The DCIT, Sabarkantha Circle, Himatnagar V. The Sabarkantha Dist.Co.Op.Milk Producers Union Ltd., Himatnagar

ITA 2244/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5689 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 06-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NOS: 2244 & 2245/AHD/2014 (ASSESSMENT YEARS 2010-11 & 2011-12) THE DEPUTY COMMISSIONER OF INCOME-TAX SABARKANTHA CIRCLE, HIMATNAGAR V/S THE SABARKANTHA DIST. CO- OP. MILK PRODUCERS UNION LTD., SABAR DAIRY, BORIYA, HIMATNAGAR DIST: SABARKANTHA (APPELLANT) (RESPONDENT) PAN: AAAAS5265L APPELLANT BY : SHRI K. MADHUSUDAN, SR. D. R. RESPONDENT BY : SHRI SANJAY R. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 25 -07-201 7 DATE OF PRONOUNCEMENT : 27-07-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THESE TWO APPEALS BY THE REVENUE ARE PREFERRED AGAI NST THE ORDER OF THE LD. CIT(A)-VIII, AHMEDABAD DATED 22.05.2014 PERTAINING TO A.YS. 2010-11 & 2011-12. ITA NOS. 224 4 & 2245/AHD/2014 . A.YS. 2010-1 1 & 2011-12 2 2. SINCE, THE FIRST APPELLATE AUTHORITY HAS DECIDED TH E APPEALS BY A CONSOLIDATED ORDER; THEREFORE, BOTH THESE APPEALS WERE HEARD TOG ETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE COMMON GRIEVANCE OF THE REVENUE IN BOTH THESE A PPEALS RELATE TO THE DELETION OF THE ADDITION BEING DISALLOWANCE OF INTE REST AND ADMINISTRATIVE EXPENDITURE BY APPLYING THE PROVISION OF SECTION 14 A READ WITH RULE 8D OUT OF DEDUCTION U/S. 80P(2)(D) OF THE ACT. 4. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E DREW OUR ATTENTION TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F GUJARAT IN THE CASE OF SABARKANTHA DISTRICT COOPERATIVE MILK PRODUCERS UNI ON LTD. IN TAX APPEAL NO. 473 OF 2014 AND STATED THAT THE IMPUGNED ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 5. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DEC ISION IN FAVOUR OF THE REVENUE. 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW QUA THE ISSUE. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE HONBLE JURISDICTIONAL HIGH COURT HAD THE OCCASION CONSIDER A SIMILAR ISSU E IN THE CASE OF SABARKANTHA DISTRICT COOPERATIVE MILK PRODUCERS UNION LTD. (SUP RA) WHEREIN THE HONBLE HIGH COURT WAS SEIZED WITH THE FOLLOWING SUBSTANTIA L QUESTION OF LAW:- '(I) WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ITAT HAS ERRED IN LAW IN CONFIRMING THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.87,39,536/- MADE BY THE ASSESSING OFFICER U/S 14A OF INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES? ITA NOS. 224 4 & 2245/AHD/2014 . A.YS. 2010-1 1 & 2011-12 3 (II) WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ITAT HAS ERRED IN LAW IN HOLDING TO THE EFFECT THAT THE PROV ISIONS OF SECTION 14A DOES NOT APPLY TO INCOME FOR WHICH DEDUCTION UNDER CHAPTER V I-A (SECTION 80A TO 80U) OF THE INCOME TAX ACT IS AVAILABLE? III) WHETHER THE WORDS 'INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THIS ACT' USED IN SECTION 14A OF THE INCOME TAX ACT , 1961 INCLUDE THE INCOME WHICH IS NOT CHARGEABLE TO TAX PURSUANT TO PROVISIO NS OF CHAPTER VIA (SECTION 80A TO 80U) OF THE INCOME TAX ACT?' 7. AND THE HONBLE HIGH COURT HELD AS UNDER:- 7. QUESTION TO BE ADDRESSED IS AS TO WHETHER SECTI ON 14A WOULD APPLY TO PROVISION OF CHAPTER VIA. PROVISION OF SECTION 14A WHEN EXAMINED, IT OPERATES IN RESPECT OF THE INCOME NOT FORMING PART OF THE TOTAL INCOME. IT COULD BE NOTED THAT PROVISIONS OF CHAPTER VIA (SECTIONS 80A TO 80U) REF ER TO DEDUCTIONS TO BE MADE IN COMPUTING THE TOTAL INCOME. SUCH DEDUCTIONS, IN NO MANNER, CAN BE COMPARED WITH THE EXEMPTED INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS PROVIDED IN SECTIONS 10 TO 13A UNDER CHAPTER III OF THE ACT. SECTION 14A WAS INTRODUCED RETROSPECTIVELY WITH EFFECT FROM 1.4.196 2 BY FINANCE ACT, 2001, FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME UNDER CHAPTER IV. AND, ANY EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO EXEMPTED IN COME, FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME, WHILE APPLYING SECTION 14A, NO DEDUCTION SHALL BE ALLOWED. HOWEVER, THERE IS A CLEAR ABSENCE OF ANY R EFERENCE OF DEDUCTION TO BE MADE IN COMPUTING THE TOTAL INCOME AS PER PROVISION OF CHAPTER IVA IN SECTION 14A. UNDOUBTEDLY, AS PROVIDED UNDER CHAPTER VIA WHI LE COMPUTING THE TOTAL INCOME OF THE ASSESSEE FROM HIS GROSS TOTAL INCOME IN ACCORDANCE WITH AND SUBJECT TO THE PROVISION OF THIS CHAPTER, THE DEDUC TIONS SPECIFIED ARE PERMISSIBLE. AS A RESULTANT EFFECT, THE TAXABLE INCOME OF THE AS SESSEE WOULD SURELY GET REDUCED AND YET THERE IS MARKED DIFFERENCE BETWEEN THE EXEMPTED INCOME AND THE DEDUCTION PROVIDED UNDER CHAPTER VIA. WE NOTICE THAT THE INVESTMENT IN ITA NOS. 224 4 & 2245/AHD/2014 . A.YS. 2010-1 1 & 2011-12 4 SHARES MADE BY THE ASSESSEE WHO EARNED HIM THE DIVI DEND WAS FROM HIS OWN INCOME. MOREOVER, FROM THE VERY PROVISION OF SECTIO N 14A, THE SAME WOULD HAVE NO APPLICATION IN RESPECT OF THE INCOME NOT BEING T AXABLE ON ACCOUNT OF DEDUCTION UNDER SECTION 80P(2) (D) . BOTH THE AUTHORITIES HAV E RIGHTLY HELD THAT THERE IS NO APPLICATION OF SECTION 14A AS FAR AS THE DEDUCTION UNDER SECTION 80A TO 80U UNDER CHAPTER VIA OF THE ACT ARE CONCERNED. 8. RESPECTFULLY FOLLOWING THE FINDINGS OF THE HONBLE HIGH COURT (SUPRA), WE DECLINE TO INTERFERE. BOTH THESE APPEALS BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 07- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 27 /07/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD