BEFORE US IS NO LONGER RES INTEGRA. THE HONBLE BO MBAY HIGH COURT IN ITA NO. 1434 & 1427/MUM/2010 14 CIT VS. M/S INDIAN OIL CORPORATION LTD. (2012) 210 TAXMAN 466 (BOM) VIDE PARA 27 OF THE JUDGMENT HAS HELD AS UNDER:- 27) IN VIEW OF THE ABOVE, WE HOLD THAT THE DECISIO N OF THE TRIBUNAL IN ITO .V. EKTA PROMOTERS PVT. LTD. REPORTED IN 113 ITD 71 9 WHICH HAS BEEN FOLLOWED IN THE IMPUGNED ORDER BY THE TRIBUNAL IS N OT CORRECT. ONE MORE ASPECT OF THE MATTER WHICH MUST BE BORNE IN MIND IS THAT TILL SUCH TIME AS THE ASSESSMENT PROCEEDINGS ARE COMPLETED IN RESP ECT OF ANY ASSESSMENT YEAR, THE AMENDMENT MADE TO THE ACT WOUL D BE APPLICABLE EVEN IN CASE OF PENDING PROCEEDINGS. IT IS NOT THE CASE OF THE RESPONDENT THAT THE PROCEEDING IN REGARD TO REFUND WHICH HAS B EEN GRANTED UNDER SECTION-143(1) OF THE ACT ARE CONCLUDED AND FINAL. THE REFUND WHICH HAS BEEN GRANTED UNDER SECTION 143(1) OF THE ACT IS PRO VISIONAL, TO BE FINALLY DETERMINED WHEN FINAL ASSESSMENT ORDER IS PASSED UN DER SECTION 143(3) OF THE ACT. EXPLANATION-2 TO SECTION 234D OF THE AC T MAKES IT CLEAR THAT IT WOULD BE APPLICABLE TO PENDING PROCEEDINGS I. E. WH ERE ASSESSMENTS IN RESPECT OF SUCH ASSESSMENT YEAR IS NOT COMPLETED ON 1/6/2003. 36 . RECENTLY THE SPECIAL BENCH OF THE TRIBUNAL IN KOTAK MAHINDRA CAPITAL CO. LTD. VS. ACIT (2012) 138 ITD 57 (MUM) [ SB] HAS ALSO CONSIDERED THE SIMILAR ISSUE AND HAS HELD VIDE PARA 48 OF THE ORDER AS UNDER:- 48 . AS REGARDS THE ISSUE INVOLVED IN GROUND NO.3 RELATI NG TO LEVY OF INTEREST U/S.234D, IT IS OBSERVED THAT EXPLANATION 2 HAS BEEN INSERTED IN SEC.234D BY THE FINANCE ACT, 2012 WITH RETROSPECTIV E EFFECT FROM 1.6.2003 CLARIFYING THAT THE PROVISIONS OF SEC.234D SHALL ALSO APPLY TO THE ASSESSMENT YEAR COMMENCING BEFORE THE FIRST DAY OF JUNE, 2003 IF THE PROCEEDINGS IN RESPECT OF SUCH ASSESSMENT YEAR IS C OMPLETED AFTER THE SAID DATE. IN THE PRESENT CASE THE ASSESSMENT YEAR INVOLVED IS AY 2003- 04 AND SINCE THE PROCEEDINGS IN RESPECT OF THE SAID YEAR HAS BEEN COMPLETED ON 30.11.2005, WE ARE OF THE VIEW THAT TH E ASSESSEE IS LIABLE TO PAY AN INTEREST U/S.234D AS PER EXPLANATION 2 TO SE C.234D INSERTED BY THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FRO M 1.6.2003. IN THAT VIEW OF THE MATTER WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) CONFIRMING THE INTEREST CHARGED BY THE AO U/S.234D AND DISMISS GROUND NO.3 OF THE ASSESSEE'S APPEAL. 37. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE A.O. WAS JUSTIFIED IN CHARGING THE INTEREST U/S 234D OF THE ACT AND ITA NO. 1434 & 1427/MUM/2010 15 ACCORDINGLY WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, REJECTED. ITA 1427/MUM /10 (A.Y. 2007-08) 38. AT THE TIME OF HEARING, GROUND NOS. 1 AND 2 ARE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS NOT OBJECTED TO BY THE LD. D.R. THIS BEING SO AND IN THE ABSENCE OF ANY SUPPORTING MATERIAL, THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, REJECTED BEIN G NOT PRESSED. 39. GROUND NO. 3 IS AGAINST THE DISALLOWANCE OF DEP RECIATION ON APPLICATION OF INCOME RS. 8,02,28,874/-, GROUND NO. 4 IS AGAINST THE SUSTENANCE OF ADDITION U/S 14A OF THE ACT, GROUND N O. 5 IS AGAINST THE DENIAL OF EXEMPTION U/S 10(34) OF THE ACT RS. 10,42 ,71,151/-, GROUND NO. 6 IS AGAINST THE DENIAL OF CLAIM OF ADJUSTMENT OF C ARRY FORWARD OF EXCESS APPLICATION OF INCOME OF THE EARLIER YEARS CLAIMED IN THE COMPUTATION OF TOTAL INCOME AND GROUND NO. 7 IS AGAINST THE LEVY O F INTEREST U/S 234D OF THE ACT. 40. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGREED THAT THE FACTS OF THE ABOVE GROUNDS ARE SIMILAR TO THE FACTS OF THE A SSESSEES CASE FOR A.Y. 2006-07, THEREFORE, THE PLEA TAKEN BY THEM IN THE S AID APPEAL MAY BE CONSIDERED WHILE DECIDING THE ABOVE GROUNDS. 41. AFTER HEARING THE RIVAL PARTIES AND PERUSING TH E MATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO DISPUTE THAT TH E FACTS OF THE ABOVE ITA NO. 1434 & 1427/MUM/2010 16 GROUNDS ARE SIMILAR TO THE FACTS OF THE CASE FOR A. Y. 2006-07, THEREFORE, WE DIRECT THE A.O. TO FOLLOW OUR FINDINGS RECORDED IN PARAS 22 TO 24 IN RESPECT OF GROUND NO. 3, PARA 11 IN RESPECT OF GROU ND NO. 4, PARAS 16-17 IN RESPECT OF GROUND NO. 5, PARA 30 IN RESPECT OF G ROUND NO. 6 AND PARAS 35-37 IN RESPECT OF GROUND NO. 7 OF THIS ORDER. WE HOLD AND ORDER ACCORDINGLY. 42. IN THE RESULT, THE ASSESSEES APPEALS STAND PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 21-11-2012. SD/- (N.K. BILLAIYA ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 21-11-2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- CONCERNED , MUMBAI 4. COMMISSIONER OF INCOME TAX CONCERNED, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH I, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI