M/s. Banco Products (India) Ltd., Vadodara V. The Dy.CIT., Circle-1(1)(1), Vadodara

ITA 2820/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7984 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: SANKET BAKSHI
• Keywords: Earning of tax free income; Cost of acquisition
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NOS: 2820 & 2821/AHD/2015 (ASSESSMENT YEARS: 2011-12 & 2012-13) M/S. BANCO PRODUCTS (INDIA) LTD. BIL, NEAR BHAILI RAILWAY STATION, PADRA ROAD, VADODARA- 391410 PAN NO. AAACB8630L AND M/S. BANCO ALUMINIUM LTD. BIL NEAR BHAILI RAILWAY STATION, PADRA ROAD, VADODARA- 391410 PAN NO. AAACB8629B V/S THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 1(1)(1), VADODARA-390007 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANKET BAKSHI, AR RESPONDENT BY : SHRI S. K. DEV, SR. D.R. ( )/ ORDER DATE OF HEARING : 12 -12-201 7 DATE OF PRONOUNCEMENT : 13-12-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. ITA NOS. 2820 & 2821/AHD/2015 ARE APPEALS BY TWO SE PARATE APPELLANTS PREFERRED TWO SEPARATE ORDERS OF THE LD. CIT(A)-1, VADODARA DATED ITA NOS. 282 0 & 2821/AHD/2015 . A.YS. 2011- 12 & 2012-13 2 21.08.20015 & 20.08.2015 RESPECTIVELY FOR A.YS. 201 1-12 & 2012-13 RESPECTIVELY. 2. SINCE THE ISSUES ARE COMMON IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE AND BREVITY. WE WILL FIRST TAKE UP ITA NO. 2820/AHD/2015 FOR 201 1-12 3. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUNDS O F APPEAL. GROUND NO. 1 & 2 RELATES TO THE DISALLOWANCE MADE U/S. 14A OF THE AC T AND GROUND NO. 3 RELATES TO THE DENIAL OF DEDUCTION U/S. 80IA(4) OF THE ACT. 4. AT THE VERY OUTSET, THE LD. COUNSEL POINTED OUT THA T THE ISSUES HAVE BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEE S OWN CASE IN A.Y. 2008-09. COPY OF THE ORDER WAS FURNISHED. THE LD. D.R. FAIRL Y CONCEDED TO THIS. 5. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW VIS--VIS THE ORDER OF THE TRIBUNAL IN ITA NO. 75/A HD/2012. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. ISSUE RAISED VID E GROUND NO. 1 WAS CONSIDERED BY THE TRIBUNAL IN A.Y. 2008-09 AND THE RELEVANT FI NDINGS OF THE TRIBUNAL READ AS UNDER:- 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AS WELL AS THE JUDGMENT RELIED UPON BY THE LD. COUNSEL. WE FIND T HAT ASSESSEE HAS NOT GIVEN DETAILS AS TO WHEN SHARES WERE ACQUIRED AND WHAT WA S THE SOURCE OF FINANCING COST OF ACQUISITION OF SHARES IN THE EARLIER YEAR AND IN THE CURRENT YEAR. WE OBSERVED THAT IT IS ALSO NOT DISPUTED THAT THE ASS ESSEE HAS EARNED EXEMPT INCOME ITA NOS. 282 0 & 2821/AHD/2015 . A.YS. 2011- 12 & 2012-13 3 BECAUSE OF WHICH THE EXPENDITURE RELATED TO EARNING OF SUCH INCOME WOULD BE DISALLOWABLE IN TERMS OF THE PROVISIONS OF SEC. 14A OF THE ACT. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE ABOUT AVAILA BILITY OF SUFFICIENT OWN FUNDS, WE EXCLUDE INTEREST COMPONENTS OF RS. 88,991/- OUT OF THE TOTAL DISALLOWANCE OF RS. 3,19,784/- AND RESTRICT THE DISALLOWANCE TO RS. 2,3 0,793/-. THEREFORE, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE LIGHT OF THE AFORE-STATED FINDINGS OF THE CO -ORDINATE BENCH THIS YEAR, THE DISALLOWANCE SHALL BE RESTRICTED TO RS. 128880/-. G ROUND NO. 1 & 2 ARE PARTLY ALLOWED. 7. ISSUES RAISED VIDE GROUND NO. 3 WAS CONSIDERED BY T HE TRIBUNAL AT PARA 7 OF ITS ORDER AND THE RELEVANT FINDINGS READ AS UNDER:- 9. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. WE HAVE NOTICED THAT THE LD. CIT(A) REPORTED IN HIS DE CISION THAT THE CASE OF CLARIS LIFE SCIENCES LTD. WAS DISTINGUISHABLE FROM THE CASE OF THE ASSESSEE AS THE FACTS ARE DIFFERENT IN AS MUCH AS IN THE CASE OF THE ASSESSEE THE APPROVAL WAS RECEIVED IN F.Y. 2008-09 I.E. AFTER F.Y. 2007-08 WAS ALREADY OV ER .HE HAS ALSO REPORTED THAT EVEN THE APPLICATION SEEKING THE APPROVAL WAS MADE BY THE ASSESSEE IN THE F.Y. 2008-09. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE U S THE ASSESSEE HAS FURNISHED PAPER BOOKS.WE HAVE PERUSED THE PAPER BOOK FURNISHE D BY THE ASSESSEE AND FIND THAT AS PER PAGE NO. 146 OF THIS PAPER BOOK THE A SSESSEE CLAIM THAT APPLICATION FOR APPROVAL OF IN-HOUSE RESEARCH AND DEVELOPMENT W AS MADE ON 22-12-2006. IN ORDER TO VERIFY THE SAME WE HAVE GONE THROUGH THE P AGES OF PAPER BOOK AND FIND THAT AS PER PARA 43 OF PAGE NO. 235 IT WAS STATED THAT APPLICATION TO THE PRESCRIBED AUTHORITY WAS MADE ON 26-06-2008. WE HA VE FURTHER VERIFIED FROM PAGE NO. 162 IN THE PAPER BOOK THAT A LETTER DATED 24-10-2008 WAS ADDRESSED TO THE ASSESSEE FROM THE MINISTRY OF SCIENCE AND TECHN OLOGY DEPARTMENT OF ITA NOS. 282 0 & 2821/AHD/2015 . A.YS. 2011- 12 & 2012-13 4 SCIENTIFIC AND INDUSTRIAL RESEARCH TRAINING PROVID ING REFERENCE OF THE APPLICATION OF THE ASSESSEE DATED 26.06.2008. THE CLAIM OF THE ASSESSEE THAT IT HAD APPLIED ON DEC 22, 2006 COULD NOT BE SUBSTANTIATED IN VIEW OF SUPPORTING MATERIAL INDICATING THAT ASSESSEE HAD APPLIED ON 26/06/2008. WE OBSERVED THAT ABOVE FINDINGS THROW LIGHTS ON THE CONTENTIONS THAT THE F ACTS OF THE CASE OF THE ASSESSEE ARE DISTINGUISHED FROM THE DECISION OF THE CASE OF CLARIS LIFE SCIENCES LTD., IN VIEW OF CONTRADICTORY FACTS AND SUPPORTING EVIDENTIAL MA TERIAL FOUND TO BE EXISTING AS ELABORATED SUPRA, WE CONSIDERED IT WILL BE MORE APP ROPRIATE TO RESTORE THE ISSUE OF APPLICABILITY OF THE DECISION IN THE CASE OF THE CLARIS LIFE SCIENCES LTD TO THE FILE OF THE ASSESSING OFFICER TO DECIDE A FRESH AFTER R EQUISITE VERIFICATION AND EXAMINATION OF MATERIALS AS STATED SUPRA AFTER P ROVIDING DUE OPPORTUNITIES TO THE ASSESSEE. 8. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA), WE DIRECT ACCORDINGLY. GROUND NO. 3 IS ALLOWED FOR STATISTICA L PURPOSE. 9. GROUND NO. 4 & 5 RELATES TO THE RE-COMPUTATION OF S ALES VALUE OF POWER. 10. SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2008-09 WHICH WAS CONSIDERED BY THE TRIBUNAL IN ITA NO. 75/AHD/2012 A ND THE RELEVANT OBSERVATIONS OF THE CO-ORDINATE BENCH READ AS UNDER :- 6.1 WE HAVE ALREADY DECIDED THE SIMILAR MATTER IN F AVOUR OF ASSESSEE IN THE A.Y.2008-09 IN THE CASE OF BANCO ALUMINIUM LTD.. IN VIEW OF THE ABOVE STATED FACTS AND LEGAL FINDINGS, RESPECTFULLY FOLLOWING TH E HONBLE GUJARAT HIGH COURT IN THE CASE OF ALEMBIC LTD. AS SUPRA WE ALLOW THIS GRO UND OF THE ASSESSEE. ITA NOS. 282 0 & 2821/AHD/2015 . A.YS. 2011- 12 & 2012-13 5 11. RESPECTFULLY FOLLOWING THE SAME, GROUND NO. 4 & 5 A RE ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 2821/AHD/2015 FOR A.Y. 2012-13. 13. GRIEVANCE RAISED VIDE GROUND NO. 1 IS IDENTICAL TO THE GRIEVANCE RAISED VIDE GROUND NO. 3 OF ITA NO. 2820/AHD/2015 (SUPRA). FOR OUR DETAILED DISCUSSION THEREIN, WE ORDER ACCORDINGLY. 14. GRIEVANCE RAISED VIDE GROUND NO. 2 & 3 ARE SIMILAR TO THE GRIEVANCE RAISED VIDE GROUND NO. 4 & 5 OF ITA NO. 2820/AHD/2015 (SUPRA). FOR OUR DETAILED DISCUSSION THEREIN, WE ORDER ACCORDINGLY. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 12- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACC OUNTANT MEMBER AHMEDABAD: DATED 13/12/2017 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