The DCIT(OSD-1)Circle-4, Ahmedabad V. Kiri Dyes Inds.Ltd., Ahmedabad

ITA 2028/AHD/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7734 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-09-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWNI
• Assessee Lawyers: T P HEMANI
• Keywords: Tax effect; Rule 8D
• Section: 14A; 10B

Judgement Text

ITA NO. 2028/AHD/2012 DCIT (OSD)-1 VS. KIRI DYES INS. LTD. ASSESSMENT YEAR : 2008-09 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH D, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO. 2028/AHD/2012 ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME-TAX (OSD)-1 CIRCLE 4, AHMEDABAD .....APPELLANT VS KIRI DYES INDUSTRIES LTD. ..........RESPO NDENT (FORMERLY KNOWN AS KIRI DYES & CHEMICALS LTD., 53, MANEKBAUG SOCIETY, AMBAWADI, AHMEDABAD 380 015 [PAN : AAACK 9025 C] APPEARANCES BY VINOD TANWNI FOR THE REVENUE TP HEMANI, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 26, 2019 DATE OF PRONOUNCEMENT : OCTOBER 14, 2019 O R D E R PER PRAMOD KUMAR, VP : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 29 TH JUNE 2012, PASSED BY THE LEARNED CIT(A)-VIII, AHME DABAD FOR THE ASSESSMENT YEAR 2008-09. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER ARE A S FOLLOWS: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE MADE U/S. 14A READ WITH RULE 8D OF THE ACT OF RS. 11,30,218/- WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HA S SHOWN DIVIDEND INCOME ON MUTUAL FUND OF RS.1,50,559/- WHICH HAS BEEN CLAI MED AS EXEMPT. DURING THE YEAR THERE WAS INVESTMENT OF RS. 4.10 CRORES IN UNITS OF VARIOUS MUTUAL FUNDS. SINCE THE ASSESSEE HAS INCURRED SUBSTANTIAL INTEREST COST ON BORROWED FUNDS AND FAILED TO ESTABLISH ANY NEXUS WITH THE IN VESTMENT IN SHARES WAS MADE OUT OF INTEREST FREE FUND. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS GR ANTED RELIEF ON ACCOUNT OF DEDUCTION U/S. 10B OF THE ACT TO THE TUNE OF RS.20,01,590/- WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAD NOT MA INTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT OF ECU AND NON EOU BUSINESS TO D ETERMINE PROPER PROFIT DERIVED BY THE EOU UNDERTAKING. IT WAS FURTHER OBS ERVED BY THE AO THAT THE ASSESSEE HAS NOT EXCLUDED DUTY DRAWBACK INCOME AMOU NTING TO RS . 97,35,571/ - . IN VIEW OF THE ABOVE, THE AO EXCLUDED THE SAME FROM ELIGIBLE PROFIT OF EOU, ITA NO. 2028/AHD/2012 DCIT (OSD)-1 VS. KIRI DYES INS. LTD. ASSESSMENT YEAR : 2008-09 PAGE 2 OF 3 REDUCED EXPENSES OF SURVIN LAB OF RS.1,13,24,211/-, REDUCED TRADING LOSS OF RS. 20,01,590/- AND RESTRICTED THE DISALLOWANCE TO RS. 9,30,02,183/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE NE EDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE RECENT CBDT CIRCULAR NO. 17 OF 2019 DATED 08.08.2019 WHEREBY THE MONETARY LIMITS FOR FILING THE APPEAL B Y THE REVENUE BEFORE THE TRIBUNAL WAS ENHANCED FROM RS.20 LAKHS TO RS.50 LAKHS. THIS INSTRUCTION IS APPLICABLE TO THE PENDING CASES ALSO. THEREFORE, THE PRESENT APPEAL O F THE REVENUE IS LIABLE TO BE DISMISSED AS NON-MAINTAINABLE AS HELD BY THIS TRIBU NAL IN THE CASE OF ITO VS. DINESH MADHAVLAL PATEL IN ITA NO.1398/AHD/2004 FOR AY 1998-99 VIDE A CONSOLIDATED ORDER DATED 14.08.2019. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN THE LIMIT PRES CRIBED BY THE AFORESAID CBDT CIRCULAR. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. AS LEARNED COUNSEL RIGHTLY CONTENDS, THIS APPEAL OF THE REVENU E IS NO LONGER MAINTAINABLE IN VIEW OF THE RECENT CBDT CIRCULAR NO. 17 OF 2019 DAT ED 08.08.2019. THE MANDATORY LIMIT FOR CASES IN WHICH REVENUE CAN CHALLENGE THE RELIEF GRANTED BY THE CIT(A) NOW STANDS ENHANCED TO RS.50 LAKHS. THIS CONCESSION GR ANTED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) IS RETROSPECTIVE IN EFFECT INAS MUCH AS IT APPLIES TO ALL PENDING APPEALS AS WELL. IN VIEW OF THE ABOVE POSITION, TH E APPEAL OF THE REVENUE IS NO LONGER MAINTAINABLE AND MUST BE DISMISSED AS SUCH. 6. IT IS, HOWEVER, MADE CLEAR THAT ON RE-VERIFICATI ON AT THE END OF THE ASSESSING OFFICER IT COMES OUT THAT THE TAX EFFECT OF MORE TH AN RS.50 LAKHS IS BEING INVOLVED IN THE APPEAL OR THE APPEAL FALLS WITHIN THE EXEMPTION CLAUSE OF THE CIRCULAR, THEN THE REVENUE WILL BE AT LIBERTY TO FILE MISCELLANEOUS AP PLICATION TO RECALL THE TRIBUNAL ORDER. THE APPLICATION SHOULD BE FILED WITHIN TIME LIMIT PRESCRIBED IN THE ACT. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D DUE TO LOW TAX EFFECT. PRONOUNCED IN THE OPEN COURT TODAY ON THE 14 TH OCTOBER, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED THE 14 TH DAY OF OCTOBER, 2019 ITA NO. 2028/AHD/2012 DCIT (OSD)-1 VS. KIRI DYES INS. LTD. ASSESSMENT YEAR : 2008-09 PAGE 3 OF 3 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ...26.09.2019.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 26.09.2019....... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .14.10.2019........ 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 14.10.2019 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ... 14.10.2019... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......