ACIT, Central Circle - 1(1), Kolkata, Kolkata V. M/s. Adhunik Alloys & Power Ltd., Kolkata

ITA 2155/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2841 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 06-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHAR YYA
• Assessee Lawyers: S AGARWAL ACA
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE S HRI S.S.VISWANETHRA RAVI, JM] I.T.A NO. 2155/KOL/20 17 ASSESSMENT YEAR : 2014-1 5 ACIT, CC-1(1), KOLKATA -VS- M/S ADHUNIK A LLOYS & POWERS LTD. [PAN: AAECA 5290 R] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A. BHATTACHAR YYA, ADDL. CIT FOR THE RESPONDENT : MS. S. AGARWAL, ACA DATE OF HEARING : 20.08.2018 DATE OF PRONOUNCEMENT : 29. 08.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-20, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO.746/CC- 1(1)/CIT(A)-20/16-17 DATED 27.07.2017 AGAINST THE O RDER PASSED BY THE ACIT, CC- 1(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 1 43(3) READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30 .12.2016 FOR THE ASSESSMENT YEAR 2014-15. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 36,39,849 /- ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND , IN THE FACTS AND C IRCUMSTANCES OF THE CASE. 2 ITA NO.2155/KOL/2017 M/S ADHUNIK ALLOYS & POWERS LTD. A.YR. 2014-15 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE FOR CERTAIN MONTHS REMITTED EMPLOYEES CONTRIBUTION TO PROVIDENT FUND BELATEDL Y BUT THE SAME WERE DULY PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139( 1) OF THE ACT. FROM THE DETAILS OF PAYMENTS MADE FOR EACH MONTH IT IS FOUND THAT THE A SSESSEE HAD MADE THE ENTIRE REMITTANCE OF THE SAID PROVIDENT FUND DUES BEFORE T HE END OF FINANCIAL YEAR BUT WITH MINOR DELAY IN SEVERAL MONTHS. THE DETAILS OF THE S AME ARE TABULATED IN PAGES 2 AND 3 OF THE ORDER OF THE LD. CIT(A). THE LD. AO PROCEEDED T O BRING TO TAX THE SAME U/S 2(24)(X) OF THE ACT ON THE GROUND THAT THE SAID PROVIDENT FU ND DUES WERE NOT REMITTED WITHIN THE DUE DATES PRESCRIBED UNDER THE RESPECTIVE PROVIDENT FUND ACT AND HENCE NOT ALLOWABLE AS DEDUCTION U/S 36(1)(VA) OF THE ACT. THE LD. CIT( A) BY PLACING RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. M/S COAL INDIA PVT. LTD. IN I.T.A. NO. 12/KOL/2015 DATED 12.08.201 5 DELETED THE SAID DISALLOWANCE. THE LD. CIT(A) ALSO PLACED RELIANCE ON SEVERAL OTHER DE CISIONS OF HONBLE JURISDICTIONAL HIGH COURT, HONBLE DELHI HIGH COURT, HONBLE MADRA S HIGH COURT AND THE DECISION OF THIS TRIBUNAL AMONG OTHERS IN SUPPORT OF HIS CONTEN TION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. DR PLACED HEAVY RELIANCE ON THE DECISION OF KERALA HIGH COURT IN THE CASE OF CIT VS . MERCHEM LTD. REPORTED IN 378 ITR 443 WHICH SUPPORTED THE CASE OF THE REVENUE. THE LD . DR ALSO PLACED RELIANCE ON THE CIRCULAR ISSUED BY CBDT VIDE CIRCULAR NO. 22/2015 D ATED 17.12.2015 WHEREIN IT WAS CLEARLY MENTIONED THAT THE VARIOUS DECISIONS OF HON BLE HIGH COURTS SHALL NOT APPLY TO CLAIM OF DEDUCTION RELATING TO EMPLOYEES CONTRIBUT ION TO WELFARE FUNDS WHICH ARE COVERED BY SECTION 36(1)(VA) OF THE ACT. WE FIND TH AT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONA L HIGH COURT WHICH HAS BEEN RIGHTLY RELIED UPON BY THE LD. CIT(A) AND IT IS WELL SETTLE D THAT THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WILL PREVAIL OVER THE DEC ISION OF NON-JURISDICTIONAL HIGH COURT. HENCE THE DECISION OF HONBLE KERALA HIGH COURT DOE S NOT COME TO THE RESCUE OF THE 3 ITA NO.2155/KOL/2017 M/S ADHUNIK ALLOYS & POWERS LTD. A.YR. 2014-15 3 REVENUE IN THE INSTANT CASE. WE ALSO FIND THAT THE CIRCULAR ISSUED BY CBDT ARE BINDING ONLY ON THE REVENUE AUTHORITIES AND HENCE CANNOT BE BINDING ON THE ASSESSEE IF IT IS NOT BENEFICIAL TO THE ASSESSEE. IN VIEW OF THIS, WE FI ND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) GRANTING RELIEF TO THE ASSESSEE BY FOLLOWING DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. ACCORDINGLY GROUND NOS. 1 TO 4 RAISED BY THE REVENUE ARE DISMISSED. 5. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S 14A OF T HE ACT READ WITH RULE 8D OF THE RULES, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE HAD MADE CERTAIN INVESTMENTS IN VARIOUS COMPANIES FROM WHICH IT HAD NOT DERIVED ANY DIVIDEND INCOME. IN OTHER WORDS, THERE WAS NO EXEMPT INCOME CLAIMED BY THE ASSESSEE IN THE RETURN. ACCORDINGLY, IT WAS PLEADED THAT THERE IS NO EXPENDITURE THAT IS REQUIR ED TO BE DISALLOWED U/S 14A OF THE ACT. THE LD. AO HOWEVER DISREGARDED THIS CONTENTION OF T HE ASSESSEE AND PROCEEDED TO MAKE DISALLOWANCE BY APPLYING THE COMPUTATION MECHANISM PROVIDED IN RULE 8D OF THE RULES AND SOUGHT TO DISALLOW RS. 59,76,473/- AND RS 25,54 ,515/- UNDER SECOND AND THIRD LIMB OF RULE 8D(2) OF THE RULES RESPECTIVELY. ACCORDINGL Y THE TOTAL DISALLOWANCE U/S 14A OF THE ACT IN THE SUM OF RS. 85,30,988/- WAS MADE BY T HE LD. AO BOTH UNDER NORMAL PROVISIONS AND ALSO IN THE COMPUTATION OF BOOK PROF ITS U/S 115JB OF THE ACT. THE LD. CIT(A) APPRECIATED THE FACT THAT THE ASSESSEE DID N OT HAVE ANY EXEMPT INCOME DURING THE YEAR. HE ALSO APPRECIATED THE FACT THAT THE ASS ESSEE HAD SUBSTANTIALLY OWN FUNDS WHICH WAS MUCH MORE THAN THE INVESTMENTS MADE AND H ENCE THERE CANNOT BE ANY DISALLOWANCE TOWARDS INTEREST UNDER SECOND LIMB OF RULE 8D(2) OF THE RULES. ACCORDINGLY, THE LD. CIT(A) DELETED THE DISALLOWANC E MADE U/S 14A OF THE ACT BOTH UNDER NORMAL PROVISIONS AS WELL AS UNDER 115JB OF T HE ACT. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4 ITA NO.2155/KOL/2017 M/S ADHUNIK ALLOYS & POWERS LTD. A.YR. 2014-15 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTS ET, IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NOT DERIVE ANY EXEMPT INCOME. THIS ISS UE IS NO LONGER RES INTEGRA INASMUCH AS THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS PVT. LTD. REPORTED IN 80 TAXMANN.COM 221 (MAD. HC) HAD HELD T HAT WHEN THERE IS NO EXEMPT INCOME THERE CANNOT BE ANY APPLICATION OF PROVISION S OF SECTION 14A OF THE ACT. WE FIND THAT THE SPECIAL LEAVE PETITION PREFERRED BY THE RE VENUE AGAINST THIS ORDER WAS DISMISSED BY THE HONBLE SUPREME COURT WHICH IS REPORTED IN 9 5 TAXMANN.COM 250 (SC). IN VIEW OF THESE DECISIONS, THE RELIANCE PLACED BY THE LD. DR ON THE CBDT CIRCULAR NO. 5/2014 DATED 11.02.2014 DOES NOT ADVANCE THE CASE OF THE R EVENUE AS IT HAS ALREADY BEEN HELD THAT THE CIRCULARS OF CBDT ARE NOT BINDING ON THE A SSESSEE, IF IT IS NOT BENEFICIAL TO THE ASSESSEE. ACCORDINGLY GROUNDS NO. 5 AND 6 OF THE RE VENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 29. 08.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 29. 08.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CENTRAL CIRCLE-1(1), KOLKATA, AAYAKAR BHAW AN POORVA, 110, SHANTIPALLY, 3 RD FLOOR, KOLKATA-700107. 2. M/S ADHUNIK ALLOYS & POWERS LTD., 14, N.S. ROAD, KOLKATA-700001. 3..C.I.T.(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S