M/s Trident Limited, Ludhiana V. DCIT, C-1, Ludhiana

ITA 1616/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6787 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 28-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Earning of tax free income; Capital expenditure; Rule 8D; Set aside
• Section: 14A; 80IA; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRISANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1151/CHD/2018 / ASSESSMENT YEARS : 2007-08 M/S ABHISHEK INDUSTRIES LTD., (NOW TRIDENT LIMITED),E-212, KITCHLU NAGAR, LUDHIANA VS. ! THE DCIT, CIRCLE-I, LUDHIANA ' # ./ PAN NO: AABCA4139J '$/ APPELLANT &' '$ / RESPONDENT ./ ITA NO. 1616/CHD/2017 / ASSESSMENT YEAR : 2014-15 M/S TRIDENT LIMITED, E-212, KITCHLU NAGAR, LUDHIANA VS. ! THE DCIT, CIRCLE-I, LUDHIANA ' # ./ PAN NO: AABCA4139J '$/ APPELLANT &' '$ / RESPONDENT & ./ ITA NO. 1591/CHD/2017 / ASSESSMENT YEAR : 2014-15 THE DCIT, CIRCLE-I, LUDHIANA VS. ! M/S TRIDENT LIMITED, E-212, KITCHLU NAGAR, LUDHIANA ' # ./ PAN NO: AABCA4139J '$/ APPELLANT &' '$ / RESPONDENT )*+, /ASSESSEE BY : SH. ASHWANI KUMAR, CA +, / REVENUE BY : SHRI G.S.PHANI KISHORE, CIT DR - .+* /# /DATE OF HEARING : 08.07.2019 01 +* /# / DATE OF PRONOUNCEMENT : 12.07.2019 ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 2 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS BY THE ASSESSEE FOR ASSESSMEN T YEAR 2007-08 AND CROSS APPEALS FOR ASSESSMENT YEAR 2014-15 ARISE FROM THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] DATED 16.07.2018 AND 29.9.20 17 RESPECTIVELY. 2. WE SHALL DEAL WITH EACH OF THE APPEAL AS UNDER:- ITA NO. 1151/CHD/2018 FOR A.Y. 2007-08 ASSESSEE S APPEAL : THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GRO UNDS OF APPEAL:- 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN AS MUC H AS THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, WAS NOT JUSTIFIED TO UPHOLD A DISALLOWANCE OF RS. 22,49,434/-OUT OF EXPENSES RELATING TO THE PAYMENT MADE TO PSEB FOR LAYING HIGH POWER ELECTRIC LINES AND EVEN THE DEPRECIATION ON THE AMOUNT UPHELD AS CAPIT AL EXPENDITURE HAS NOT BEEN ALLOWED. 2. THAT HE WAS FURTHER NOT JUSTIFIED TO UPHOLD THE DISALLOWANCE OF RS. 2,09,58,801/- OUT OF FINANCIAL EXPENSES ALLEGEDLY RELATED TO EXEMPT UNIT U/S 80IA OF (CO-GENERATION OF POWER UNIT) THE INCOME OF WHICH I S DEDUCTIBLE U/S 801 A@ 100%. 3. THE ISSUE RAISED VIDE GROUND NO. 1 IS AS TO WHET HER THE PAYMENT MADE BY THE ASSESSEE TO ELECTRICITY BOARD FOR LAYIN G HIGH POWER ELECTRIC LINES IS TO BE TREATED AS CAPITAL EXPENDITURE OR RE VENUE EXPENDITURE, ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 3 WHEREAS, THE ISSUE RAISED BY GROUND NO.2 IS RELATIN G TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF FINANCIAL EXPENSES HOLDING THE SAME TO HAVE BEEN RELATED TO TAX EXEMPT UNIT U/S 80IA OF T HE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. A PERUSAL OF THE IMPUGNED ORDER OF THE CIT(A) RE VEALS THAT THE SAME IS A NON-SPEAKING ORDER. SO FAR AS GROUND NO.1 IS CONCERNED, THE LD. CIT(A) HAS NOT DISCUSSED THE ISSUE IN DETAIL. HE HAS SIMPLY OBSERV ED THAT EARLIER THE ISSUE WAS RESTORED BY THIS TRIBUNAL TO THE ASSESSIN G OFFICER, HOWEVER, THE ASSESSEE COMPANY FAILED TO SATISFY THE CONDITIO N LAID DOWN BY THE TRIBUNAL. THE LD. CIT(A) HAS FURTHER OBSERVED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL DATED 3.1.2 018 PASSED IN THE OWN CASE OF THE ASSESSEE IN ITA NO. 505/CHD/2017, H OWEVER, NEITHER THE COPY OF THE ORDER OF THE TRIBUNAL VIDE WHICH TH E ISSUE IS EARLIER RESTORED TO THE FILE OF THE ASSESSING OFFICER HAS B EEN PRODUCED ON THE FILE NOR THE COUNSEL FOR THE PARTIES COULD APPRISE US AS TO WHAT ARE THE CONDITIONS LAID DOWN BY THE TRIBUNAL IN THE SAID OR DER, WHICH THE ASSESSEE COULD NOT COMPLY. EVEN NO COPY OF THE OR DER OF THE TRIBUNAL DATED 3.1.2018 (SUPRA) RELATING TO THE ASSESSMENT Y EAR 2006-07 HAS BEEN PLACED ON FILE. THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE SAID ORDER, WHICH THE ASSESSEE IN THE CASE OF M/S VARDHMAN TEXTILES LTD VS ACIT ITA NO.1430/CHD/2010 VIDE ORDER DATED 31.3.2010. HOWEV ER, THE SAID ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 4 DECISION HAS ALSO NOT BEEN DISCUSSED BY THE LD. CIT (A) IN THE IMPUGNED ORDER. EVEN NO DISCUSSION HAS BEEN MADE ABOUT THE N ATURE OF EXPENDITURE MADE BY THE ASSESSEE AND THAT WHY IT SHOULD BE TREA TED AS CAPITAL EXPENDITURE. IN OUR VIEW, THIS ISSUE REQUIRES TO BE ADJUDICATED AFRESH BY THE LD. CIT(A) BY WAY OF A SPEAKING ORDER. 5. SO FAR AS GROUND NO.2 IS CORNERED, THE LD. COUNS EL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE GROUND NO . 3 (D) OF THE GROUNDS OF APPEAL TAKEN BEFORE THE LD. CIT(A), WHEREBY, THE ASSESSEE HAD AGITATED AGAINST THE ACTION OF THE ASSESSING OFFICE R RELATING TO DISALLOWANCE OF FINANCIAL EXPENSES OF RS. 2,09,58,8 01/- HELD BY THE ASSESSING OFFICER RELATING TO TAX EXEMPT UNITS U/S 80IA OF THE ACT. THE LD. CIT(A), HOWEVER, WHILE ADJUDICATING THE ISSUE HAS RESORTED TO THE PROVISIONS OF SECTION 14A OF THE ACT, WHEREAS, THE ACTUAL ISSUE IS DIFFERENT. THIS GROUND, IN OUR VIEW, IS ALSO REQUI RED TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW ON THE ACTUAL ISSUE T AKEN BY THE ASSESSEE. IN VIEW OF THIS, WE SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE MATTER TO THE FILE OF THE CIT(A) FOR ADJUDICAT ION AFRESH ON BOTH THE GROUNDS TAKEN BY ASSESSEE BY WAY OF SPEAKING ORDER. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 5 ITA NO.1616/CHD/2017 FOR A.Y. 2014-15 (ASSESSEES A PPEAL): 6. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER U/S-36(1)(III) OF RS.3,46,19,027/ - ON ACCOUNT OF INTEREST ON INVESTMENTS. 2. THE LD. CIT(A) WAS FURTHER NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ALLOWANCE OF MAT CREDIT AFTE R ADDING SURCHARGE AND CESS TO THE TAX COMPUTED UNDER REGULAR PROVISIONS OF INCOME TAX ACT RESULTING IN AN ADDITIONAL DEMAND OF RS.2,45,51,749/-. 7. GROUND NO.1 : VIDE GROUND NO.1, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 36(1)(III) OF THE INCOME TAX ACT, 1961. THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE IN THIS CASE HA S BEEN THAT THE ASSESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS TO M EET THE INVESTMENTS IN QUESTION. HOWEVER, THE LD. DR HAS PLACED RELIANC E ON PAGE 6 OF THE IMPUGNED ORDER OF THE ASSESSING OFFICER TO SUBMIT T HAT THE ASSESSEE WAS NOT POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE I NVESTMENT IN QUESTION. THAT THE BORROWED FUNDS OF THE ASSESSEE WERE MUCH MORE THAN THE TOTAL SHARE CAPITAL OF THE ASSESSEE. ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 6 IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE HAS R ELIED UPON THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASS ESSEE RELEVANT TO ASSESSMENT YEAR 2011-12 PASSED IN ITA NO. 173/CHD/ 2016 VIDE ORDER DATED 29.11.2017 AND HAS FURTHER SUBMITTED THAT THE LD. CIT(A) WHILE MAKING THE IMPUGNED DISALLOWANCE HAS FOLLOWED HIS O WN ORDER DATED 28.12.2015 FOR ASSESSMENT YEAR; 2011-12, WHEREAS, THE SAID ORDER STANDS REVERSED BY THE TRIBUNAL VIDE ORDER DATED 29.11.201 7 (SUPRA). HE, THEREFORE, HAS SUBMITTED THAT IN VIEW OF THE ABOVE, THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) IS LIABLE TO BE DELETE D. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE TR IBUNAL IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011- 2 VIDE ORDER DATED 29.11.2017 (SUPRA) HAS DELETED THE ADDITIONS ON TH IS ISSUE OBSERVING THAT THE ASSESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE INVESTMENTS IN QUESTION. THERE IS NO DOUBT ABOUT TH E AFORESAID LEGAL POSITION. HOWEVER, NONE OF THE LOWER AUTHORITIES H AS GIVEN ANY FINDINGS AS TO WHETHER THE ASSESSEE IN THE YEAR UNDER CONSID ERATION WAS POSSESSED OF SUFFICIENT OWN /INTEREST FREE FUNDS TO MEET THE INVESTMENT IN QUESTION. IN THE ABSENCE OF ANY SUCH DOCUMENTARY EVIDENCE ON THE FILE, WE RESTORE THIS ISSUE TO THE FILE OF THE CIT(A) TO ADJ UDICATE THE SAME AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL DATED 29.11.2017 (SUPRA) AFTER GETTING THE NECESSARY DETAILS AS THE WHETHER THE ASSESSEE WAS ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 7 POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE INVES TMENTS MADE DURING THE YEAR. 9. GROUND NO.2 : AT THE OUTSET, LD. REPRESENTATIVES OF BOTH THE PARTIES HAVE SUBMITTED THAT THIS ISSUE IS COVERED B Y THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S VARDHMAN TEXTILES LTD, ITA NO. 6/CHD/2014 (A.Y. 2010-11) VIDE ORDER DATED 12.7.20 16, WHEREIN, WHILE ADDRESSING THE SAME ISSUE, THE COORDINATE CHANDIGAR H BENCH OF THE TRIBUNAL HAS MADE THE FOLLOWING OBSERVATIONS:- 8. BEFORE US LD. COUNSEL FOR THE ASSESSEE RELIED U PON ITS ARGUMENTS MADE BEFORE THE LD. CIT(A) AND FURTHER STATED THAT THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF A NUMB ER OF JUDGMENTS OF THE HONBLE TRIBUNAL. LD. COUNSEL FOR THE ASSESSEE RELI ED UPON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTION. 1. DCIT VS. VACMENT INDIA LTD. ITA NO. 93/2014 A.Y . 2011-12 DATED 22.05.2014 2. WYETH LTD. VS. ACIT (MUM) ITA NO. 6682/11 DT. 0 9/01/2015 FOR ASSESSMENT YEAR 2007-08. 3. DCIT VS. GODREJ OIL PALM LTD. (MUM) IN ITA NO. 5 098/13 DT. 14/01/2015 FOR ASSESSMENT YEAR 2011-12. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT TH E FINDING OF THE AGRA BENCH OF THE HONBLE ITAT IN THE CASE OF DCIT VS. V ACMENT INDIA LTD. (SUPRA) HAS BEEN UPHELD BY THE HONBLE ALLAHABAD HI GH COURT IN ITS ORDER DT. 29/10/2014 REPORTED AT 369 ITR 304. LD. COUNSEL THEREFORE CONTENDED THAT THE SET OFF, OF MAT CREDIT SHOULD HAVE BEEN AL LOWED TO IT BEFORE THE LEVY OF SURCHARGE AND CESS ON THE TAX DETERMINED AS PAYA BLE UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT 1961, AND THEREFOR E THE RECTIFICATION ORDER PASSED BY THE AO UNDER SECTION 154 WAS ERRONEOUS AN D BAD IN LAW. 9. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F THE LD. CIT(A) AND FURTHER ON THE DECISION OF THE HONBLE ITAT DEL HI BENCH IN THE CASE OF M/S RICHA GLOBAL EXPORTS PVT. LTD. (SUPRA). ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 8 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE DOCUMENTS PLACED BEF ORE US. 11. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER ADJUSTMENT ON ACCOUNT OF MAT CREDIT IS TO BE MADE AGAINST THE TAX DETERMINED UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT, BEFORE LEV YING SURCHARGE AND CESS OR OTHERWISE. THIS ISSUE WE FIND HAS BEEN DECIDED I N FAVOUR OF THE ASSESSEE BY THE ALLAHABAD HIGH COURT IN THE CASE OF DCIT VS. VACMENT INDIA LTD. (SUPRA) 369 ITR 304 WHEREIN THE HONBLE HIGH COURT HELD AT PARA 5 - 7 OF ITS ORDER AS UNDER: 5. THE ONLY QUESTION WHICH IS RAISED PERTAINS TO TH E COMPUTATION OF TAX IN ACCORDANCE WITH THE MODALITIES WHICH ARE PRESCRIBED IN THE RELEVANT FORM, ITR-6. INSOFAR AS IS MATERIAL, THE R ELEVANT ENTRIES IN THE FORM (PART B-TTI) ARE AS FOLLOWS: 3 GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4 CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIE R YEARS (IF 2C IS MORE THAN 1) (7 OF SCHEDULE MATC) 5 TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA[(3- 4)] 6 SURCHARGE ON 5 7 EDUCATION CESS, INCLUDING SECONDARY AND HIGHER ED UCATION CESS ON (5+6) 8 GROSS TAX LIABILITY (5+6+7) 6. THE AFORESAID ENTRIES LEAVE NO MANNER OF AMBIGUI TY IN REGARD TO THE METHOD OF COMPUTATION OF TAX LIABILITY. ENTR Y 3 REQUIRES COMPUTATION OF THE GROSS TAX PAYABLE. UNDER ENTRY 4 , CREDIT IS REQUIRED TO BE GIVEN UNDER SECTION 115JAA OF THE AC T OF THE TAX PAID IN EARLIER YEARS. ENTRY 5 REQUIRES A COMPUTATION OF THE TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA OF THE ACT. THE M ATTER IS PLACED BEYOND DOUBT BY THE PARENTHESIS, WHICH INDICATES TH AT TAX PAYABLE UNDER ENTRY 5 IS TO BE ARRIVED AT BY DEDUCTING THE CREDIT UNDER SECTION 115JAA OF THE ACT (UNDER ENTRY 3) FROM THE GROSS TAX PAYABLE (UNDER ENTRY 4). THE SURCHARGE IS COMPUTED ON THE A MOUNT REFLECTED IN ENTRY 5. 7. THE TRIBUNAL HAS NOTED THAT FROM THE NEXT ASSESS MENT YEAR, ASSESSMENT YEAR 2012-13, THE POSITION WAS MATERIAL LY ALTERED, BUT IN THE PRESENT CASE, SINCE THE DISPUTE RELATED TO ASSE SSMENT YEAR 2011- 12, THE METHOD OF COMPUTATION, AS DIRECTED BY THE C OMMISSIONER ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 9 (APPEALS), WAS PLAINLY IN ACCORDANE WITH THE METHOD OLOGY AS PROVIDED IN ITR-6. THE TRIBUNAL IN CONFIRMING THE O RDER OF THE COMMISSIONER (APPEALS) HAS, HENCE, NOT COMMITTED AN Y ERROR. THE APPEAL WILL NOT GIVE RISE TO ANY SUBSTANTIAL QUESTI ON OF LAW AND IS, ACCORDINGLY, DISMISSED. IT IS CLEAR FROM THE ABOVE THAT THE HONBLE HIGH CO URT, AFTER TAKING INTO CONSIDERATION THE RELEVANT ENTRIES IN ITR-6, HELD T HAT MAT CREDIT IS TO BE ADJUSTED FROM THE GROSS TAX PAYABLE AND THEREAFTER ON THE BALANCE, SURCHARGE IS TO BE COMPUTED. THE MUMBAI BENCH OF TH E HONBLE ITAT FOLLOWED THE ABOVE PROPOSITION OF THE ALLAHABAD HIG H COURT IN THE CASE OF WYETH LTD. VS. ACIT(MUM) IN ITA 6682/11 DT. 09/01/2 015, AND IN THE CASE OF DCIT VS. GODREJ OIL PALM LTD. (MUM) IN ITA NO. 5 098/13 FOR ASSESSMENT YEAR 2011-12. IN THE CASE OF WYETH LTD. (SUPRA) THE HONBLE BENCH CLARIFIED THAT MAT AS WELL AS NORMAL TAX BEFO RE ALLOWING MAT CREDIT, HAS TO BE TAKEN ON PARITY. MEANING THEREBY THAT IF MAT CREDIT DOES NOT INCLUDE THE SURCHARGE AND CESS THEN THE NORMAL TAX LIABILITY SHOULD ALSO NOT INCLUDE THE SAME BEFORE SETTING OFF MAT CREDIT AND VICE VERSA. THE RELEVANT FINDINGS OF THE HONBLE BENCH AT PARA 5 ARE REPRODU CED HEREUNDER: 5. THUS IT IS CLEAR THAT THE HONBLE HIGH COURT HAS TAKEN INTO ACCOUNT THE ORDER OF ENTRIES IN THE FORM ITR-6 FOR THE A.Y. 2011-12 IN THE SAID CASE AND HELD THAT AS PER FORM ITR-6, THE MAT CREDIT HAS TO BE GIVEN AGAINST THE GROSS TAX PAYABLE EXCLUSIVE OF SURCHARGE/CESS AND ONLY AFTER THE MAT CREDIT TAX LIABILITY, THE SU RCHARGE AND CESS HAS TO BE CALCULATED FOR THE PURPOSE OF WORKING OUT THE GRAND TAX LIABILITY. WE ALSO FIND MERIT AND SUBSTANCE IN THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT IF THE MAT CREDIT I S TAKEN INTO ACCOUNT WITHOUT INCLUDING THE SURCHARGE AND EDUCATI ON CESS THEN THE SURCHARGE AND EDUCATION CESS ON THE TAX LIABILITY H AS TO BE CALCULATED ONLY AFTER ALLOWING THE MAT CREDIT. ALTERNATIVELY, THE AMOUNT OF MAT CREDIT SHOULD ALSO INCLUDE SURCHARGE AND EDUCAT ION CESS FOR THE PURPOSE OF ALLOWING THE CREDIT AGAINST THE TAX LIAB ILITY INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THEREFORE, THE MAT AS WELL AS NORMAL TAX BEFORE ALLOWING THE MAT CREDIT HAS TO BE TAKEN ON PARITY EITHER EXCLUSION OF SURCHARGE AND EDUCATION CESS OR INCLUS IVE OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND ED UCATION CESS. ACCORDINGLY WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE MAT CREDIT AGAIN ST THE TAX LIABILITY PAYABLE BEFORE SURCHARGE AND EDUCATION CESS OR ALTE RNATIVELY THE AMOUNT OF MAT CREDIT SHOULD ALSO BE INCLUSIVE OF SU RCHARGE AND EDUCATION CESS AND THEN ALLOW THE CREDIT AGAINST TH E TAX PAYABLE INCLUSIVE OF SURCHARGE AND EDUCATION CESS. ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 10 IN THE IMPUGNED CASE, THE ASSESSEE HAD STATED THAT THE MAT CREDIT DOES NOT INCLUDE SURCHARGE AND CESS, WHICH FACT WE FIND, HAS NOT BEEN CONTROVERTED BY THE REVENUE. THEREFORE, FOLLOWING THE PROPOSITIO N LAID DOWN BY THE CO- ORDINATE BENCH IN THE ABOVE NOTED CASES, ALSO THE D ECISION OF THE HONBLE ALLAHABAD HIGH COURT WE HOLD THAT THE ADJUSTMENT OF MAT CREDIT UNDER SECTION 115JAA IS TO BE MADE FROM THE TAX DETERMINE D AS PAYABLE BEFORE INCLUDING SURCHARGE AND CESS THEREON. THE RELIANCE PLACED BY THE LD. DR ON THE DECISION O F THE DELHI BENCH OF THE ITAT IN THE CASE OF M/S RICHA GLOBAL EXPORTS PVT. L TD. (SUPRA) WE FIND IS MISPLACED AS THE ISSUE BEFORE THE BENCH IN THAT CAS E WAS TOTALLY DIFFERENT. THE ISSUE IN THAT CASE WAS WHETHER THE AMOUNT OF MA T CREDIT UNDER SECTION 115JA WOULD INCLUDE SURCHARGE AND CESS ON THE TAX P AYABLE ON THE BOOK PROFIT OF THE ASSESSEE. THE ISSUE IN THAT CASE DID NOT RELATE TO THE POINT AT WHICH MAT CREDIT WAS TO BE ADJUSTED AGAINST THE TAX PAYABLE BY THE ASSESSEE, THEREFORE THE DECISION RENDERED IN THE CA SE OF M/S RICHA GLOBAL EXPORTS PVT. LTD. (SUPRA) WOULD NOT APPLY IN THE PR ESENT CASE. WE MAY ADD THAT THE ISSUE BEFORE US PERTAINS TO REC TIFICATION BEING MADE UNDER SECTION 154 AND IT IS TRITE LAW THAT ONLY ERR ORS WHICH ARE APPARENT FROM THE RECORD CAN BE RECTIFIED UNDER THESE PROCEE DINGS. EVEN IF FOR A MOMENT, THE DECISION IN THE CASE OF M/S RICHA GLOBA L EXPORTS PVT. LTD. (SUPRA)MAY BE CONSIDERED TO BE APPLICABLE TO THE AS SESSES CASE, THOUGH WE HAVE HELD IT OTHERWISE IT IS EVIDENT THAT THERE ARE CONFLICTING VIEWS ON THE ISSUE AT HAND, IN VIEW OF THE JUDGMENTS CITED BY TH E ASSESSEE IN ITS FAVOUR ALSO. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE ISSUE IN THE PRESENT CASE IS OF AN APPARENT ERROR WHICH CAN TO BE RECTIF IED UNDER SECTION 154 AND IN VIEW OF THE SAME ALSO WE HOLD THAT PROCEEDINGS U NDER SECTION 154 ARE NOT LEGALLY VALID. IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE MAT CREDI T AGAINST THE TAX LIABILITY PAYABLE BEFORE SURCHARGE AND EDUCATION CESS. 10. NO CONTRARY DECISION HAS BEEN CITED BEFORE US. RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL, AS WELL FOR THE SAKE OF CONSISTENCY, WE DIRECT THE ASS ESSING OFFICER TO ALLOW THE MAT CREDIT AGAINST THE TAX LIABILITY PAYA BLE BEFORE SURCHARGE AND EDUCATION CESS. ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 11 THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS TREAT ED AS PARTLY ALLOWED. ITA NOS.1591/CHD/2017 (A.Y.2014-15 ) REVENUES AP PEAL:- 11. THE REVENUE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW IN DELETING TH E ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962? 2. THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 12. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL S THAT THE REVENUE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) IN DEL ETING THE ADDITIONS MADE BY THE ASSESSING OFFICER U/S 14A OF THE I.T. ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 12. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DID NOT EARN ANY TAX EXEMPT INCOME DURING THE YEAR. WE FIND THAT THE ISSUE IS NOW SQUARELY COVERED BY THE VARIO US DECISIONS OF THE HON'BLE HIGH COURTS WHO HAVE BEEN UNANIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTRACTED U/S 14A IN CASE THE ASSES SEE HAS NOT EARNED ANY INCOME NOT FORMING PART OF THE TOTAL INCOME. RELIA NCE IN THIS RESPECT ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 12 CAN BE PLACED ON VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS INCLUDING THAT OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P&H) AND IN THE CASE OF CIT FARIDABAD V. LAKHANI M ARKETING INC 226 TAXMANN 45 (P&H); HON'BLE DELHI HIGH COURT IN THE C ASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTE CH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 AND FURTHER OF THE HON'BL E ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S SHIVAM MOTORS (P ) LTD (2014) 272 CTR (ALL) 277. 13 SINCE THE ASSESSEE DID NOT EARN ANY TAX EXEMPT I NCOME, HENCE, NO DISALLOWANCE U/S 14A IS ATTRACTED. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE RE VENUES APPEAL, THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.07.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 12.07.2019 .. 3+&*4565* / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. - 7* / CIT 4. - 7* ( )/ THE CIT(A) 5. 58 &*9 , / 9 , :;<= / DR, ITAT, CHANDIGARH 6. <> . / GUARD FILE ITA NOS. 1151-C-18 & 1591 & 1616-C-17 M/S ABHISHEK INUSTRIES LTD.,(NOW TRIDENT) LUDHIANA 13 3 - / BY ORDER, ? / ASSISTANT REGISTRAR