Gujarat Power Corporation Limited-GPCL, Ahmedabad V. The Dy.Commissioner of Income Tax, Gandhinagar , Gandhinagar

ITA 162/AHD/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5279 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 06-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Initiation of penalty proceedings; Rule 8D
• Section: 10; 143(3); 244A; 14A; 115JB; 201; 22; 92CA; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER GUJARAT POWER CORPORATION LTD. PAN: AAACG5596J (APPELLANT) VS THE DCIT, GANDHINAGAR CIRCLE, GANDHINAGAR (RESPONDENT) REVENUE BY: SHRI R.R. MAKWANA, SR. D.R. ASSESSEE BY: SHRI S.N. SOPARKAR, A. R. DATE OF HEARING : 19-04-2021 DATE OF PRONOUNCEMENT : 04-05-2 021 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2015-16, ARISES FRO M ORDER OF THE CIT(A), GANDHINAGAR, AHMEDABAD DATED 01-01-2019, IN PROCEEDINGS UNDER SECTION 143(3) RWS 92CA OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. 2. THE ASSESSEE IS A GOVT. COMPANY PROMOTED BY THE GOVERNMENT OF GUJARAT. ASSESSMENT U/S. 143(3) OF THE ACT FOR THE YEAR UNDER CONSIDERATION WAS FINALIZED ON 22 ND DECEMBER, 2017 AND TOTAL LOSS OF THE ASSESSEE COMPANY WAS DETERMINED AT RS.24,96,06,671/- AND BOO K PROFIT U/S. 115JB OF ITA NO. 162/AHD/2019 ASSESSMENT YEAR 2015-16 I.T.A NO. 162/AHD/2019 A.Y. 2015-16 PAGE NO GUJARAT POWER CORPORATION LTD. VS. DCIT 2 THE ACT WAS ASSESSED AT RS. 10,82,26,7518/-. THE R EMAINING FACTS PERTAINING TO THE ISSUES CONTESTED IN THE GROUNDS OF APPEAL AR E DISCUSSED WHILE ADJUDICATING THESE GROUNDS OF APPEAL FOLLOWS AS UND ER:- GROUND NO. 1 (DISALLOWANCE U/S. 14A OF RS. 57,07,0 20/-) 3. DURING THE COURSE OF ASSESSMENT, THE ASSESSING O FFICER NOTICED THAT ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS. 1,24,4 5,228/- AND IT HAS DISALLOWED AN AMOUNT OF RS. 1 LACS AS EXPENDITURE I NCURRED FOR EARNING SUCH EXEMPT INCOME. THE ASSESSING OFFICER HAS REJECTED ASSESSEES SUO MOTO DISALLOWANCE OF RS. 1 LACS AFTER TAKING A GENERAL V IEW FROM EARLIER YEARS COMPUTED DISALLOWANCE RS. 63,52,960/- UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. RULE, 1962. AFTER REDUCING THE DISA LLOWANCE OF RS. 1 LACS SUO MOTO MADE BY THE ASSESSEE, THE ASSESSING OFFICER HA S MADE ADDITION OF RS. 62,52,960/- U/S. 14A TO THE TOTAL INCOME OF THE ASS ESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT IT HAS M ADE ALL THE INVESTMENT IN THE EARLIER YEARS OUT OF SURPLUS FUND OF THE COMPAN Y AND IT HAS NOT MADE ANY NEW INVESTMENT DURING THE YEAR ON WHICH EXEMPT INCO ME WAS RECEIVED. THE ASSESSEE HAS ALSO SUBMITTED THAT IT HAS NOT INCURRE D ANY INTEREST EXPENSES WHICH WERE RELATED TO INVESTMENT THAT YIELD TAX FRE E INCOME. HOWEVER, THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 58,07,020/- ON THE BASIS OF FOLLOWING THE DECISION OF HIS PREDE CESSOR FOR A.Y. 2014-15 AFTER TAKING CORRECT AVERAGE VALUE OF INVESTMENT. IT WAS ALSO SUBMITTED THAT THERE WAS NO EXPENSES INCURRED FOR ADMINISTRATION, CONVEYANCE, SALARY ETC. I.T.A NO. 162/AHD/2019 A.Y. 2015-16 PAGE NO GUJARAT POWER CORPORATION LTD. VS. DCIT 3 THE LD. CIT(A) HAS NOT ACCEPTED THE SUBMISSION OF T HE ASSESSEE AFTER CONSIDERING THE DECISION OF HIS PREDECESSOR IN EARL IER ASSESSMENT YEARS. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE LD. COUNSEL AT THE OUTSET HAS SUBMITTED THAT IDENTICAL ISSUE ON SIMILAR FACTS HAS BEEN ADJUDICATED BY THE CO-ORDINATE BENCH OF THE ITAT AH MEDABAD IN THE CASE OF ASSESSEE ITSELF IN ITS FAVOUR VIDE ITA NO. 232/A HD/2017 A.Y. 2014-15 DATED 20 TH SEP, 2019. THE LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH NOT TO CONTROVERT THIS UNDISPUTED FACT THAT THE ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE. WITH THE ASSISTANCE OF LD. REPRESENT ATIVES, WE HAVE GONE THROUGH THE DECISION OF ITAT IN THE CASE OF ASSESSE E ITSELF ON THE ISSUE OF DISALLOWANCE MADE U/S. 14A ADJUDICATED VIDE ITA NO. 2332/AHD/2017 AS CITED ABOVE. THE RELEVANT PART OF THE DECISION AS CITED ABOVE OF THE CO- ORDINATE BENCH IS PRODUCED AS UNDER:- 6. WE FURTHER FIND THAT THIS PARTICULAR ISSUE HAS ALSO BEEN DEALT WITH IN ITA NO. 1928/AHD/2016 FOR A.Y. 2012-13. THE RELEVANT PORTION WHEREOF IS A S FOLLOWS:- '29. GROUND NO. 1THIS GROUND RELATES TO DISALLOWANC E U/S 14A R.W.R. 8D TO THE TUNE OF RS. 51,61,079/- UNDER NORMAL PROVISION. 30. UPON VERIFICATION OF THE PROFIT AND LOSS ACCOUN T FOR A.Y. 2011-12, IT WAS FOUND THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.L,71, 72,097/- DURING THE YEAR UNDER CONSIDERATION WHICH WAS CLAIMED TO BE EXEMPT U/S 10 (34) OF THE ACT IN THE STATEMENT OF TOTAL INCOME. FURTHER THAT, THE ASSESSEE HAS DISALL OWED SUO MOTO SUM OF KS.L,00,00()/- AS EXPENSES RELATING TO THE EARNING OF SUCH EXEMPT INC OME. THE ASSESSEE 'S CASE IS THAT INVESTMENT ON WHICH EXEMPT INCOME HAS BEEN EARNED W ERE NOT MADE FROM INTEREST BEARING FUNDS AS THERE ARE NO BORROWINGS MADE BY TH E COMPANY WHICH IS EVIDENT FROM THE BALANCE SHEET. ULTIMATELY, APPLYING SECTION I4A R.W .R 8D THE IOTA! DISALLOWANCE HAS BEEN WORKED OUT TO RS.5!,6L,079/- BY THE LEARNED AO, ADD ITION WHEREOF WAS IN TURN CONFIRMED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL. 31. WE FIND THAT THIS PARTICULAR ISSUE AS ALREADY B EEN DEALT WITH BY IN IN ITA NO. 1172/AHD/20I6 FOR A.Y. 2011-12 IN REVENUE'S APPEAL WHEREBY AND WHEREUNDER SUCH DISALLOWANCE MADE BY THE AUTHORITIES HAS BEEN DELET ED BY US RELYING UPON THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE MATT ER OF PCIT-VS-SHRENO LTD. REPORTED IN {20191 102 TAXMAN.COM 129 (GUJ). HENCE, IN THE ABSE NCE OF ANY CHANGED CIRCUMSTANCES THE SAME SHALL APPLY MUTATIS MUTANDIS. HENCE, THE G ROUND OF APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED.' SINCE THE IDENTICAL ISSUE HAS ALREADY BEEN CONSIDER ED BY THE CO-ORDINATE BENCH IN FAVOUR OF THE ASSESSEE WE FOUND NO REASON TO OBSERVE OTHERWISE AN D HENCE IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES RESPECTFULLY RELYING UPON THE SAME WE DELETE THE ADDITION MADE BY THE AUTHORITIES BELOW. I.T.A NO. 162/AHD/2019 A.Y. 2015-16 PAGE NO GUJARAT POWER CORPORATION LTD. VS. DCIT 4 FOLLOWING THE DECISION OF CO-ORDINATE BEN CH AS ELABORATED ABOVE ON SIMILAR ISSUE ON IDENTICAL FACTS, THIS GROUND OF AP PEAL OF THE ASSESSEE IS ALLOWED. GROUND NO.2 (ADDITION ON ACCOUNT OF INTEREST U/S. 2 44A TO THE AMOUNT OF RS. 30,00,964/-) 6. DURING THE COURSE OF ASSESSMENT, THE ASSES SING OFFICER POINTED OUT THAT ASSESSEE HAS NOT FILED SPECIFIC CLARIFICATION WITH REGARD TO THE RECEIPT OF INTEREST U/S. 244A AS SHOWN IN THE ITS DETAILS. TH E ASSESSING OFFICER FURTHER STATED THAT ON VERIFICATION OF PROFIT AND LOSS ACCO UNT IT WAS NOTICED THAT ASSESSEE HAD NOT OFFERED THE INTEREST AMOUNT RECEIV ED U/S. 244A FOR ASSESSMENT YEAR 2010-11 AND FOR ASSESSMENT YEAR 201 2-13 OF RS. 27,64,620/- AND RS. 2,36,344/- RESPECTIVELY TOTALING TO RS. 30, 00,964/-. THEREFORE, THE ASSESSING OFFICER HAS ADDED THE SAME TO THE TOTAL I NCOME OF THE ASSESSEE. 7. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) HAS REJECTED THE APPEAL OF THE ASSESSEE. 8. DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE LD. COUNSEL HAS SUBMITTED THAT ASSESSEE HAS NEITHER RECEIVED ANY RE FUND FOR ASSESSMENT YEAR 2010-11 AND 2012-13 NOR RECEIVED ANY INTIMATION REG ARDING IT THEREFORE ADDITION ON ACCOUNT OF INTEREST U/S. 244A WAS WRONG LY MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. DEPA RTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDER OF LOWER AUTHORITY. I.T.A NO. 162/AHD/2019 A.Y. 2015-16 PAGE NO GUJARAT POWER CORPORATION LTD. VS. DCIT 5 9. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF I NTEREST RECEIVED U/S. 244A OF THE ACT FOR THE ASSESSMENT YEAR 2010-11 AND 2012-13 ON THE BASIS OF DETAIL SHOWN IN ITS. THE CLAIM OF THE ASSESSEE THAT IT HAD NOT RECEIVED INTEREST, WAS NOT VERIFIED AT THE LEVEL OF LOWER AU THORITIES. THEREFORE, WE ARE OF THE VIEW THAT THAT IT WILL BE APPROPRIATE TO RESTORE THIS CASE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER VERI FICATION AND EXAMINATION OF THE CLAIM OF THE ASSESSEE THAT IT HAS NEITHER RE CEIVED ANY REFUND FOR ASSESSMENT YEAR 2009-10 AND 2012-13 NOR RECEIVED AN Y INTIMATION REGARDING THE SAME. THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 (INITIATION OF PENALTY PROCEEDINGS U/S . 271(C)) 10. THIS GROUND OF APPEAL IS PREMATURE AT THIS ST AGE, THEREFORE, THE SAME STANDS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 04-05-2021 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 04/05/2021 I.T.A NO. 162/AHD/2019 A.Y. 2015-16 PAGE NO GUJARAT POWER CORPORATION LTD. VS. DCIT 6 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,