Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 5651 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-01-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2009-2010
Appeal Filed On
04-04-2016
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 301/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 D.C.I.T, CIRCLE-2, JAIPUR. CUKE VS. M/S OM METALS INFRA PROJECTS LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 302/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 D.C.I.T, CIRCLE-2, JAIPUR. CUKE VS. M/S OM METALS INFRA PROJECTS LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: AAACO 8245 J IZR;K{KSID@ OBJECTOR IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 303/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2012-13 D.C.I.T, CIRCLE-2, JAIPUR. CUKE VS. M/S OM METALS INFRA PROJECTS LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : G.R. PARIK (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI B.V. MAHESHWARI (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/01/2017 ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 2 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 24/01/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE THREE APPEALS FILED BY THE REVENUE AGAINS T THE ORDERS OF LD. CIT(A)-1, JAIPUR OF EVEN DATE 04/01/2016 FOR A.Y . 2009-10, 2010-11 & 2012-13 RESPECTIVELY. SINCE COMMON ISSUES ARE INV OLVED, ALL THE APPEALS WERE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UN DER:- GROUNDS OF REVENUES APPEAL IN ITA NO. 301/JP/2016. (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.1,44,82,686/- MADE BY AO UNDER THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF THE I.T. RULES. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.2,71,194/- MADE BY THE AO ON DELAYED PAYMENT OF EMPLOYEE CONTRIBUTION OF ESI AND PF. GROUNDS OF REVENUES APPEAL IN ITA NO. 302/JP/2016. (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.1,44,207/- MADE BY AO ON DELAYED PAYMENT OF EMPL OYEE CONTRIBUTION OF ESI AND PF. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANC E OF RS.39,80,602/- MADE BY THE AO UNDER THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF THE I.T. RULES. ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 3 GROUNDS OF REVENUES APPEAL IN ITA NO. 303/JP/2016. (1.) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY WAY OF DISALLOWING DEDUCTION U/S 801A(4) OF THE ACT. (2.) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.5,35,708/- MADE BY THE AO ON DELAYED PAYMENT OF EMPLOYEE CONTRIBUTION OF ESI AND PF. (3). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.2,53,22,418/- MADE BY THE AO UNDER THE PROVISION S OF SECTION 14A R.W. RULE 8D OF THE I.T. RULES. 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT ALL THE GROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ASSESSEES OWN CASES PASSED BY THE COORDINATE BENCH IN THE EARLIER YEARS. THE LD . DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT T HOUGH THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE COORDINATE BENCH IN RESPECT OF EARLIER YEARS, AT THE SAME TIME , THE DEPARTMENT IS IN FURTHER APPEAL AGAINST THE SAID ORDERS. ON QUERY FR OM THE BENCH, IT WAS SUBMITTED THAT NO STAY HAS BEEN GRANTED BY THE HON BLE RAJASTHAN HIGH COURT AGAINST THE SAID EARLIER ORDERS PASSED BY THE COORDINATE BENCHES IN ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 4 ASSESSEES OWN CASE AGAINST WHICH THE DEPARTMENT HAS FILED FURTHER APPEALS BEFORE THE HONBLE RAJASTHAN HIGH COURT. 3. IN RESPECT OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D OF THE ACT, THE GROUND WHICH IS COMMON IN ALL THE THREE YEA RS, THE COORDINATE BENCH IN ITA NO.230/JP/2015 & 916/JP/2014 DATED 4.0 2.2016 HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. THE RE LEVANT FINDINGS ARE CONTAINED AS UNDER:- 5.1 WE HAVE HEARD THE RIVAL CONTENTIONS, JUDICIAL PRONOUNCEMENTS AND MATERIAL AVAILABLE ON RECORD. FO LLOWING FACTS CLEARLY EMERGE FROM THE RECORD:- (I) IT IS ADMITTED BY LD. AO HIMSELF THAT THE INV ESTMENTS IN ASSETS FROM WHICH EXEMPT INCOME IS EARNED I.E. JV E QUITY AND MUTUAL FUNDS WERE MADE BY THE ASSESSEE OUT OF ITS OWN CAPITAL AND RESERVES. (II) ASSESSEES EXPLANATION THAT IN AY 2008-09, I NTEREST EXPENDITURE AMOUNTING TO RS.3,26,05,191/- WAS INCURR ED AS UNDER:- (A) TERM LOAN USED FOR PARTICULAR ASSETS RS.2,35,26,803/ - (B) WORKING CAPITAL USED FOR BUSINESS RS. 90,78,388/- RS.3,26,05,191/- (III) LD. AO INVOKED SUB-RULE (2) WITHOUT DEMONSTRA TING WHY THE ASSESSEES EXPLANATION WAS UNREASONABLE AND UNSATISFACTORY. ON ONE HAND, IT IS ADMITTED THAT IM PUGNED ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 5 INVESTMENTS ARE NOT OUT OF BORROWED FUNDS AND THEY WE RE OUT OF ASSESSEES OWN RESOURCES. ON THE OTHER HAND, A SELF CONTRADICTORY STAND IS ADOPTED BY AO IN THE GUISE O F MECHANICAL RULE AND THESE INTEREST FREE OWN FUNDS ARE INCLUDED AS BORROWED FUNDS. THIS IS IMPERMISSIBLE AND CLEARLY MANIFESTS A SELF CONTRADICTORY APPROACH. (IV) LD. AO HAS FAILED TO CORRELATE PROXIMITY OF AN Y NEXUS BETWEEN THE EXEMPT INCOME WITH EXPENDITURE INCURRED I N THIS BEHALF BY AN OBJECTIVE ANALYSIS AND COGENT REASONS. SINCE THERE IS NO CORRELATION NO BASIS EXISTS FOR METHOD OF ANY APPORTIONMENT OF EXPENSES, AS HELD BY SUPREME COURT IN WALFORT CASE (SUPRA). (V) APROPOS ADMINISTRATIVE OR OTHER EXPENSES THERE IS EVEN NO WHISPER FROM LD. AO THAT ASSESSEE HAD TO INCUR ANY S UCH EXPENDITURE FOR INVESTMENT IN JV OR ACQUISITION OF MUTUAL FUNDS. (VI) HONBLE DELHI HIGH COURT IN TAIKISHA (SUPRA) HE LD THAT TO PROCEED FURTHER FOR DISALLOWANCE U/S 14A R.W. RULE 8D THE DETERMINATION AMOUNT IS DERIVED AFTER EXAMINATION O F THE ACCOUNTS AND REJECTION IF ASSESSEES CLAIM OR EXPLA NATION. WE FIND THAT LD. AO RATHER ACCEPTS THAT THE IMPUGNED I NVESTMENTS IN JV EQUITY AND MUTUAL FUNDS IS OUT OF OWN FUNDS OF ASSESSEE, NEVERTHELESS AO PROCEEDS FOR DISALLOWANCE IN THIS BE HALF. THE SECOND ASPECT IS THERE APPEARS TO BE NON SCRUTINY O F THE RELEVANT ASPECTS AND PROPOSITIONS OF THE LD. AO. (VII) LD. CIT(A) HAS CONSIDERED THE ISSUES, RELEVANT FACTS, ASSESSEES EXPLANATION AND JUDICIAL PRECEDENTS IN R IGHT PERSPECTIVES AND BY DETAILED FINDINGS DISLODGED THE AOS OBSERVATIONS AND FINDINGS. THE ORDERS OF LD. CIT(A) S UFFER FROM NO INCONSISTENCY AND DESERVE TO BE UPHELD. ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 6 5.2 IN VIEW OF THE FACTS, CIRCUMSTANCES, CONTENTIONS AND OUR OBSERVATIONS MENTIONED ABOVE & RESPECTFULLY FOLLOWIN G THE JUDGMENTS IN THE CASE OF TAIKISHA, JOINT INVESTMENTS , REGENT AUTOMOBILES AND HONBLE SUPREME COURT IN THE CASE O F WALFORT SHARES AND STOCK BROKERS (SUPRA) WE FIND NO INCONSIS TENCY OR INFIRMITY IN THE IMPUGNED ORDERS PASSED BY LD. CIT(A ), WHICH ARE UPHELD. 4. SIMILARLY, IN RESPECT OF DISALLOWANCE OF EMPLOYEE CONTRIBUTION TOWARDS ESI & PF, THE GROUND WHICH IS COMMON IN ALL T HE THREE YEARS, THE COORDINATE BENCH IN DECISION REFERRED (SUPRA) H AS HELD AS UNDER:- 4.1 APROPOS THE SECOND GROUND RAISED IN AY 2011-12 IN RESPECT OF CONTRIBUTION OF EMPLOYEES PF, IT IS NOT DISPUTED THAT THE PAYMENTS ARE MADE BY THE ASSESSEE WITHIN THE DUE DAT E PRESCRIBED FOR FILING THE RETURN. THE ISSUE IN QUEST ION IS SQUARELY COVERED BY HONBLE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF CIT V. SBBJ (2014) 263 ITR 17, WHICH HAS BEEN RELIED B Y LD. CIT(A). RESPECTFULLY FOLLOWING HONBLE RAJASTHAN HIGH COURT JUDGMENT THIS GROUND IS DISMISSED. 5. REGARDING THE THIRD GROUND IN RESPECT OF DEDUCTI ON U/S 80IA(4) OF THE I.T. ACT WHICH IS RELEVANT ONLY FOR A.Y. 2012-13, THE COORDINATE BENCH IN ITA NO.911/JP/2010 ORDER DATED 05/08/2011 HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDI NGS ARE REPRODUCED AS UNDER:- ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 7 19.1 IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCES AN D IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE , WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE IS A DEVELOPER AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4) EVEN AFTER EXPLANAT ION ADDED IN SECTION 80IA(4) BY FINANCE ACT, 2007 AND AMENDED BY FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000. A CCORDINGLY WE ALLOW THIS GROUND OF THE ASSESSEE AND DIRECT THE DEP ARTMENT TO ALLOW THE DEDUCTION UNDER SECTION 80IA(4) TO THE ASS ESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS P ASSED BY THE COORDINATE BENCHES IN EARLIER YEARS. ADMITTEDLY, TH ERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE NOR IS THER E ANY CHANGE IN THE LEGAL POSITION. NO CONTRARY AUTHORITY HAS BEEN BROU GHT TO THE NOTICE OF THE BENCH OTHER THAN WHAT HAVE BEEN CONSIDERED BY TH E COORDINATE BENCHES IN EARLIER YEARS. FURTHER, THE DECISIONS O F THE COORDINATE BENCHES AGAINST WHICH THE REVENUE IS IN FURTHER APPE AL BEFORE THE HONBLE RAJASTHAN HIGH COURT HAS NOT BEEN STAYED BY THE HONBLE RAJASTHAN HIGH COURT. HENCE, WE SEE NO REASON TO DE VIATE FROM THE DECISION TAKEN BY THE COORDINATE BENCHES IN EARLIER YEARS WHICH HAS BEEN PASSED AFTER TAKING INTO CONSIDERATION THE DET AIL ARGUMENTS OF BOTH THE PARTIES AS WELL AS LEGAL PRONOUNCEMENTS AVAILABL E ON THE SUBJECT. ITA NO.301, 302 & 303/JP/2016 D.C.I.T VS. OM METALS INFRA PROJECTS LTD. 8 7. IN THE RESULT, ALL THE GROUNDS TAKEN BY THE REVE NUE IN ALL THE THREE YEARS ARE DISMISSED. HENCE, THE APPEAL FILED BY THE REVENUE FOR ALL THE THREE YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/01/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/01/2017. * SANJEEV*. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE D.C.I.T, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S OM METALS INFRA PROJECTS. LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR.. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO.301, 302 & 303/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR
