Gujarat State Investments Ltd., Ahmedabad V. The Income Tax Officer Wd. 4(1), Ahmedabad

ITA 2409/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0882 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 27-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A; 115JB; 10B; 12; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.2409/AHD/2010 2. ./ I.T.A. NO.2410/AHD/2010 ( / ASSESSMENT YEARS : 2002-03 & 2004-05 RESPECTIVELY ) GUJARAT STATE INVESTMENTS LTD. 6 TH FLOOR, H.K. HOUSE ASHRAM ROAD AHMEDABAD / VS. THE ITO WARD-4(1) AHMEDABAD $ ./ ./ PAN/GIR NO. : AABCG 4649 M ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : SMT. ARTI N.SHAH, AR '($&*) / RESPONDENT BY : SHRI SANJAY KUMAR, SR.DR +* / DATE OF HEARING 22/07/2016 ,-./* / DATE OF PRONOUNCEMENT 29/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A PPEALS)-XX, AHMEDABAD IDENTICALLY DATED 08/04/2010 FOR THE ASSESSMENT YEARS (AYS) 2002-03 AND 2004-05. ITA NOS. 2409 & 2410/AHD/2010 GUJARAT STATE INVESTMENTS LTD. VS. ITO ASST.YEARS 2002-03 & 2004-05 RESPECTIVELY - 2 - 2. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THE APPEALS OF THE ASSESSEE RELATE TO DIFFERENT ASSESSMENT YEAR S BUT THE ISSUE IS IDENTICAL IN BOTH THE YEARS EXCEPT FOR THE AMOUNTS INVOLVED AND THE ASSESSMENT YEARS AND THEREFORE SHE HAS COMMON SUBMI SSIONS TO MAKE. THE FORESAID SUBMISSION OF LD.AR HAS NOT BEEN CONTR OVERTED BY LD.DR. IN VIEW OF THE AFORESAID FACTS, WE FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER . WE HOWEVER PROCEED WITH FACTS FOR AY 2002-03 (IN ITA NO.2409/ AHD/2010). 2.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MATE RIALS ON RECORD ARE AS UNDER:- 2.2. ASSESSEE IS AN INVESTMENT COMPANY WHO FILED IT S RETURN OF INCOME DECLARING A LOSS OF RS.3,25,282/- (BEFORE SET OFF O F BROUGHT FORWARD LOSSES). ASSESSMENT WAS FRAMED U/S.143(3) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WHEREIN THE TOTAL INCOME WAS DETERMINED AT RS.NIL AFTER SETTING OFF OF UNABSORBE D LOSS OF EARLIER YEARS OF RS.23,03,032/- SINCE THE TAXABLE INCOME WAS NIL, TAX WAS LEVIED U/S.115JB OF THE ACT ON THE BOOK PROFIT OF RS.52,94 ,324/-. SUBSEQUENTLY, IT WAS NOTICED BY AO THAT WHILE FRAMING THE ASSESSM ENT ORDER, THAT THOUGH DISALLOWANCE U/S.14A OF RS.26,28,414/- WAS MADE BUT THE SAME WAS NOT ADDED TO BOOK PROFIT AS REQUIRED UNDER EXPL ANATION(F) TO SECTION 115JB OF THE ACT. ACCORDINGLY, PROCEEDINGS U/S.147 OF THE ACT WERE INITIATED AND NOTICE U/S.148 WAS ISSUED ON 03/01/20 08 AND SERVED UPON ITA NOS. 2409 & 2410/AHD/2010 GUJARAT STATE INVESTMENTS LTD. VS. ITO ASST.YEARS 2002-03 & 2004-05 RESPECTIVELY - 3 - THE ASSESSEE ON 05/08/2008. THEREAFTER REASSESSMEN T WAS FRAMED U/S.143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 15 /10/2009 AND THE BOOK PROFIT U/S.115JB OF THE ACT WAS DETERMINED AT RS.79 ,22,738/- AFTER ADDING THE DISALLOWANCE MADE U/S.14A TO THE NET PROFITS. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 08/04/2010 (IN APPE AL NO.CIT(A)- XX/385/09-10) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 3.3. I HAVE CONSIDERED THE FACTS OF THE CASE, SU BMISSION FILED BY THE LD.COUNSEL FOR THE APPELLANT. IN THIS CASE, IT IS NOT A DISPUTABLE FACT THAT THE TAX HAS BEEN LEVIED ON THE BOOK PROFIT AS DECLA RED BY THE APPELLANT AT RS.52,94,324/- UNDER SECTION 115JB OF THE ACT. FURTHER, THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF RS.26 ,28,414/- UNDER THE PROVISIONS OF SECTION 14A OF THE ACT WHILE COMPLETI NG THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. AS PER EXPLANATION ( F) TO SECTION 115JB(2) OF THE I.T. ACT; BOOK PROFIT MEANS THE NE T PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIO US YEAR PREPARED UNDER SUB SECTION(2), AS INCREASED BY THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH [SECTI ON 10 [OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) OR [SECTION 10A OR SECTION 10B OR ] SECTION 11 OR SECTION 12 APPLY:]. 3.4. IN VIEW OF THE AFOREMENTIONED FACTS, THE BOOK PROFIT OF THE APPELLANT HAS INCREASED BY AN AMOUNT OF RS.26,28,41 4/- UNDER SECTION 14A WHILE MAKING THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. THUS, THE ASSESSING OFFICER RIGHTLY COMPUTED THE BO OK PROFIT OF THE APPELLANT BY ADDING RS.26,28,414/- AS PER EXPLANATI ON ((F) TO SECTION 115JB(2) OF THE I.T.ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS HEREBY DISMISSED. ITA NOS. 2409 & 2410/AHD/2010 GUJARAT STATE INVESTMENTS LTD. VS. ITO ASST.YEARS 2002-03 & 2004-05 RESPECTIVELY - 4 - 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX , AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIR MING THE ADJUSTMENTS MADE BY THE ASSESSING OFFICER WHILE COMPUTING BOOK PROFIT U/S.115JB IN RESPECT OF DISALLOWANCE OF RS.26,28,414/- MADE U/S. 14A OF THE INCOME TAX ACT, 196, THOUGH NO EXPENDITURE HAS BEEN INCURR ED BY THE APPELLANT FOR EARNING THE EXEMPT INCOME. 3.1. IN ITA NO.2410/AHD/2010 FOR AY 2004-05 ASSESSE E HAS RAISED THE FOLLOWING GROUND:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX , AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIR MING THE ADJUSTMENTS MADE BY THE ASSESSING OFFICER WHILE COMPUTING BOOK PROFIT U/S.115JB IN RESPECT OF DISALLOWANCE OF RS.17,30,082/- MADE U/S. 14A OF THE INCOME TAX ACT, 196, THOUGH NO EXPENDITURE HAS BEEN INCURR ED BY THE APPELLANT FOR EARNING THE EXEMPT INCOME. 4. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT A S FAR AS THE ISSUE OF DISALLOWANCE U/S.14A IS CONCERNED, THE ISSUE IS CO VERED AGAINST THE ASSESSEE BY THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL (ITAT D BENCH AHMEDABAD) IN ASSESSEES OWN CASE FOR AYS 20 02-03 AND 2005- 06 IN ITA NOS.1264 & 1265/AHD/2012 ORDER DATED 20/0 1/2016. SHE THEREFORE SUBMITTED THAT THE GROUND BE DECIDED ACCO RDINGLY. LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO A ND THE LD.CIT(A). 4.1. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NOS. 2409 & 2410/AHD/2010 GUJARAT STATE INVESTMENTS LTD. VS. ITO ASST.YEARS 2002-03 & 2004-05 RESPECTIVELY - 5 - THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO MA KING ADDITION OF THE DISALLOWANCE U/S.14A TO THE NET PROFITS FOR THE PU RPOSE OF COMPUTATION OF BOOK PROFITS U/S.115JB OF THE ACT. IT IS AN UNDI SPUTED FACT THAT WHILE DECIDING THE APPEAL OF ASSESSEE FOR AY 2002-03, THE COORDINATE BENCH OF TRIBUNAL HAS UPHELD THE DISALLOWANCE U/S.14A OF THE ACT. WE FURTHER FIND THAT AS PER EXPL.1(F) TO SECTION 115JB OF THE ACT, THE AMOUNT OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH PROVIS IONS OF SECTION 10 APPLIES, NEEDS TO BE ADDED TO THE NET PROFITS AS SH OWN IN THE PROFIT & LOSS ACCOUNT FOR THE PURPOSES OF CALCULATION OF BOOK PR OFITS. IN VIEW OF THE DISALLOWANCE U/S.14A BEING UNDISPUTED AND THE EXPR ESS PROVISION OF THE ACT, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF ASSESSEE IS DISMISSED IN BOTH THE Y EARS. 5. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.2409/ AHD/2010 AND 2410/AHD/2010 FOR AYS 2002-03 AND 2004-05 RESPECTIV ELY ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/07/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/ 07 /2016 3..,.../ T.C. NAIR, SR. PS ITA NOS. 2409 & 2410/AHD/2010 GUJARAT STATE INVESTMENTS LTD. VS. ITO ASST.YEARS 2002-03 & 2004-05 RESPECTIVELY - 6 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)- 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 22.7.16 (DICTATION-PAD 4+ P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.7.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.29.7.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.7.16 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