The DCIT, Circle-1(1)(1), Ahmedabad V. M/s. Amazon Textiles Pvt. Ltd., Ahmedabad

ITA 3134/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4068 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 17-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: VARTIK R CHOKSI; IRA R KAPOOR
• Keywords: Depreciation; Additional depreciation; Proportionate interest; Rule 8D
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 3134/AHD/2015 & 1997/AHD/2016 (ASSESSMENT YEARS: 2011-12 & 2012-13) DCIT, CIRCLE-1(1)(1), AHMEDABAD M/S. AMAZON TEXTILES PVT. LTD. 105, SAKAR-I, NR. NEHRU BRIDGE, ASHRAM ROAD, AHMEDABAD-380009 V/S V/S M/S. AMAZON TEXTILES PVT. LTD. 105, SAKAR-I, NR. NEHRU BRIDGE, ASHRAM ROAD, AHMEDABAD-380009 ITO WARD-1(1)(4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCB6914E APPELLANT BY : SHRI LALIT P. JAIN, SR. D .R. RESPONDENT BY : SHRI VARTIK R. CHOKSI & MS. IRA R. KAPO OR, C.A. ( )/ ORDER DATE OF HEARING : 03 -01-201 9 DATE OF PRONOUNCEMENT : 11 -03-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER ITA NOS. 3134/AHD /2015 & 1997/AHD/16 . A.YS. 2011- 12 & 2012-13 2 1. ITA NOS. 3134/AHD/2015 & 1997/AHD/2016 ARE CROSS AP PEALS BY THE REVENUE AND THE ASSESSEE PREFERRED AGAINST THE ORDE R OF THE LD. CIT(A)-1, AHMEDABAD DATED 26/08/2015 & 29/06/2016 PERTAINING TO A.YS. 2011-12 & 2012-13 AND REVENUE HAS RAISED THE FOLLOWING GROUND S:- (1) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF RS.1,26,08,625/- ON ACCOUNT OF ADDITIONAL DEPRECIAT ION CLAIMED ON ASSETS LEASED OUT AND NOT USED FOR THE PURPOSE OF ITS BUSINESS. (2) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.29,09,768/- ON ACCOUNT OF DISALLOWANCE U/S 14A R .W. RULE 8D. (3) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF RS.1,26,87,091/- OF INTEREST EXPENDITURE U/S 36(L)( III) OF THE ACT OUT OF DISALLOWANCE OF RS. 1,47,25,215/-. (4) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.29,09,768/- ON ACCOUNT OF DISALLOWANCE U/S 14A R .W. RULE 8D WHILE COMPUTING BOOK PROFIT U/S 115 JB OF THE ACT. 2. GROUND NO. 1 IS RELATING TO DELETING THE DISALLOWAN CE OF RS. 1,26,08,625/- ON ACCOUNT OF ADDITIONAL DEPRECIATION CLAIMED ON ASSET S LEASED OUT AND NOT USED FOR THE PURPOSE OF ITS BUSINESS U/S. 32(1)(IIA). 3. ASSESSEE IS IN THE BUSINESS OF LEASING ACTIVITY AND IS EARNING INCOME FROM LEASING BUSINESS AND CLAIMED ADDITIONAL DEPRECIATIO N ON THINGS AND ARTICLE WHICH HAVE BEEN LEASED OUT BY THE ASSESSEE. BUT LD. A.O. WAS NOT AGREE WITH THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT ASSES SEE HAS NOT USED MACHINERY OR PLANT FOR PRODUCTION AND MANUFACTURING OF ARTICL E OR THINGS AND DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION. 4. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPE AL BEFORE THE LD. CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE. ITA NOS. 3134/AHD /2015 & 1997/AHD/16 . A.YS. 2011- 12 & 2012-13 3 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN SUPPORT OF ITS CONTENTION, LD. A.R. CONTENDED THAT ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION AND CITED AN ORDER OF MADRAS HIGH COUR T IN THE MATTER OF TITANIUM EQUIPMENT AND ANODE MANUFACTURING COMPANY LTD. VS. DCIT 278 ITR 565 WHEREIN IT IS HELD THAT LESSOR IS ENTITLED TO EXTRA SHIFT AND ADDITIONAL DEPRECIATION ALLOWANCE ON THE ASSETS LEASED OUT. AN D HONBLE HIGH COURT DRAWN SUPPORT FROM THE ORDER OF THE SUPREME COURT IN THE MATTER OF CIT VS. MAHARASHTRA APEX CORPORATION LTD. (2002) 254 ITR 98 . 6. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE SAID JU DGMENT, WE ALLOW THE CLAIM OF THE ASSESSEE FOR ADDITIONAL DEPRECIATION AND DIS MISSED THE GROUND OF THE APPEAL OF THE REVENUE. 7. NOW WE COME TO GROUND NO. 2 RELATING TO DELETING TH E ADDITION OF RS. 29,09,768/- ON ACCOUNT OF DISALLOWANCE U/S 14A R.W . RULE 8D OF INCOME TAX ACT. 8. THE ASSESSEE HAS MADE INVESTMENT OF RS. 77665000/- IN A LLP, BEING ASSESSEE CONTRIBUTION TO THE CAPITAL OF LIMITED LIABILITY PA RTNERSHIP (LLP) IN QUESTION WAS BOUND TO PRODUCE EVERY YEAR AND IT HAD INDEED P RODUCED THIS YEAR TAXABLE IN CASE BY WAY INTEREST FROM THE LLP. AND ON SUCH I NCOME DISALLOWANCE U/S. 14A CANNOT BE MADE AS INVESTMENT IN FIRMS HAVE RESU LTED INTO TAXABLE INCOME. THEREFORE, IN OUR CONSIDERED OPINION, LD. CIT(A) H AS RIGHTLY GRANTED RELIEF TO THE ASSESSEE AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUT END. THUS, THIS GROUND OF THE APPEAL OF THE REVENUE IS D ISMISSED. ITA NOS. 3134/AHD /2015 & 1997/AHD/16 . A.YS. 2011- 12 & 2012-13 4 9. NOW WE COME TO GROUND NO. 3 RELATING TO DELETING TH E DISALLOWANCE OF RS. 12687091/- OF INTEREST EXPENDITURE U/S. 36(1)(III) OF THE ACT OUT OF DISALLOWANCE OF RS. 14725215/-. 10. IN THIS GROUND, LD. A.O. CONTENDED THAT INTEREST FR EE LOANS HAVE BEEN MADE OUT OF INTEREST BEARING FUNDS TOWARDS WHICH INTEREST EX PENSE HAVE BEEN PAID @ RATE FROM 12% TO 16%. ACCORDINGLY, A.O HELD THAT 15% OF INTEREST ON THE ADVANCES SHALL BE DISALLOWED AND FURTHER OBSERVED THAT SINCE INTEREST BEARING FUNDS HAVE BEEN DIVERTED FOR NON BUSINESS PURPOSE AS FOLLOWS: PARTICULARS AMOUNT AS ON 31/03/2011 AMOUNT AS ON 31/03/2010 DHAWALGIRI PROPERTIES P LTD. 9550000 9550000 ELATE INVESTMENTS & HOLDINGS PVT. LTD. 8315700 8315700 KAMAL TEA PROCESSORS P. LTD. 18402400 18402400 JAYESH K SHAH 61900000 0 TOTAL 9,81,68,100 3,62,68,100 11. ON THE OTHER HAND, ASSESSEE CONTENTION WAS THAT IT HAD SUFFICIENT INTEREST FREE FUNDS IN FORM OF SHARE CAPITAL, SHARE APPLICATION M ONEY AND RESERVE AND SURPLUS. HENCE, PROPORTIONATE INTEREST DISALLOWANCE CANNOT BE MADE. 12. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPE AL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE. 13. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IT IS OBSERVED FROM THE IMPUGNED ORDER WHEREIN IN EARLIER ASSESSME NT YEAR 2008-09 AND 2010- ITA NOS. 3134/AHD /2015 & 1997/AHD/16 . A.YS. 2011- 12 & 2012-13 5 11 WHEREIN LD. CIT(A) HAS RESTRICTED DISALLOWANCE O F INTEREST EXPENDITURE OF RS. 2038124 OUT OF TOTAL DISALLOWANCE OF RS. 14725215/- U/S. 36(1)(III) AND ACCORDINGLY ASSESSEE GOT RELIEF OF RS. 12687091/-. 14. AFTER GOING THROUGH THE IMPUGNED ORDER, WE ARE OF T HE CONSIDERED OPINION, THAT LD. CIT(A) HAS PASSED DETAILED AND REASONED OR DER AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUR END. THEREF ORE SAME IS DISMISSED. 15. THE NEXT GROUND WITH REGARD TO RELATING TO DELETING THE ADDITION OF RS. 2909768/- ON ACCOUNT OF DISALLOWANCE U/S. 14A R.W.R . 8D WHILE COMPUTING BOOK PROFIT U/S. 115JB. 16. WHILE COMPUTING BOOK PROFIT U/S. 115JB IN ASSESSEE S OWN CASE IN GROUND NO. 2 ALREADY WE HAVE GRANTED RELIEF TO THE ASSESSEE AND DISMISSED THE GROUND OF THE REVENUE. HAVING PARITY WITH THE SAID GROUND, WE HOL D THAT DISALLOWANCE U/S. 14A FOR BOOK PROFIT U/S. 115JB CANNOT BE MADE. THER EFORE, THIS GROUND OF APPEAL IS DISMISSED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 18. SO FAR ASSESSEES APPEAL IN ITA 1997/AHD/2016 FOR A .Y. 2012-13. 19. AT THE OUTSET, ASSESSEE REQUESTED TO WITHDRAW THE A PPEAL. PERMISSION IS GRANTED AND APPEAL IS DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN OPEN COURT ON 11 - 03- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 11/03/2019 ITA NOS. 3134/AHD /2015 & 1997/AHD/16 . A.YS. 2011- 12 & 2012-13 6 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