Gujarat Power Corporation Limited- GPCL, Ahmedabad V. DCIT, Gandhinagar Circle, Gandhinagar

ITA 2004/AHD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7674 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-02-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 2004/AHD/2017 (ASSESSMENT YEAR: 2013-14) GUJARAT POWER CORPORATION LIMITED GPCL PANKAJ R. SHAH & ASSOCIATES, CHARTERED ACCOUNTANTS 7 TH FLOOR, REGENCY PLAZA, OPP. RAHUL TOWER, NEAR MADHUR HALL, ANAND NAGAR CROSS ROAD, SATELLITE, AHMEDABAD-380015 VS. DCIT GANDHINAGAR CIRCLE, GANDHINAGAR PAN NO. AAA CG5 596 J ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S. N. SOPARKAR WITH SMT. URVASHI SODHAN, SHRI PARIN SHAH AR RESPONDENT BY : SHRI DILIP KUMAR, SR. D.R. DATE OF HEARING 01 . 07 .20 20 DATE OF PRONOUNCEMENT 31.08.2020 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 16.06.2017 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) GANDHINAGAR, AHMEDABAD ARISING OUT OF THE ORDER DAT ED 29.02.2016 PASSED BY THE DCIT, GANDHINAGAR CIRCLE, GANDHINAGAR UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO T HE ACT) FOR ASSESSMENT YEAR 2013-14. ITA NO.2004/AHD/2017 GUJARAT POWER CORPORATION LTD. VS. DCIT ASST.YEAR 2013-14 - 2 - 2. THE SOLE GROUND AS AGITATED BY THE ASSESSEE IS A GAINST THE DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.R. 8D TO THE TUNE OF RS. 51,61,079/- IN CALCULATING INCOME UNDER THE NORMAL PROVISION OF THE ACT; WHILE CONFIRMING THE ORDER PASSED BY THE LD. AO THE LD. CIT(A) FOLLOWED THE ORDER PASSED IN ASSESSEES OWN CASE FOR A.Y. 20 12-13. 3. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL THE LD. SENIOR COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE SIMILAR DISALLOWANCE MADE BY THE LD. CIT(A) ON THE SAME SET OF FACTS IN ASSESSEES OWN CASE FOR A.Y. 2012-13 HAS BEEN QUASHED BY THE H ONBLE ITAT IN ITA NO. 1928/AHD/2016 FOR A.Y. 2012-13; A COPY WHEREOF HAS ALSO BEEN SUBMITTED BEFORE US. HE, THEREFORE, PRAYS FOR SIMI LAR RELIEF. THE LEARNED DR HOWEVER HAS BEEN FAILED TO CONTROVE RT SUCH SUBMISSION MADE BY THE LD. AR. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, WE HAVE AL SO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. UPON PERUS AL OF THE PROFIT AND LOSS OF THE ACCOUNT, THE STATEMENT OF INCOME FOR THE YEA R UNDER CONSIDERATION IT WAS FOUND THAT THE ASSESSEE HAS EARNED DIVIDEND INC OME TO THE TUNE OF RS. 1,26,93,728/- WHICH WAS CLAIMED TO BE EXEMPT UNDER SECTION 10(34) OF THE ACT. FURTHER THAT THE ASSESSEE HAS DISALLOWED SUO MOTO OF RS. 1,00,000/- AS EXPENSES RELATING TO EARNING OF SUCH EXEMPT INCOME. IT IS THE CASE OF THE ASSESSEE THAT THE INVESTMENT ON WHICH EXEMPT INCOME EARNED WERE NOT FROM THE INTEREST BEARING FUNDS AS THERE WAS NO BORROWIN GS MADE BY THE COMPANY WHICH IS ALSO EVIDENT FROM THE RECORDS BEFORE US. IT ALSO APPEARS AT PAGE 15 OF THE LD. CIT(A)S ORDER THAT WHILE CONFIRMING THE DISALLOWANCE UNDER ITA NO.2004/AHD/2017 GUJARAT POWER CORPORATION LTD. VS. DCIT ASST.YEAR 2013-14 - 3 - SECTION 14A R.W.R. 8D BY THE LD. AO; THE LD. CIT(A) FOLLOWED SIMILAR DISALLOWANCE MADE IN THE CASE OF THE ASSESSEE FOR A .Y. 2012-13. HOWEVER, IT FURTHER APPEARS THAT THE CO-ORDINATE BENCH IN AS SESSEES APPEAL IN ITA NO. 1928/AHD/2016 FOR A.Y. 2012-13 HAS BEEN PLEASED TO DELETE THE ADDITION ON THE BASIS OF THE RATIO LAID DOWN IN THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF PCIT VS. SHRENO LTD. REPORTED IN [2019] 102 TAXMAN.COM 129 (GUJ). THE R ELEVANT PORTION WHEREOF IS AS FOLLOWS:- 29. GROUND NO.1 THIS GROUND RELATES TO DISALLOWANCE 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.1,71,72,097/- DURING THE YEAR UNDER CONSIDERATION WHICH WAS CLAIMED TO BE EX EMPT U/S 10(34) OF THE ACT IN THE STATEMENT OF TOTAL INCOME. FURTHER THAT, THE ASSESS EE HAS DISALLOWED SUO MOTO SUM OF RS.1,00,000/- AS EXPENSES RELATING TO THE EARNING O F SUCH EXEMPT INCOME. THE ASSESSEES CASE IS THAT INVESTMENT ON WHICH EXEMPT INCOME HAS BEEN EARNED WERE NOT MADE FROM INTEREST BEARING FUNDS AS THERE ARE NO BO RROWINGS MADE BY THE COMPANY WHICH IS EVIDENT FROM THE BALANCE SHEET. ULTIMATELY , APPLYING SECTION 14A R.W.R 8D THE TOTAL DISALLOWANCE HAS BEEN WORKED OUT TO RS.51 ,61,079/- BY THE LEARNED AO, ADDITION WHEREOF WAS IN TURN CONFIRMED BY THE LEARN ED CIT(A). HENCE, THE INSTANT APPEAL. 31. WE FIND THAT THIS PARTICULAR ISSUE AS ALREADY B EEN DEALT WITH BY US IN ITA NO.1172/AHD/2016 FOR A.Y. 2011-12 IN REVENUES APPE AL WHEREBY AND WHEREUNDER SUCH DISALLOWANCE MADE BY THE AUTHORITIES HAS BEEN DELETED BY US RELYING UPON THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF PCIT-VS-SHRENO LTD. REPORTED IN [2019] 102 TAXMAN.COM 129 (GUJ). H ENCE, IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAME SHALL APPLY MUTATIS MUTANDIS. HENCE, THE GROUND OF APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED. 5. WE FIND NO REASON TO DEVIATE FROM THE OBSERVATIO N AND/OR DECISION MADE BY THE CO-ORDINATE BENCH IN THE MATTER AS MENT IONED HEREINABOVE IN THE SIMILAR SET OF FACTS. THE ASSESSEES CASE IS S QUARELY COVERED FACTUALLY AND LEGALLY. THE ASSESSEE IS ENTITLED TO THE RELIE F AS CLAIMED FOR. THUS, TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER RELYING UPON THE ITA NO.2004/AHD/2017 GUJARAT POWER CORPORATION LTD. VS. DCIT ASST.YEAR 2013-14 - 4 - ORDER PASSED IN ITA NOS. 1172, 1361 & 1928/AHD/2016 GUJARAT POWER CORPORATION LTD. VS. JCIT FOR A.Y. 2011-12, 2011-12 & 2012-13 WE ALLOW THE APPEAL BY DELETING DISALLOWANCE. HENCE, ASSESS EES APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/08/2020 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/08/2020 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 01.07.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.07.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 31.08.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31.08.20 20 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31 .08.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.08.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER