Prayas Engineering Limited, Anand V. The Dy.CIT.,Anand Range, Anand

ITA 2774/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6253 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SURYAVANSHI
• Assessee Lawyers: BHARGAV KARIA
• Keywords: Opportunity of being heard; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER) ITA NO.2774/AHD/2009 [ASSTT. YEAR : 2006-2007] PRAYAS ENGINEERING LTD. FORMERLY KNOWN AS VVN MFG. & INVESTA LTD. ANAND SOJITRA ROAD VALLABH VIDHYANAGAR 388 120 GUJARAT. VS. DCIT, ANAND RANGE ANAND. ITA NO.2775/AHD/2009 [ASSTT. YEAR : 2006-2007] PRAYAS ENGINEERING LTD. FORMERLY KNOWN AS PRAYAS CASTINGS LTD. ANAND SOJITRA ROAD VALLABH VIDHYANAGAR 388 120 GUJARAT. VS. DCIT, ANAND RANGE ANAND. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHARGAV KARIA REVENUE BY : SHRI G.S. SURYAVANSHI O R D E R PER G.D. AGARWAL , VICE-PRESIDENT : THESE ARE TWO ASSESSEES APPEALS AGAINST THE ORDERS OF THE LEARNE D COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA DATED 19.6.2009 AND 13.7.2009 ARISING OUT OF THE ORDERS OF THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I.T. ACT, 1961. ITA NO.2774/AHD/2009 PRAYAS ENGINEERING LTD. (FOR MERLY KNOWN AS VVN MFG. & INVESTA LTD.) ITA NO.2774 AND 2775/AHD/2009 -2- 2. THE APPEAL BY THE ASSESSEE IS LATE BY 29 DAYS. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT THE DELAY IN FILING OF THE APPEAL WAS ON ACCOUNT OF DEA TH OF A NEAR RELATIVE OF SHRI ASHOKUMAR K. PANDIT DIRECTOR OF TH E ASSESSEE- COMPANY. IT WAS STATED THAT DUE TO THE DEATH OF NE AR RELATIVE, SHRI ASHOK KUMAR HAD TO RUSH TO HIS NATIVE PLACE AND THE RE HE WAS REQUIRED TO STAY FOR A LONG TIME. IN THE ABOVE CIR CUMSTANCES, THERE WAS DELAY OF 29 DAYS IN FILING OF THE APPEAL. IN S UPPORT OF THIS CONTENTION AFFIDAVIT OF SHRI ASHOK KUMAR IS FILED. IN VIEW OF THE ABOVE, WE DEEM IT PROPER TO CONDONE THE DELAY AND A DMIT THE APPEAL. 3. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE IS AGAINST DISALLOWANCE UNDER SECTION 14A OF THE ACT. 4. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE IDENTICAL ISSUE IS COVERED BY THE DECISION OF ITAT IN THE CASE OF EMTICI ENGG. LTD. VS. JCIT, IN ITA NO.2546/AHD/2009 VIDE ORDER DATED 21-4-2011 WHEREIN THE ITAT SET ASIDE THE MATTER BACK TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ITAT C BENCH, AHMEDABAD CONSIDERED IDENTICAL ISSUE IN THE CASE OF EMTICI ENGG. (SUPRA) WHEREIN THE ITAT HELD AS UNDER : ITA NO.2774 AND 2775/AHD/2009 -3- 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS NOW FINALLY DECIDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING C O. LTD. VS DCIT AND ANOTHER 328 ITR 81 IN WHICH IT WAS HELD THAT RULE 8 D IS NOT RETROSPECTIVE AND IS APPLICABLE FR OM ASSESSMENT YEAR 2008-09 AND THE DISALLOWANCE FOR TH E EARLIER PERIOD TO BE DETERMINED ON REASONABLE BASIS. HE HA S FURTHER SUBMITTED THAT THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS GUJARAT POWER CORPORATION LTD. 2011- TIOL-21 9-HC- AHM-IT (TAX APPEAL NO.1587 OF 2009) IN RECENT DECIS ION HELD AS UNDER: INCOME TAX SECTION 14A WHEN THERE IS NO EVIDEN CE THAT THE BORROWED AMOUNT IS UTILISED FOR IN VESTMENT IN TAX FREE SECURITY, AND THE MAJOR INVESTMENT WAS MADE BEFORE THE DATE OF BORROWINGS, WHETHER DISALLOWANCE MADE BY THE AO U/S 14A FOR INTEREST ON BORROWED FUNDS IS RIGHTLY DELETED. HE, THEREFORE, SUBMITTED THAT THE MATTER MAY BE REM ANDED TO THE FILE OF THE AO FOR RECONSIDERATION IN VIEW OF T HE ABOVE DECISIONS. THE LEARNED DR DID NOT DISPUTE THE ABOVE FACTS AND STATED THAT THE MATTER MAY BE REMANDED TO THE AO FO R RECONSIDERATION. 4. ON CONSIDERATION OF THE ABOVE FACTS AND SUBMISS IONS OF THE PARTIES, WE ARE OF THE VIEW THAT THE MATTER IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT AND A NOTHER 328 ITR 81 IN WHICH IT WAS HELD AS UNDER: HELD, THAT THE PROVISIONS OF RULE SD OF THE RULES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, WOULD APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008-0 9. EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN RULE SD WAS NOT APPLICABLE, THE ASSESSING OFFICER HAD TO EN FORCE THE PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. F OR THAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTA L ITA NO.2774 AND 2775/AHD/2009 -4- INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST AD OPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL TH E RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON RECORD. THE PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 WOULD STAND REMANDED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD DETERMINE AS TO WHETHER THE ASSESSEE HAD INCURRED A NY EXPENDITURE (DIRECT OR INDIRECT) IN RELATION TO DIV IDED INCOME/INCOME FROM MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECT ION 14A. THE ASSESSING OFFICER CAN ADOPT A REASONABLE B ASIS FOR EFFECTING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, THE ASSESSING OFFICER SHOULD PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S GUJARAT POWER CORPORATION LTD. (SUPRA) HAS ALSO DEC IDED IDENTICAL ISSUE AS NOTED ABOVE. THEREFORE, IN VIEW OF THE ABOVE DECISIONS, WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH DIRECT ION TO RE- DECIDE THE SAME AFRESH AS PER THE DECISION OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT AND ANOTHER (SUPRA) AND AS PER THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS GUJARAT POWER CORPORATION LTD. (SUPRA). T HE AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY TO THE ASSESSEE OF PRODUCING RELEVANT MATERIALS BEFORE HIM ON THE FACT S AND CIRCUMSTANCES OF THE CASE. SINCE THE ISSUE IS IDENTICAL, WE RESPECTFULLY FOLLO WING THE ABOVE DECISION OF THE ITAT, SET ASIDE THE ORDERS OF THE A UTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR RE- ADJUDICATION AS PER THE ABOVE DIRECTION OF THE ITAT . NEEDLESS TO ITA NO.2774 AND 2775/AHD/2009 -5- MENTION, THE AO WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. SIMILAR ISSUE IS RAISED BY THE ASSESSEE VIZ. PRA YAS ENGINEERING LTD., (FORMERLY KNOWN AS PRAYAS CASTINGS LTD.) IN I TA NO.2775/AHD/2009. SINCE THE ISSUE IS IDENTICAL FOR DETAILED REASON GIVEN IN PARA NO.5, WE SET ASIDE THE ORDER OF AUTHO RITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF TH E AO TO BE RE- ADJUDICATED AS PER DIRECTION IN PARA-5. 7. IN RESULT, THE ASSESSEES APPEALS ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 30 TH JUNE, 2011 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 30-06-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD