DCIT, Circle-1(1)(2), Ahmedabad V. Chiripal Industries Ltd, Ahmedabad

ITA 292/AHD/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7019 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 02-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RITA DOKANIA
• Keywords: Deemed owner of house property; Earning of tax free income; Rule 8D; Set aside
• Section: 14A; 115JB; 80IA

Judgement Text

ITA No.292/Ahd/2020 A.Y. 2016-17 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.292/Ahd/2020 Assessment Year: 2016-17 DCIT, Circle-1(1)(2), vs. Chiripal Industries Ltd., Ahmedabad. Survey No.199-200/1-2, Baijpur, Gopalpur, Pirana Road, Piplaj, Ahmedabad – 382 405. [PAN – AAACC 8513 B] (Appellant) (Respondent) Appellant by : Rita Dokania, CIT DR Respondent by : None Date of hearing : 23.06.2022 Date of pronouncement : 15.07.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by Revenue against the order dated 20.01.2020 passed by the CIT(A)-1, Ahmedabad for the Assessment Year 2016-17. 2. The Revenue has raised the following grounds of appeal :- “1. The CIT(A) has erred in law and on facts in deleting the addition of Rs.8,91,35,894/- made u/s 80IA of the Act. 2. The CIT(A) has erred in law and on facts in restricting the addition of Rs.38,93,576/- made as per the provisions of Section 14A r.w. Rule 8D of the Act to Rs.1,50,000/- 3. The CIT(A) has erred in law and on facts in deleting the addition of Rs.38,93,576/- made while computing book profit u/s.115JB of the Act. 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.” ITA No.292/Ahd/2020 A.Y. 2016-17 Page 2 of 4 3. The assessee is engaged in the business of dealing in textile products and manufacturing and processing of textile products. Return of income was filed on 30.11.2016 thereby declaring income of Rs.26,82,53,280/-. The Assessing Officer observed that the assessee claimed deduction of Rs.8,91,35,894/- under Section 80IA of the Income Tax Act, 1961. On verification of Form No.10CCB, the Assessing Officer observed that the assessee has shown activity of power generation and the total value of machinery and plant used for the said activity is shown at Rs.766.44 lakhs. The power plant was originally installed by the erstwhile concern M/s Shanti Processor Limited prior to 01.04.2005. The total value of power plant as on 31.03.2008 was Rs.7,66,75,468/-, out of which value of old machinery was Rs.7,11,23,416/- as mentioned by the Assessing Officer in Assessment Order. The Assessing Officer made disallowance of Rs.8,91,35,894/- under Section 80IA(4) as claimed by the assessee. The Assessing Officer further made disallowance under Section 14A amounting to Rs.38,93,576/- and also made addition of Rs.1,80,000/- towards deemed house property income. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. At the time of hearing none appeared on behalf of the assessee despite giving notice. Hence, we are proceeding on the basis of submissions made by the assessee before the CIT(A) & the Assessing Officer. 6. The Ld. DR submitted that the CIT(A) has erred in deleting the addition of Rs.8,91,35,894/- made under Section 80IA(4) of the Act. The Assessing Officer has categorically observed that the old machinery was also part of the estimated claimed deduction by the assessee. Ld. DR further submitted that since the power plant set up by the assessee is not a new power plant, the value of which is more than 20% of the total value of plant & machinery, the assessee company is not eligible for deduction under Section 80IA of the Act in view of the Explanation-2 to Sub-section (3) of Section 80IA of the Act. ITA No.292/Ahd/2020 A.Y. 2016-17 Page 3 of 4 7. We have heard Ld. DR and perused all the relevant material available on record. Since the amalgamation company which is the assessee company has taken the power plant from amalgamation company the statutory tax deduction which were available to amalgamating company are also applicable to small company i.e. assessee company as per law. The Tribunal in assessee’s own case for A.Y. 2011-12 also granted the said relief. Therefore, ground nio.1 of the Revenue’s appeal is dismissed. 8. As regards ground no.2, ld. DR submitted that the CIT(A) erred in restricting the addition of Rs.38,93,576/- made as per provisions of Section 14A read with Rule 8D of the Act of Rs.1,50,000/-. The Ld. DR submitted that the assessee made huge investment in shares, received dividend of Rs.3,07,95,922/- for which the calculation of the CIT(A) is totally contradictory to the administrative expenses incurred by the assessee as per Rule 8D. 9. We have heard Ld. DR and perused all the relevant material available on record. It is pertinent to note that the assessee has made investment in shares and received dividend of Rs.3,07,95,922/- and claimed the sum of exempt income without incurring expenses is not just and proper. The calculation done by the CIT(A) restricting the addition to Rs.1,50,000/- is not just and proper. Therefore, we remand back this issue to the file of the Assessing Officer for proper verification of the applicability of provisions of Section 14A Rule 8D in consonance with the judicial precedents set out by the Court. Ground no.2 is partly allowed for statistical purposes. 10. As regards ground no.3, the ld DR submitted that deleting the addition of Rs.38,93,576/- made while computing book profit under Section 115JB of the Act is not just and proper. 11. We have heard both the parties and perused all the relevant material available on record. This issue is already decided by Special Bench in case of ACIT vs. Vireet Investment, ITA No.502/Del/2012, order dated 16.06.2017, wherein it is held that no adjustment can be made under Section 115JB in respect of Section 14A of the Act. There is no need to interfere with the findings of the CIT(A). Ground No.3 is dismissed. ITA No.292/Ahd/2020 A.Y. 2016-17 Page 4 of 4 12. In the result, appeal of the Revenue is partly allowed for statistical purposes. Order pronounced in the open Court on this 15 th day of July, 2022. Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 15 th day of July, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad