Century Enka Limited., Pune V. D.C.I.T Cir - 6,kolkata., Kolkata

ITA 301/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4758 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH J
• Assessee Lawyers: AKASH MANSINKA; VIVEK RUIA
• Keywords: Depreciation; Business expenditure; Additional depreciation; Earning of tax free income; Proportionate interest
• Section: 143(3); 234B; 14A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 301 / KOL / 2013 ASSESSMENT YEAR :2009-10 CENTURY ENKA LTD. CENTURY ARCADE, 2 ND FLOOR, NARANGI BAUG ROAD, PUNE-411 001 [ PAN NO.AABCC 2491 D ] V/S . DCIT, CIRCLE-6, AAYAKAR BHAWAN,P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI AKASH MANSINKA, AR & SHRI VIVEK RUIA, AR /BY RESPONDENT SHRI KALYAN NATH, JCIT-DR /DATE OF HEARING 25-05-2016 /DATE OF PRONOUNCEMENT 03-06-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY ASSESSEE IS AGAINST THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DATED 10.12.2012. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-6, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 26.1 2.2011 FOR ASSESSMENT YEAR 2009-10. ASSESSEE HAS RAISED ITS GROUND ASSESSEE AS UNDER:- BASED ON THE FACTS AND THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI [HEREINAFTE R REFERRED TO AS LEARNED CIT(A)] ERRED IN UPHOLDING THE ORDER [DATE D 26 DECEMBER 2011 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CI RCLE 6, KOLKATA (HEREINAFTER REFERRED TO AS THE AO') UNDER SECTION 143(3) OF THE INCOME- ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 2 TAX ACT, 1961 (THE ACT) IN RELATION TO THE ASSESS MENT YEAR (AY') 2009- 10, RELEVANT TO THE PREVIOUS YEAR ENDED 31 MARCH 20 09, IN THE CASE OF CENTURY ENKA LIMITED (HEREINAFTER REFERRED TO AS T HE APPELLANT) ON CERTAIN GROUNDS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A): DISALLOWANCE UNDER SECTION 32(1)(IIA) OF THE ACT. 1. ERRED IN NOT ALLOWING THE CLAIM OF THE APPELLANT THAT THE BALANCE ADDITIONAL DEPRECIATION AMOUNTING TO RS.1,832,362/- ON THE ASSES WHICH WERE PUT TO USE FOR LESS THAT 180 DAYS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR (I.E., AY 2009-10) COULD BE CLAIMED IN THE SUBJECT ASSESSMENT YEAR; 2. ERRED IN DISREGARDING THE FACT THAT CARRY FORWAR D OF UNCLAIMED ADDITIONAL DEPRECIATION OF IMMEDIATELY PRECEDING AS SESSMENT YEAR (I.E., AY 2008-09) IS NOT RESTRICTED UNDER THE PROV ISIONS OF THE ACT; 3. ERRED IN HOLDING THAT ADDITIONAL DEPRECIATION IS ALLOWED ONLY IN THE YEAR OF PURCHASE OF ASSETS; 4. FAILED TO APPRECIATE THAT THE BALANCE ADDITIONAL DEPRECIATION @ 10% HAD ALREADY VESTED IN THE HANDS OF THE APPELLANT UN DER SECTION 32(1)(IIA) OF THE ACT IN THE YEAR IN WHICH THE ASSE T HAD BEEN PURCHASED I.E., IN AY 2008-09 AND RIGHTLY CLAIMED I N THE CURRENT YEAR; DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.R. 8D OF THE INCOME TAX RULES 1962 (RULES) 5. ERRED IN CONFIRMING THE DISALLOWANCE AMOUNTING T O RS.958,584/- MADE BY THE AO UNDER SECTION 14A OF THE ACT, READ W ITH RULE 8D OF THE RULES; 6. ERRED IN DISREGARDING THE FACT THAT THE INVESTME NTS WERE MADE BY THE APPELLANT FROM ITS OWN FUNDS AND SINCE NO EXPENDITU RE WAS INCURRED IN EARNING THE EXEMPT INCOME, NOTING CAN BE DISALLO WED UNDER SECTION 14A OF THE ACT; 7. ERRED IN DISREGARDING THE FACT THAT THE INCOME E XEMPT FROM TAX HAS BEEN EARNED FROM INVESTMENTS MADE IN THE PERIOD PRI OR TO 1995-96 AND NO MOVEMENT (I.E., PURCHASE / SALE) HAS OCCURRE D IN THE SAME DURING THE AY 2009-10 AND HENCE NO EFFORTS / EXPENS E HAVE BEEN INCURRED FOR EARNING SUCH EXEMPT INCOME; 8. WITHOUT PREJUDICE TO THE ABOVE, FAILED TO APPREC IATE THAT THE APPELLANT HAS ADEQUATE OWN FUN FOR MAKING INVESTMEN T AND HENCE, DISALLOWANCE OF PROPORTIONATE INTEREST EXPENSE UNDE R SECTION 14A OF THE ACT CANNOT BE MADE; 9. WITHOUT PREJUDICE TO THE ABOVE, 1% OF DIVIDEND I NCOME CAN BE SAID TO BE REASONABLE EXPENDITURE UNDER SECTION 14A OF T HE ACT; ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 3 DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT CLAI MED AS DEDUCTION 10. ERRED IN CONFIRMING THE DISALLOWANCE AMOUNTING TO RS.5,049,661/- MADE BY THE AO WITH REGARD TO PROVISION FOR LEAVE E NCASHMENT; 11. FAILED TO APPRECIATE THAT PROVISION FOR LEAVE E NCASHMENT IS A LIABILITY FOR NORMAL BUSINESS EXPENSES AND NOT A ST ATUTORY LIABILITY OR CONTINGENT LIABILITY AND THE APPELLANT WAS ENTITLED TO MAKE PROVISIONS FOR THE SAME AND THEREBY ENTITLED TO DEDUCTION UNDE R THE ACT; 12. FAILED TO APPRECIATE THAT THE APPS POSITION IS BASED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF EXIDE INDUSTRIES LTD AND OTHERS VS. UOI [(2007) 292 ITR 4 70 (HC KOL)]. FURTHER, THE HON'BLE SUPREME COURT HAS ALSO PERMITT ED EXIDE INDUSTRIES LTD TO CLAIM THE DEDUCTION ON THE PROVIS ION FOR LEAVE ENCASHMENT MADE BY IT; INTEREST UNDER SECTION 234B AND 234C OF THE ACT 13. ERRED IN LEVY OF INTEREST UNDER SECTION 234B AN D 234C OF THE ACT. 2. INTER-CONNECTED GROUNDS RAISED BY ASSESSEE IN GR OUND NO. 1 TO 4 IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE A CTION OF ASSESSING OFFICER BY SUSTAINING THE DISALLOWANCE OF ADDITIONAL DEPRECIAT ION FOR AN AMOUNT OF RS.18,32,362/- BY WRONGLY INTERPRETING THE PROVISIO N OF SEC. 32(1)(IIA) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A LIMI TED COMPANY AND ENGAGED IN MANUFACTURING AND SALE OF POLYESTER CHIP S/ POLYESTER YARN, NYLON TYRE CORD/ FABRICS ETC. DURING THE YEAR ASSESSEE HA S CLAIMED ADDITIONAL DEPRECIATION FOR RS.18,32,362/- ON THE ADDITION OF PLANT AND MACHINERY PURCHASED IN THE FINANCIAL YEAR 2007-08 U/S 32(1)(I IA) OF THE ACT AS IN THE YEAR OF PURCHASE THE AFORESAID PLANT AND MACHINERY WAS P UT TO USE FOR A PERIOD LESS THAN 180 DAYS. SO THAT YEAR, THE ASSESSEE CLAIMED 5 0% OF THE ADDITIONAL DEPRECIATION AND ANOTHER 50% ADDITIONAL DEPRECIATIO N WAS CLAIMED AGAIN BY ASSESSEE IN THE FINANCIAL YEAR 2008-09 I.E. THE YEA R UNDER CONSIDERATION WHICH WAS NOT ALLOWED BY ASSESSING OFFICER ON THE GROUND THAT ADDITIONAL DEPRECIATION IS AVAILABLE EXCLUSIVELY IN THE YEAR O F PURCHASE AND SAME CANNOT ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 4 BE CLAIMED IN SUBSEQUENT YEAR. ACCORDINGLY, AO DISA LLOWED THE ADDITIONAL DEPRECIATION OF RS.18,32,362/- AND ADDED IT TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF AO. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. SHRI AKASH MANSINKA AND MR. VIVEK RUIA, LD. AUTHORI ZED REPRESENTATIVES APPEARED ON BEHALF OF ASSESSEE AND SHRI KALYAN NATH , LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 5. AT THE OUTSET, IT WAS OBSERVED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN ITS O WN CASE IN ITA NO.335/KOL/2012 DATED 18.05.2016, THE RELEVANT EXTRACT IS REPRODUC ED BELOW:- 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD THE LD. AR STATED THAT THE LD. CIT(A) RELIED ON THE DECISION OF HIS PREDECESSOR IN THE CASE OF M/S BIRLA CORPORATION LT D. FOR AY 2007-08 AND UPHELD THE ADDITION MADE BY THE LD. AO. THE LD. AR PLACED ON RECORD THE COPY OF THE DECISION OF THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF BIRLA CORPORATION LTD. VS. DCIT IN ITA NO. 683/KOL/2011 FOR AY 2007-08 DATED 08.12.2014, WHEREIN THIS TRIBUNAL HELD THAT T HE ASSESSEE IS ENTITLED TO CLAIM THE REMAINING PORTION OF 50% ADDITIONAL DEPRE CIATION IN THE SUBSEQUENT YEAR. HE ALSO PLACED ON RECORD ANOTHER DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASES FOR AY 2006-07 REP ORTED IN (2015) 154 ITD 426 (KOLKATA), WHICH IN TURN PLACED RELIANCE ON THE DECISION OF BIRLA CORPORTION LTD., SUPRA. THE DECISIONS CITED BY LD. AR WERE FAIRLY CO NCEDED BY THE LD. DR. WE FIND THAT THE ISSUE INVOLVED IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH BY THIS TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN (2015) 154 ITD 426 (KOLKATA), WHEREIN IT WAS HELD AS UNDER : - THE ISSUE ON PROPOSITION OF LAW REGARDING ALLOWANC E OF REMAINING ADDITIONAL DEPRECIATION IN THE NEXT ASSESSEE YEAR U /S 32(1)(IIA) OF THE ACT WAS COVERED IN FAVOUR OF ASSESSEE AND AGAINST R EVENUE BY THE DECISION OF COORDINATE BENCH OF ITAT KOLKATA A BE NCH IN THE CASE OF BIRLA CORPORATION LTD. VS. DCIT IN ITA NO. 683/KOL/2011 FOR THE ASSESSMENT YEAR 2007-08 DATED 8-12-2014, WHEREIN IT WAS HELD THAT EXTRA DEPRECIATION ALLOWABLE U/S. 32(1)(IIA) IS AN EXTRA INCENTIVE WHICH HAS BEEN EARNED AND CALCULATED IN THE YEAR OF ACQUI SITION BUT RESTRICTED ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 5 FOR THAT YEAR TO 50% ON ACCOUNT OF USAGE. THE SO E ARNED INCENTIVE MUST BE MADE AVAILABLE IN THE SUBSEQUENT YEAR. THE OVERALL DEDUCTION OF DEPRECIATION U/S. 32 SHALL DEFINITELY NOT EXCEED THE TOTAL COST OF MACHINERY AND PLANT. THUS, ASSESSEE IS ENTITLED FOR THE BALANCE 50% ADDITIONAL DEPRECIATION IN VIEW OF SEC. 32(1)(IIA) OF THE ACT IN THE NEXT ASSESSMENT YEAR FOR REMAINING UNUTILIZED ADDITIONAL DEPRECIATION. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE A LLOW THE GROUND NO. 1 AS RAISED BY THE ASSESSEE. TAKING A CONSISTENT VIEW IN ASSESSEES OWN CASE IN ITA NO.335/KOL/2012 (SUPRA) WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 6. COMING TO NEXT INTER-CONNECTED GROUND NO.5 TO 9 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF AO BY SUSTAINING DISALLOWANCE AMOUNTING TO RS.9,58,584/- U/S 14A OF THE ACT R.W.S RULE 8D OF T HE IT RULES, 1962. 7. DURING THE YEAR, ASSESSEE EARNED TAX FREE INCOME BY WAY OF DIVIDEND OF RS.53.15 LACS BUT NO EXPENSE AGAINST SUCH INCOME WA S DISALLOWED. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING INVOKED THE PROVISION OF SEC. 14A OF THE ACT AND DISALLOWED A SUM OF RS.9,58,584/ - IN TERMS OF RULE 8D OF THE RULES AND ADDED TO THE TOTAL INCOME OF ASSESSEE . 8. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- 33. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLA NT. THE APPELLANT HAS AVERAGE INVESTMENTS AMOUNTING TO RS.319,00000/- AND HAS PAID INTEREST AMOUNTING TO RS.25,66,00,000/- O THE BORROWINGS. TH E APPELLANT HAS NOT DISALLOWED ANY EXPENDITURE FOR EARNING THE EXEMPTED DIVIDEND INCOME AMOUNTING TO RS.53,14,994/-. THE APPELLANT HAS ITS SHARE CAPITAL OF RS.20.45 CRORES AND GENERAL RESERVE OF RS.308.42 CRORS. THE APPELLANT HAS FURTHER CLARIFIED AN AMOUNT OF RS.113.10 CRORES AS PROFIT F ROM THE CURRENT YEAR. 34. THEREFORE, IN THE FACTS & CIRCUMSTANCES AS DISC USSED AND FOLLOWING THE JUDGMENTS OF THE HON'BLE APPELLATE AUTHORITIES INCL UDING THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ISG TRADER S LTD. VS. CIT-III, KOLKAA & DHANUKA & SONS V. CIT (CENTRAL)-I; THE HON'BLE SPEC IAL BENCH OF ITAT IN THE CASE OF CHEMINVEST LTD. V. INCOME-TAX OFFICE5R, NE W DELHI AND THE HON'BLE ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 6 ITAT DELHI BENCH H IN THE CASE OF TECHNOPAK ADVI SORS (P) LTD. V. ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE-16, NEW DELHI AND SONATA INFORMATION TECHNOLOGY TD. V. DEPUTY COMMISSIONER OF INCOME TAX LTU, MUMBAI REPORTED IN 2012-TIOL-721-ITAT-MUM THE DISALLOWANCE OF RS.9,58,584/- AS PER RULE 8D READ WITH SECTION 14A IS UPHELD. THE AD DITIONS MADE BY THE ASSESSING OFFICER OF RS.9,58,584/- IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE OBSERVE THAT ISSUE RAISED BY ASSESSEE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE IN ASSESSEES OWN CAS E IN ITA NO. 335/KOL/2012 DATED 18.05.2016 (SUPRA) WHERE THE TRIBUNAL HAS DE CIDED THIS ISSUE IN PARA 14 & 15, FOR THE SAKE OF CLARITY, THE RELEVANT EXTRACT OF THIS ORDER REPRODUCED BELOW:- 14. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD INCLUDING THE VARIOUS CASE LAWS RELIED UPON BY BOTH THE SIDES. WE FIND FROM THE FACTS OF THE INSTANT CASE THAT THE LEARNED AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND THERE IS NO SATISFACTI ON RECORDED BY THE LEARNED AO ABOUT THE CORRECTNESS OF THE CLAIM OF TH E ASSESSEE AND WITHOUT THE SAME, HE INVOKED RULE 8D(2) OF IT RULES. WHILE REJECTING THE CLAIM OF ASSESSEE WITH REGARD TO EXPENDITURE IN RELATION TO EXEMPT INCOME, THE LEARNED AO HAS TO INDICATE COGENT REASONS FOR THE S AME. WE FIND THAT THE LEARNED AO HAD STRAIGHT AWAY EMBARKED UPON COMPUTIN G DISALLOWANCE UNDER RULE 8D(2) OF THE RULES. WE FIND THAT THE CASE LAWS RELIED UPON BY THE LEARNED AR ON THE DECISION OF THE JURISDICTIONAL HI GH COURT ARE DIRECTLY ON THIS POINT AND IN FAVOUR OF THE ASSESSEE. CIT VS ASHSISH JHUNJHUNWALA IN G.A. NO.2990 OF 2013 IN ITAT NO. 157 OF 2013 DATED 8.1.2014 RENDERED BY CALCUTTA HIGH COURT . WHILE REJECTING THE CLAIM OF THE ASSESSEE WITH REG ARD TO EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR THE SAME. FROM THE FACTS OF THE PRESENT CASE, IT IS NOTICED THAT THE AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UPON COM PUTING DISALLOWANCE UNDER RULE 8D OF THE RULES ON PRESUMIN G THE AVERAGE VALUE OF INVESTMENT AT % OF THE TOTAL VALUE. IN VI EW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N IN THE CASE OF J.K.INVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE O RDER OF CIT(A). ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 7 CIT VS R.E.I. AGRO LTD IN GA 3022 OF 2013 IN ITAT 1 61 OF 2013 DATED 23.12.2013 RENDERED BY CALCUTTA HIGH COURT 'THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENDIT URE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 WITHOUT FIRST RECOR DING THAT HE WAS NOT ITA NOS1146,1138/KOL/2012-C-AM INTEGRATED COAL MINI NG LTD SATISFIED WITH THE CORRECTNESS OF THE CLAIM AS REGARDS THE CL AIM THAT 'NO EXPENDITURE' WAS MADE BY THE ASSESSEE. CHALLENGING THE ORDER OF THE TRIBUNAL, THE PRESENT APPEAL HAS BEEN FILED. WE HAV E HEARD MR.BHOWMIK AND ARE OF THE OPINION THAT NO POINT OF LAW HAS BEEN RAISED. THEREFORE, THIS APPEAL IS DISMISSED'. HENCE, WE HOLD THAT THE ACTION OF THE LD. AO IN DIR ECTLY EMBARKING ON RULE 8D(2) OF THE RULES IS NOT APPRECIATED AND HENCE NO DISALLOWANCE U/S. 14A OF THE ACT COULD BE MADE IN THE FACTS OF THE INSTANT C ASE. 15. FROM THE AFORESAID CHART REPRODUCED IN PARA 11 ABOVE, WE ALSO FIND THAT THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS WHICH ARE SEVERAL TIMES MORE THAN THE INVESTMENTS MADE BY THE ASSESSEE. HENCE, IT CAN BE SAFELY CONCLUDED THAT BORROWED FUNDS HAVE NOT BEEN UTILIZED FOR THE PURPOSE OF MAKING INVESTMENTS. ACCORDINGLY, WE HOLD THAT THE PROVISIO NS OF RULE 8D(2)(II) OF THE RULES COULD NOT BE INVOKED IN THE FACTS AND CIRCUMS TANCES OF THE CASE. IN THIS REGARD, WE PLACE RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. REPORTED IN 313 ITR 340 (BORN) . WE ALSO ARE IN AGREEMENT WITH THE ARGUMENTS OF TH E LD. AR THAT INVESTMENTS YIELDING DIVIDEND INCOME ALONE ARE TO B E CONSIDERED FOR THE PURPOSE OF MAKING DISALLOWANCE U/S. 14A OF THE ACT READ WITH RULE 8D OF THE RULES. HOWEVER, THIS ASPECT WOULD BECOME INFRUCTUOU S IN VIEW OF OUR FINDING RECORDED HEREINABOVE THAT PROVISIONS OF RULE 8D(2) OF THE RULES COULD NOT BE INVOKED IN THE FACTS AND CIRCUMSTANCES OF THE CASE FOR WANT OF SATISFACTION IN TERMS OF RULE 8D(1) OF THE RULES BY THE LD. AO. IN VIEW OF THE AFORESAID FINDINGS AND DECIDED JUDICIAL PRECEDENTS, WE ALLOW GROUND NOS. 7 TO 10 RAISED BY THE ASSESSEE. WE ALSO FIND THAT GROUND NO. 11 RA ISED BY THE ASSESSEE WOULD BECOME INFRUCTUOUS IN VIEW OF OUR DECISION GI VEN FOR GROUND NOS. 7 TO 10. WE FURTHER FIND THAT THERE IS NO CHANGE IN THE INVE STMENT OF SHARES AND SECURITIES OF THE COMPANY AND THERE IS SURPLUS OWN FUND AVAILABLE WITH THE ASSESSEE. THE FACTS OF THE INSTANT CASE ARE EXACTL Y IDENTICAL AS OF ITA NO. 335/KOL/2012 IN THE OWN CASE OF THE ASSESSEE. TAKING A CONSISTE NT VIEW OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO. 335/KOL/2012 (SUPRA) WE ALLOW GROUND OF ASSESSEES APPEAL. ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 8 10. NEXT INTERCONNECTED GROUND NO. 10 TO 12 OF ASSE SSEES APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF AO BY SUSTAINING THE DISALLOWANCE OF RS,50,49,661/- ON ACCOUNT OF LEAVE ENCASHMENT. 11. AT THE OUTSET, WE FIND THAT SIMILAR ISSUE HAS B EEN DECIDED BY THIS HONBLE TRIBUNAL IN REVENUES APPEAL IN THE OWN CAS E OF THE ASSESSEE IN ITA NO.665/KOL/2012 DATED 18.05.2016 (SUPRA), WHERE THE TRIBUNAL REMIT TED BACK THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION IN TERMS OF DECISION OF HON'BLE SUPREME COURT, THE RELEVANT EXTRACT OF THE ORDER IN PARA-4 FOR THE SAKE OF CLARITY IS REPRODUCED BELOW:- 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HAD ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF PROVISION MADE FOR LEAVE ENCASHMENT BY P LACING RELIANCE ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. REPORTED IN VS. UNION OF INDIA (2007) 292 ITR 470 (CAL) BUT LD. SR. DR BEFORE US ARGUED THAT SUBSEQUENTLY HON'BLE SUPREME COURT HAS STAYED THIS JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 08-05-2009 BY FOLLOWING OBSERVATIONS:- PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL AP PEALS, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHI CH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDI NG INTEREST DEMAND AS OF DATE IS CONCERNED, IT WOULD BE OPEN TO THE DEPAR TMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) IS ON THE STATUE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE CLAIM IN ITS RETURNS. IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT LET HON'BLE SUPREME COURT DECIDED THE ISSUE AND BY THAT TIME TH E MATER CAN BE REMITTED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN TE RM OF THE DECISION OF HON'BLE SUPREME COURT. ON THIS, LD. CIT DR HAS NOT OBJECTED TO THE SAME. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO AWAIT THE DECISION OF HON'BLE SUPREME COURT AND DECIDE THE ISSUE ACCOR DINGLY. THIS ISSUE OF REVENUES APPEAL IS REMITTED BACK TO THE FILE OF AO AND IS ALLOWED FOR STATISTICAL PURPOSES. TAKING A CONSISTENT VIEW OF THIS TRIBUNAL IN ITA NO.665/KOL/2012 (SUPRA) WE REMIT THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDI CATION IN ACCORDANCE WITH LAW. ITA NO.301/KOL/2013 A.Y. 2009- 10 CENTURY ENKA LTD. V. DCIT, CIRL-6 KOL. PAGE 9 ASSESSEE IS DIRECTED TO EXTEND FULL COOPERATION TO THE AO. HENCE THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 12. NEXT GROUND OF ASSESSEES APPEAL IS U/S 234B AN D 234C OF THE ACT AS WE HAVE ALREADY PARTLY ALLOWED ASSESSEES APPEAL TH IS ISSUE IS PREMATURE STAGE AND DOES NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 03/ 06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 03 / 06 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-CENTURY ENKA LTD., CENTURY ARCADE, 2 ND FLOOR, NARANGI BAUG ROAD, PUNE-4 11 001 2. /RESPONDENT-DCIT, CIRCLE-6, AAYAKAR BHAWA, P7, CHOW RINGHEE SQUARE, KOL-69 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,