Nirma Chemical Works Ltd., Ahmedabad V. The ACIT., Cent.Circle-1(1), Ahmedabad

ITA 2282/AHD/2008

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0030 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Keywords: Rectification of order; Opportunity of being heard
• Section: 244A; 14A; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SN ITA NO. AY APPELLANT RESPONDENT 1 2169/AHD/2008 2005-06 DCIT, CENTRAL CIRCLE- 1(1), AHMEDABAD NIRMA CHEMICAL WORKS LTD, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD PAN : AAACN 5353 L 2 2282/AHD/2008 2005-06 ASSESSEE REVENUE 3 2170/AHD/2011 2003-04 ASSESSEE REVENUE 4 2372/AHD/2011 2003-04 REVENUE ASSESSEE REVENUE BY : SHRI R.I. PATEL, CIT-DR ASSESSEE BY : SHRI S.N. SOPARKAR, AR / DATE OF HEARING : 10/11/2016 / DATE OF PRONOUNCEMENT: 11/11/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- ITA NOS. 2169/AHD/2008 AND 2372/AHD/2011 ARE THE AP PEALS BY THE REVENUE DIRECTED AGAINST THE ORDERS OF CIT(A)-II, A HMEDABAD DATED 27.03.2008 AND CIT(A)-XI, AHMEDABAD DATED 15.07.201 1 FOR AYS 2005-06 AND 2003-04 RESPECTIVELY. ITA NOS. 2282/AHD/2008 A ND 2170/AHD/2011 ARE THE APPEALS BY THE ASSESSEE DIRECTED AGAINST TH E ORDERS OF CIT(A)-II, AHMEDABAD DATED 27.03.2008 AND CIT(A)-XI, AHMEDABAD DATED 15.07.2011 FOR AYS 2005-06 AND 2003-04 RESPECTIVELY. THIS BUN CH OF APPEALS WAS HEARD TOGETHER SINCE COMMON ISSUES ARE INVOLVED AND ARE D ISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 2170/AHD/2011 : AY 2003-04 : ASSESSEES APP EAL 2. THE SOLITARY GROUND RAISED IN ASSESSEES APPEAL FOR AY 2003-04 READS AS UNDER:- IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANT COMPANYS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT AP PEAL DOES NOT LIE ON THE ITA NOS. 2169, 2282/AHD/2008 & 2170 & 2372/AHD/2011 ASSESSEE : NIRMA CHEMICAL WORKS LTD AY : 2005-06 & 2003-04 2 ISSUE OF ASSESSING INCOME OF RS.2,58,44,224 ON INVE STMENT OF OFCPNS OF NIRMA INDUSTRIES LTD. 2. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, CONTENDS THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE IN ITATS ORDER DATED 15.02.2013 IN ITS OWN CASE FOR AY 2002-03, BY FOLLO WING OBSERVATIONS:- 4.4 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE THA T THE ISSUE HAS BEEN ALREADY DECIDED BY ITAT IN ASSESSEES OWN CASE FOR AY 2002- 03 IN ITA NO.1244/AHD/2006, WHEREIN THE TRIBUNAL, FOLLOWING T HE DECISION IN THE CASE OF KISHAN DISCRETIONARY FAMILY TRUST VS. ACIT IN IT A NO. 1850/AHD/2007 DATED 02.11.2007, HELD THAT THE ASSESSEE HAS RIGHT TO ADOPT THE CHANGED SYSTEM OF ACCOUNTING AND BY CHANGING THE SYSTEM OF ACCOUNTING FROM MERCANTILE TO CASH WAS A BONA FIDE CHANGE. RESPECT FULLY FOLLOWING ITAT JUDGMENT IN ASSESSEES OWN CASE (SUPRA), WE UPHOLD THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY GROUNDS IN THIS BEHALF AND THE APPEAL OF THE REVENUE ARE DISMISSED. 2.1 THE LD. COUNSEL SUBMITTED THAT THE ISSUE BEING SAME AND THE FACTS AND CIRCUMSTANCES AND THE INVESTMENT IN OFCPNS OF NIRMA INDUSTRIES LTD BEING SAME, THE ASSESSEES GROUND DESERVED TO BE ALLOWED. 2.2 LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TRIBU NALS DECISION IN ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO.1244/A HD/2006. THIS GROUND OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. ITA NO. 2282/AHD/2008 : AY 2005-06 : ASSESSEES APP EAL 3. FIRST GROUND RAISED BY THE ASSESSEE IN ITS APPEA L IS GENERAL IN NATURE. ITA NOS. 2169, 2282/AHD/2008 & 2170 & 2372/AHD/2011 ASSESSEE : NIRMA CHEMICAL WORKS LTD AY : 2005-06 & 2003-04 3 3.1 SECOND GROUND IS WITH REGARD TO CONFIRMING THE DISALLOWANCE OF RS.8,61,050/- U/S 14A OF THE ACT OUT OF INTEREST EX PENSES. 3.2 THIRD GROUND IS WITH REGARD TO CONFIRMING DISAL LOWANCE OF RS.5,23,116/- U/S 14A OF THE ACT OUT OF ADMINISTRAT IVE EXPENSES AND PAYMENT TO EMPLOYEES. 3.3 FORTH GROUND IS WITH REGARD TO CONFIRMING DISAL LOWANCE OF RS.29,06,755/- OUT OF INTEREST EXPENSES U/S 14A. 3.4 THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET , CONTENDS THAT THE ITAT IN ASSESSEES OWN CASE FOR AYS 2004-05 IN ITA NOS. 2281/AHD/2008 HAS SET ASIDE THE ISSUE BACK TO THE FILE OF ASSESSING OFFIC ER FOR VERIFICATION, BY FOLLOWING OBSERVATIONS:- 6.6 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IT EMERGES FROM THE RECORD THAT THE ASSESSEE HAS PLACED ON RECORD A REVISED WORKING OF THE INTEREST EXPENSES OF NIRMAN SOAPS & DETERGENTS PVT LTD AND NAVIN DETERGENT PVT LTD, WHICH REQUIRES TO BE VERIFIED AT THE ASSESSING OFFICERS LEVEL ALONGWITH OTHER RELEVANT FACTS AND CIRCUMSTAN CES OF THE CASE ALONGWITH THE CASE LAW RELIED BY THE ASSESSEE IN THE CASE OF UTI BANK LTD (SUPRA). THEREFORE, IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTER PROVIDING DUE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. THUS, THESE GROUNDS ARE ALLOWED FOR STATI STICAL PURPOSES. 7. GROUND NO.4, WHICH RELATES TO DISALLOWANCE OF IN TEREST EXPENSES OF RS.1,02,74,427/- U/S 14A, IS ALSO SIMILAR TO THE IS SUE WE DECIDED ABOVE IN GROUND NOS. 3 & 4. FOR THE REASONS STATED ABOVE, THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF THE LD. AO FOR DECISION AFRESH IN ACCORDANCE WITH LAW AND AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS THUS ALLOWED FOR STATISTICA L PURPOSES. RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05, THESE ISSUES ARE SET ASIDE TO THE F ILE OF THE AO WITH THE ITA NOS. 2169, 2282/AHD/2008 & 2170 & 2372/AHD/2011 ASSESSEE : NIRMA CHEMICAL WORKS LTD AY : 2005-06 & 2003-04 4 SIMILAR DIRECTION. THUS, GROUND NOS. 2 TO 4 ARE AL LOWED FOR STATISTICAL PURPOSES. 3.5. GROUND NO.5 REGARDING INTEREST U/S 234B, 234D AND 244A OF THE ACT IS MANDATORY THOUGH CONSEQUENTIAL. 3.6. GROUND NO.6 IS NOT PRESSED AS THE SUITABLE REL IEF HAS BEEN GIVEN BY THE AO BY A RECTIFICATION ORDER U/S 154 DATED 09.07 .2008. THIS GROUND IS ACCORDINGLY DISMISSED AS NOT PRESSED. ITA NO. 2169/AHD/2008 : AY 2005-06 : REVENUES APPE AL ITA NO. 2372/AHD/2011 : AY 2003-04 : REVENUES APPE AL 4. IN THESE APPEALS, THE GROUNDS ARE TO THE EFFECT THAT THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF NOTIONAL INTERE ST INCOME ON INVESTMENTS IN DDB/NCD/REC BONDS ETC, RELYING ON THE ITAT JUDGE MENT IN THE CASE OF KISAN DISC. FAMILY TRUST & OTHERS IN ITA NO.1850/AH D/2007 DATED 02.11.2007. 4.1 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL V IDE ITS ORDER DATED 15.02.2013 IN ITA NO.1244/AHD/2006 FOR AY 2002-03. 4.2. LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TRIBU NALS DECISION IN ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO.1244/A HD/2006 WHICH IS ITA NOS. 2169, 2282/AHD/2008 & 2170 & 2372/AHD/2011 ASSESSEE : NIRMA CHEMICAL WORKS LTD AY : 2005-06 & 2003-04 5 ALREADY REPRODUCED HEREINABOVE WHILE DEALING WITH A SSESSEES APPEAL IN ITA NO.2170/AHD/2011 FOR AY 2003-04. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS BOTH THE REVENUES APPEALS. 5. IN THE RESULT, ASSESSEES APPEAL FOR AY 2003-04 IS ALLOWED, ASSESSEES APPEAL FOR AY 2005-06 IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES AND REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 11/11/2016 *BIJU T., SR.PS / 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, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD